Uqud al-Tamin Haqiqatuha wa Hukmuha
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- الجامعة الإسلامية بالمدينة المنورة
Uqud al-Tamin: Haqiqatuha wa Hukmuha (Insurance Contracts: Their Reality and Legal Ruling) is a contemporary treatise on Islamic commercial jurisprudence by the Saudi scholar Hamad bin Hammad al-Hammad, analyzing the legal nature and Islamic permissibility of insurance contracts. The study was published in the Journal of the Islamic University of Medina in 1405 AH (1984–1985 CE).
Background and Purpose
The treatise was composed to address the widespread modern discourse surrounding commercial and cooperative insurance. Al-Hammad observed that many contemporary jurists divided insurance into commercial (tijari) and cooperative (ta'awuni), endorsing the latter without offering a coherent legal characterization (takyif) or demonstrating a valid legal distinction between the two forms. The author intended to elucidate the core structure of insurance contracts under Islamic legal principles and evaluate the arguments advanced by those who declared them lawful.
Tracing the history of insurance, al-Hammad notes that while risk-sharing concepts existed in ancient systems dating back millennia, modern marine insurance began in Europe with the Italian policy of 1347 CE, followed by terrestrial fire insurance after the Great Fire of London in 1666 CE. In Islamic jurisprudence, Ibn Abidin (d. 1252 AH) was among the earliest scholars to address the contract under the term sūkarah, deeming it unlawful because it constituted an obligation of what was not legally binding (iltizam ma la yalzam). In modern times, fatwas permitting insurance emerged, beginning with Muhammad Abduh, who analogized life insurance to silent partnership (mudarabah), a premise embraced and expanded by later figures such as Mustafa al-Zarqa, Ali al-Khafif, and Muhammad al-Bahi.
Legal Prohibitions in Insurance
Al-Hammad concludes that conventional insurance contracts contain four distinct prohibitions recognized in Islamic law:
- Uncertainty (Gharar): Insurance contracts are inherently aleatory contracts of chance (uqud ihtimaliyyah), in which neither party knows the exact amounts they will surrender or receive at the time of agreement. The occurrence and timing of the contingent event are unknown, creating a degree of excessive gharar surpassing classical prohibitions such as pebble-toss sales (bay' al-hasah).
- Usury (Riba): Because insurance involves the exchange of money for money, it violates the rules of currency exchange (sarf). It typically entails riba al-fadl (usury of disparity) when the payout differs from the total premiums paid, as well as riba al-nasi'ah (usury of delay) because the payments are never exchanged simultaneously on the spot.
- Gambling (Qimar / Maysir): The contract is contingent upon an uncertain hazard, enabling one party to gain substantial funds against a minimal contribution or lose their investment entirely without consideration.
- Sale of Debt for Debt (Bay' al-Dayn bi-l-Dayn): Premiums represent deferred liabilities on the policyholder, while the compensation is a deferred contingent debt on the insurer, leading to an impermissible exchange of debts.
Critique of Proponents' Analogies
A substantial portion of the work is dedicated to refuting classical legal analogies and contemporary justifications advanced by proponents of insurance:
- Analogy to Novel Contracts and Bay' al-Wafa': Proponents argued that contracts are presumed permissible unless explicitly forbidden. Al-Hammad responds that the prohibition of insurance stems not from its novelty, but from its inherent inclusion of riba, gharar, and gambling.
- Analogy to Guard Services (Aqad al-Hirasah): Proponents suggested that payment in insurance is made for "peace of mind" (aman), just as a guard is hired for security. Al-Hammad counters that a guard is compensated for tangible labor and physical presence, whereas security is an intangible state within the sole domain of God that cannot be bought or sold.
- Road Risk Guarantee (Daman Khatar al-Tariq): The classical guarantee of safety on a perilous road is a unilateral voluntary undertaking based on misleading (taghrir), whereas insurance is a bilateral commercial exchange (mu'awadah).
- Clientage by Allegiance (Wala' al-Muwalah) and Solidarity (Aql al-Aqilah): Proponents compared insurance to tribal solidarity in paying blood money (diyyah). Al-Hammad demonstrates that the aqilah system is a divinely imposed family duty grounded in kinship and mutual aid, not an optional commercial contract designed for profit.
- Binding Promises (al-Wa'd al-Mulzim) and Reward Contracts (Ju'alah): Binding promises in the Maliki school apply to unilateral gratuitous acts (tabarru'), whereas insurance is an onerous reciprocal exchange. Similarly, ju'alah requires a defined wage for a specific performance, which does not match insurance.
- Public Interest (Maslahah) and Necessity (Darurah): The author argues that economic interest cannot override clear textual prohibitions; such considerations represent invalid interests (masalih mulghah). Furthermore, true legal necessity (darurah) pertains to exceptional individual emergencies, not permanent financial institutions.
- State Retirement Pensions (Nizam al-Taqa'ud): Pensions represent unilateral administrative welfare obligations disbursed by the state to support public servants, rather than commercial bilateral transactions.
Position on Cooperative Insurance
Al-Hammad examines the traditional texts cited in support of cooperative insurance, such as the prophetic traditions regarding the mutual pooling of provisions (al-nahd) practiced during expeditions by Abu Ubaydah and the Ash'arite tribe. He argues that these cases represented voluntary acts of mutual consolation (muwasah) and charity during times of distress, devoid of bilateral contractual obligations.
Consequently, he concludes that if cooperative insurance operates through binding reciprocal agreements—where participants are obligated to pay fixed premiums in exchange for guaranteed compensation—it remains an unlawful contract of exchange (mu'awadah) despite its cooperative label. It is only permissible if structured purely as voluntary donations (tabarru') without binding reciprocal contractual compensation.
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