INSURANCE UNDERSTANDING

Insurance is a means of protection from financial loss. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss.

An entity which provides insurance is known as an insurer, insurance company, or insurance carrier. A person or entity who buys insurance is known as an insured or policyholder. The insurance transaction involves the insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in exchange for the insurer's promise to compensate the insured in the event of a covered loss. The loss may or may not be financial, but it must be reducible to financial terms, and must involve something in which the insured has uninsurable interest established by ownership, possession, or preexisting relationship. The insured receives a contract, called the insurance policy, which details the conditions and circumstances under which the insured will be financially compensated. The amount of money charged by the insurer to the insured for the coverage set forth in the insurance policy is called the premium. If the insured experiences a loss which is potentially covered by the insurance policy, the insured submits a claim to the insurer for processing by a claims adjuster.

INSURANCE IN ISLAM

In Islam, at least two opinion about insurance.

First, insurance is forbidden in all kinds of forms including the life insurance. This opinion was expressed by Sayyid Abdullah al-Qalqii Sabiq, Yusuf Qaradawi and Muhammad al-Muth'i curmudgeonly. The reasons that they put forward is:

1. Insurance together with gambling

2. Insurance contains uncertain elements.

3. Insurance contain elements of usury.

4. Assumption contains elements of extortion due to policyholder if it can not continue to pay premiums will lose the premium that has been paid or less.

5. Premiums already paid which will be played in the practice of usury.

6. Insurance including a sale or exchange of currency is not cash.

7. Life and death of man as object of business and equal with God precede destiny.

Second, insurers are allowed in such practices now this opinions expressed by Abd. Akhmad Mustafa Zarqa Wahab Khalaf, Muhammad Yusuf Musa and Abd. Rakhman Isa. they reasoned are:

1. There are no Shari source texts that prohibit insurance.

2. There is an agreement and the willingness of both parties.

3. Mutually beneficial to both parties.

3. Insurance can overcome the public interest because premiums collected can be invested For that productive projects and development.

4. Insurance including contract mudhrabah

5. Including insurance cooperatives.

6. Insurance in analogy with the retired system.