Definition of Sharia Insurance: Pillars, Terms, Objectives, & Principles
9/15/2022
The definition of sharia insurance is a type of insurance to face certain risks through a contract or engagement that is in accordance with sharia.
Definition of sharia insurance is a type of insurance to face certain risks through a contract or engagement in accordance with sharia.
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Definition of sharia insurance is a type of insurance to face certain risks through a contract or engagement in accordance with sharia.
Insurance is currently an option that many people consider, including sharia insurance.
Based on Article 1 of Law no. 2 of 1992 concerning Insurance Business, insurance is an agreement between two or more parties, in which the insurer binds himself to the insured by receiving insurance premiums to provide compensation to the insured due to damage, loss, expected profits, or legal liability to third parties who may be suffered by the insured, arising from an uncertain event, or to provide a payment based on the death or life of the insured person.
Definition of Sharia Insurance
Referring to the OJK Attitude to Your Money , sharia insurance itself has been guaranteed to be halal and legally allowed to be carried out according to the decision of the Indonesian Ulema Council (MUI) through the National Sharia Council (DSN) with Fatwa No. 21/DSN-MUI/X/2001 concerning General Guidelines for Sharia Insurance.
The fatwa also states that sharia insurance is an effort to protect and help each other between a number of registered parties by investing in assets to face certain risks through contracts or agreements that are in accordance with sharia.
Pillars of Sharia Insurance
According to the book Islamic Religious Education and Morals for SMA/K Class X published by the Ministry of Education and Technology, Imam Hanafi as a well-known scholar in the field of fiqh said that the pillars of insurance were only consent and acceptance. Unlike other fiqh scholars, the pillars of insurance consist of four pillars, namely:
- Kafil: A guarantor (adult, sane, free will, not prevented from spending his wealth).
- Makful lah: It is recommended that people who owe debts are known to the kafil.
- Makful 'anhu: A person in debt.
- Makful bih: Debt, both goods and money, is required to be known and the amount is fixed.
Sharia Insurance Terms
Meanwhile, there are also sharia insurance requirements that must be met by both the insurer and the insured, namely:
- Puberty;
- Reasonable;
- Free will (not under duress);
- Invalid transaction on something unknown (gharar);
- Invalid transaction if it contains usury;
- Transactions are not valid if they contain gambling practices (maisir).
Sharia Insurance Ban
Actually, the prohibition of sharia insurance is contained in the terms themselves, namely there should be no gharar, usury, and gambling or maisir. Check out the full explanation below.
1. No usury
Riba means taking a profit or profit that is different from the amount it should be. An example of the practice of usury in insurance could be in the form of the allocation of premiums paid by participants on investments that contain elements of usury in them.
2. Can't practice gharar
Meanwhile, gharar is a lack of clarity of information between the two parties conducting the transaction. For example, the company stated that the insurance claim was paid 20 days after the agreement but did not explain further whether it was 20 calendar days or 20 working days where Saturday and Sunday were not counted.
3. There can be no gambling
Gambling or maisir is a situation where one party experiences an advantage, while the other party experiences a loss. The practice of gambling should also not be in Islamic insurance.
Sharia Insurance Purpose
As a form of investment, the main purpose of Islamic insurance is to protect insurance participants from possible unexpected risks in the future. Therefore, sharia insurance service companies must be able to carry out the mandate by managing funds from customers.
In addition, sharia insurance can also be a means to help and alleviate the calamities experienced by participants or other fates.
Sharia Insurance Principles
To achieve the above objectives, Islamic insurance must have basic principles as its foundation. The principles of sharia insurance are as follows.
1. Monotheism
All decisions taken must be based on divine values if you want to say sharia insurance. In fact, every human action, even if it is a small thing, comes from Allah SWT.
2. Fair
Placing the rights of customers and managers in accordance with the place and part is an example of the principle of justice in sharia insurance. In addition, there must be transparency in every transaction.
This must be in line with the DSN-MUI fatwa Number: 53/DSN-MUI/III/2006 concerning the tabarru contract or payment of contributions that the member's obligation is to pay tabarru which will be used to help other participants who experience disaster and are entitled to insurance claims, while the manager must manage tabarru funds and are entitled to profit sharing on invested tabarru funds.
3. Plague
Ta'awun means to help or to help. Becoming an insurance participant must apply the principle of ta'awun because it is the main pillar of sharia insurance.
4. Cooperation
The form of cooperation in sharia insurance is a contract in the form of mudharabah or musyarakah, namely a cooperation agreement with the principle of profit sharing. Mudharabah is a cooperation agreement between the insurance participant (shahibul maal) and the management company (mudharib) to manage the participant's investment funds in accordance with the specified authority.
While musharaka is a cooperation agreement between participants (shahibul maal) and insurance companies (mudharib) where shahibul maal only contributes by depositing funds, while mudharib contributes by providing their services through an agreement that profits and losses will be shared. .
5. Willingness or ridla
The application of the ridla principle in sharia insurance is in the form of submitting a number of funds which become insurance premiums that are paid periodically to insurance companies.
