Islamic Insurance: A Modern Approach to Islamic Banking by Aly Khorshid

By Aly Khorshid

A few Muslims think assurance makes no sense, as society might actually help its sufferers. Muslims can not forget about the truth that they reside, alternate and speak with open worldwide platforms, they usually can not forget about the necessity for banking and assurance. Aly Khorshid demonstrates how preliminary clerical apprehensions have been triumph over to create pioneering Muslim-friendly banking structures, and applies the teachings learnt to a plausible coverage framework through which Muslims can compete with non-Muslims in company and feature hide in everyday life. The publication makes use of appropriate Quranic and Sunnah extracts, and the arguments of professional- and anti-insurance jurists to reach at its end that Muslims can benefit from the peace of brain and fairness of an Islamic coverage scheme.

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Islamic Insurance: A Modern Approach to Islamic Banking (Islamic Studies)

A few Muslims think coverage is not sensible, as society can assist its sufferers. Muslims can not forget about the truth that they dwell, exchange and converse with open worldwide platforms, and so they can not forget about the necessity for banking and coverage. Aly Khorshid demonstrates how preliminary clerical apprehensions have been conquer to create pioneering Muslim-friendly banking platforms, and applies the teachings learnt to a viable assurance framework through which Muslims can compete with non-Muslims in enterprise and feature disguise in lifestyle.

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Ijara wa Iktina (lease purchase) An Ijara contract does not permit the lessee the option of purchasing the leased asset, because the granting of such an option would involve uncertainty, which is prohibited in Islamic finance. Under Ijara wa Iktina, the lessee undertakes to purchase the leased asset, while making payments into an Islamic investment 36 R I B A ( U S U RY ) A N D G H A R A R ( R I S K ) account on top of the regular lease payments. : 111). Qard Hassan (interest-free loan) Islamic institutions are often prepared to grant interest-free loans to clients for humanitarian and welfare reasons.

The literal translation of the Arabic verb riba is derived from the Arabic root raba and means ‘increase’ and refers to the practice of lending money at an exorbitant (and therefore unlawfully high) rate of interest. The noun riba literally means surplus excess. Some English definitions of the word ‘usury’ are: ‘the practice of loaning money at an exorbitant rate of interest’ (Collins Dictionary) and ‘an addition to the principal of a loan, usually interpreted as interest payments or receipts for both commercial and private loans’ (Wilson 1987).

30 2 RIBA (USURY) AND GHARAR (RISK) Riba A principal argument against insurance, one whose case is strong and deserves careful analysis, is that of the Quran’s and Shari’a’s banning of usury and other forms of economic transaction which are deemed to be unproductive or to give unfair advantage to one party at the expense of the other. The history of insurance as it developed in the Arab world has traditionally been limited to joint sharing of common risk. This is a slight deviation from the purely societal interpretation of the mutually caring community, as particular interest groups could individualize risk to their collective advantage, even when it could benefit their competitors.

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