Finance conventionnelle
Before discussing the difference between Islamic and Conventional insurance it is better to first understand the concept of insurance and the objection of Shariah Scholars at it.
WHAT IS INSURANCE
Insurance provides the means for people to transfer the burden of uncertainty (of financial loss) to the insurer, for an agreed financial consideration called the “premium”. In exchange, the insurer promises to provide financial compensation to the insured should a specified loss occur. It is an effective risk transfer mechanism by which individuals or organisations can exchange their uncertainty of financial loss (or risk) for the certainty of the premium. With a fixed premium, the insured is certain that he will not have to pay more for that year. This service of providing certainty of cost (fixed premium) is of immense value especially to organisations, as it would help them budget their expenditure confidently. This is the financial security provided by modern insurance. The act of taking precautionary measures or `ikhtiar’ against possible danger and its consequences is in line with the teachings of Islam. In the holy Quran it is clearly described how Prophet Yussof a.s. filled the grain silos from the surplus of seven years of good harvest as a protection to ensure the availability of continuous food during the seven lean years. This is a clear indication that one has to strive hard to avoid from being inflicted by any ill luck, and at the same time be fully prepared in terms of the measures taken as precautions in the event such an unfortunately eventuality cannot be avoided. One such measure available to every member of the community presently is the cover or protection provided by insurance policies. As a concept, insurance actually does not contradict the teachings of Islam, as it is a method by way common resources are pooled in order to help the needy. Based on this, it is said that the operation of