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Similarly, it is the case of reinsurance based on the principle of cooperative insurance.
Third: The Academy invites the Islamic countries to work on establishing cooperative
insurance institutions and cooperative entities for reinsurance to liberate the Islamic
economy from exploitation and put an end to the violation of the system which Allah has
chosen for this Ummah.”
Later in 2005, the same body, i.e. IIFA, permitted Health Insurance with some conditions to be
observed. The following is its relevant resolution on this issue:
” 1. If the Health insurance contract is concluded directly with the hospital, it is permissible.
However, specific guidelines must be observed, such as ensuring that the ambiguities or gharar
is minimized, and the need for Health insurance is apparent that it can be considered as a
daruriyyat (necessities) matter, because of its connection with the protection of life, intellect
and offspring, which form part of the five essentials that the Shari'ah seeks to preserve. Apart
from that, several conditions must be fulfilled, as follows:
a. The responsibilities of the contracting parties must be comprehensively defined;
b. A study on the health condition of the insured, as well as his probable future health
conditions, must be conducted; and
c. The contractual relationship between the organisation seeking insurance and the
health institution must be direct, and no conventional insurance company is involved,
so that all medical bills are forwarded straight to the said organisation.
2. If the Health insurance is from an Islamic insurance company (Takaful or ta’awun - mutual
assistance), which manages its activities in line with the guidelines of the Shari'ah, which the
Council have recognised in its Resolution no. 9(2/9) regarding insurance and reinsurance, it is
permissible; and
3. If Health insurance is provided by a conventional insurance company, it is not permissible,
as clearly mentioned in the above resolution. ”
The above two resolutions were confirmed and consolidated in resolution No.200 by IIFA in
2013, where the council addressed in detail all the relevant technical and Shari'ah matters
relating to insurance and Takaful.
The AAOIFI issued a Shari'ah Standard on Islamic insurance in 2006 serving as a guideline for
regulators and industry players for establishing Islamic Insurance institutions in compliance
with the Shari'ah (AAOIFI, 2019).
Specifically, the importance of Shari'ah in regulating RTOs has been emphasised by Muslim
scholars since 1985. A resolution was passed by Islamic Fiqh Academy on the need for a proper
set up of Takaful or Re-Takaful operation to replace the conventional insurance and reinsurance