The health insurance fatwa states that the vast majority of current and popular insurance models in the Islamic world and therefore also in our country are not acceptable to devout Muslims. The fatwa contains binding provisions issued by Islamic authorities regulating religious or legal interpretations of the Qur’an.
Health insurance that Muslims must take
Since there is no halal health insurance in most countries of the world and even in some Islamic and Arab countries, health insurance can only be possible in exceptional cases:
In the case of compulsory insurance such as car liability, health and accident insurance are required here.
In the case of a car, only compulsory liability insurance is allowed according to the fatwa, but partial or comprehensive insurance is prohibited. Even in the case of health insurance, only statutory basic insurance is allowed.
In case of necessity or urgency, Muslims also have the opportunity to conclude a contract, which is prohibited by the Holy Qur’an but only with strict conditions. The loss that one might incur without insurance must be intolerable or life-threatening.
Examples of health insurance
Home health insurance is optional at many companies. However, there is a strong urgency that without a cover, for example in the event of a fire, a life-threatening situation can arise and is therefore permissible for the Muslim community.
Other permitted examples: Cancellation insurance can be obtained for air travel. But these, like all so-called follow-up insurances, are also subject to strict requirements for Muslims. They may not be agreed upon separately and must take place simultaneously in the same contract.
This is the reason why many health insurance policies do not comply with the Qur’an and are therefore prohibited in the religious community
Muslims are generally only free to conclude contracts as long as they do not contain any Islamic requirements. Islamic jurisprudence forbids conventional insurance, which is common in our country, among other things because it is incompatible with Islam.
Takaful insurance
There is no single Islamic insurance called Takaful (joint insurance) in many countries. “Compliant” (legal) health insurance must take into account the prohibition of interest and betting in Islam and be based on a community of insured not only sharing the risks but also the profits of the insurance company.
Therefore, devout Muslim policyholders are paid into a common fund that is invested according to Islamic principles. Potential profits are largely distributed, with only the insurance company managing the fund and charging a fee for it. Each insured is obliged to put his so-called halal solution with his broker or insurance company.
The most important terms in health insurance
Prohibition of speculation
A traditional health insurance contract is essentially a barter or barter contract. The policyholder pays the premiums insured by the insurance company.
The policy (indemnity) represents the good that is sold to the policyholder. The policyholder’s premium is the price or consideration for that commodity. Trade-offs occur Uncertainty and speculation arise from the fact that at the beginning of the contract period it is not certain whether this will be the case and, if so, when and to what extent the damage will ever occur.
Gambling ban
Based on Islamic jurisprudence, health insurance companies bet that certain conditions (damages) will not occur and therefore the insurance companies will make profits.
If the insured damage does not occur, the policyholder loses payment of the premium. On the other hand, the insurance company shows defaults/losses when the claim is higher than the premiums paid by the policyholder, so a special kind of gambling occurs.
Prohibition of interest
The prohibition of interest is of central importance in Islam. All contracts and transactions shall be completely free from the elements of interest. Interest means the difference between premiums and the payment by the health insurance company in the event of a claim. In most cases, the amount paid by the insurance company is greater than the premiums paid. Muslims see an interest in this difference and therefore they should not be accepted.
Late payment of the insurance premium can result in interest on the arrears. Insurance companies also receive interest if they invest a portion of the premiums received in interest-earning securities or accounts, as they usually do.
Therefore, Islamic finance must be compatible with the work of traditional health insurance without violating the Qur’an. However, it advocates the idea of security and preventive measures as well as mutual support in the face of difficult times and the blows of fate. Islamic sources primarily call for precautions against risks.
Is there Halal health insurance in Europe?
There are no known financial and insurance products from Islamic finance departments in most European countries and are accessible to all Muslim clients. In this sense, the issue of health insurance compatible with Islam for local Muslims is not often raised, because they cannot obtain any insurance other than the usual insurance in these countries.
If the core values and principles of insurance are also taken into account in the Islamic finance sector, such as giving up profit or mitigating the emergency to individuals or social groups, then regulated health insurance companies, which are also found in European countries, come close to the model.
By the way, it is sometimes possible to negotiate large insurance contracts.
Forms of Insurance
The conferences of Islamic Sharia scholars on the subject of insurance were distinguished into 3 main categories:
1. Commercial Insurance (for profit)
It includes all forms of insurance that are not compatible with the cooperative or cooperative insurance model. In this form, the insured must pay a regular contribution to the company to which he is contractually obligated.
However, the insured does not participate in the company, its capital, investments, and profits. If he does not suffer any harm, he has no right to money or any other form of participation. Because the likelihood of a group of insured people paying more money than claims eventually arrive is generally higher, commercial insurers record large amounts as dividends or investment capital for new business or to increase their company’s equity. This is how the majority of local insurance companies operate.
2. Cooperative insurance
Simple form
A group of people exposed to certain risks working together by regularly paying into a joint account to help each other financially in the event of an accident. There is no profit, no profit, no investment.
Compound form
A company is formed for this purpose, in which all the insured become the owners of the company through their contribution. There is a general assembly/meeting of shareholders and a board of directors charged with running the day-to-day business of the insurance company. The money remains in the possession of the participants in the company, i.e. the insured, and is used for them.
The principle is not aimed at profit, but rather at cooperation and is based on the idea of cohesion and donations. If there is a profit after the end of the year, it can be distributed to those involved (eg by lowering premiums), or used as an investment or as a security for the company’s shares. Those involved should identify this in their meetings.
3. Islamic Insurance
It is based on the principle of cooperation and donation. Amounts paid are managed in a separate account. A company that is only authorized to manage donations ensures that day-to-day business runs smoothly. She gets paid for her services, but she doesn’t share in the surplus. The surplus remains in the account and is used by the insured.
Islamic finance – is it the solution?
The various forms of insurance belong to the field of “Islamic finance” or “Islamic banking”. The latter means investing money under religious and moral principles. Investments in arms production, unfair acts, and pornography are prohibited.
The corresponding products are offered in different countries by especially specialized companies, including large multinational companies. Islamic finance products are managed by so-called Sharia councils (recognized Islamic scholars), where professionals from the financial sector and the field of Islamic law define the appropriate rules and standards, i.e. certify insurance companies as being Islamic/Sharia-compliant,
Is Islam an exception?
What many don’t know: Like Islam, Judaism and Christianity originally prohibited interest. This prohibition goes back to passages in the Old Testament, and thus was valid for both religions.
But in the Catholic Church, the ban on interest was officially repealed in 1822. Although the Torah still prohibits interest today, if you read it closely, it is a relative law rather than an absolute. What is meant is not a fundamental ban on interest, but an emergency ban on the borrower, which explains the existence and great importance of Jewish banks for centuries.
The prohibition of insurance in Islam applies to purely commercial insurance. There is cooperative and Islamic insurance for Muslims all over the world.
