Conventional and Islamic insurance: a comparative analysis

While insurance per se is not contrary to Islam, many practices of the conventional insurance system do not conform to shari`a or to certain Islamic principles. A brief sketch of the primary qualities of an Islamic insurance system is useful. A comparison of conventional and Islamic insurance reveals differences on ten topics: dealing with a blameless misrepresentation of actual circumstances in making a contract; the question of the permissibility of a valued policy; the aspect of profit-and-loss sharing; attention to and examination of company accounts; the sort of investments an insurance company can make; creating provisions for reinsurance; creating a system of two separate accounts; the ultimate goal of insurance; the function of a company's upturns and progress; and the building of a zaka fund. An Islamic insurance company should stick to shari`a with no loss in the benefits or range of insurance for the client.