Sharia Insurance and Conventional Insurance

Sharia Insurance and Conventional Insurance

Sharia Insurance and Conventional Insurance
Sharia Insurance and Conventional Insurance

History of Sharia Insurance

The word insurance is taken from the dutch language, ‘assurantie’. In Dutch law is called ‘Verzekering’, which means coverage. The term then develops into ‘assuradeur’ which means the insurer and the insured is called ‘geassureerde’. In the Law of the Republic of Indonesia number 2 of 1992, the definition of insurance is an agreement between two or more parties; The insurer binds itself to the insured, accepting the insurance premium, to provide reimbursement to the insured due to loss, damage or loss of expected profit or legal liability to a third party which may be subject to the insured, arising from an uncertain event or for Provide a payment based on the death or life of an insured person.

The scope of the insurance business includes the financial services business by collecting public funds through the collection of insurance premiums. Insurance also provides protection to members of the community of insurance service users against the possibility of loss due to an uncertain event or on the life or death of a person.


Insurance Basics

Insurance in Arabic is called At-ta’min. The insured party is called mu’ammin and the insured party is called mu’amman lahu or musta’min. At-ta’min comes from the word amanah which means to provide protection, tranquility, security and freedom from fear. The term menta’minkan something means a person pays or provides installment money so that he or the person appointed to be his heirs get a replacement for lost property.


The underlying philosophy of Takaful insurance is that mankind is a big family of humanity. In order for common life to be established, humankind must help-help, mutual responsibility, and bear each other between one and the other. Tafakul yag means mutual bearing between human beings is the basis of the foundation of human activity as a social creature. On the basis of the footing, among the participants agreed to share among them the risks posed by death, fire, loss and so on. Thus, the Takaful system should be universal, generally applicable.
According to the National Shariah Council Fatwa of the Indonesian Ulema Council (DSN-MUI) on general guidance of Takaful insurance, Takaful is a mutual protection and help among some people through investment in assets and / or tabarru which provides a pattern of return to face risks Certain through akad (engagement) in accordance with sharia, responsible, cooperate and help each other, and protect each other. Meanwhile, in conventional insurance, we recognize the risk transfer system which means the transfer of risk from the insured to the insurer. Both systems are the basic difference from the definition of Takaful with conventional insurance.
According to Shaykh Abu Zahra, every individual in society is in a collateral or dependent of society. Any person who has the ability to become a guarantor with a virtue for every potential humanity in society shall ensure his brother for any deficiencies
The difference between sharia insurance and conventional insurance
In the law of the Republic of Indonesia number 2 of 1992, the definition of conventional insurance is the risk spillover that may occur to the insured (the insurer) to the insurer (insurance company). Thus, the elements contained in the definition of conventional insurance are:A. First element; The insured party promised to pay the premium money to the insurer at once or gradually.
B. The second element; The insurer promised to pay some money to the insured, simultaneously or gradually, if implemented third element.
C. The third element; An event that was not immediately clear will happen.

Definition of conventional insurance

Here are some notions of conventional insurance based on several different viewpoints;
Economic Viewpoint
Insurance is a method to reduce risk by moving and combine the uncertainty of financial disadvantages.

Legal point of view

Insurance is a risk insurance contract between the insured and the insurer. Insurers promise to pay for the activities caused by the risks insured to the insured. Meanwhile, the insured pays a periodic premium to the insurer so that the insured exchange for large losses that may occur with a certain payment is relatively small.

Business viewpoint

Insurance is a company whose main business is receiving / selling services, transferring risks from other parties, and benefiting from the risks (sharing of risk) of the people who then invest the funds in various economic activities.

Social point of view

Contoh Teks Editorial Di Koran Insurance is defined as a social organization that receives the transfer of risk and collects funds from its members to pay the losses that may occur to each member. With the uncertainty of losses occurring to each member, members who have never suffered harm from a social point of view are contributors to the organization.
From various viewpoints it can be concluded that conventional insurance is transfer / risk transfer from the insured to the insurer or the term transfer risk. In the concept of Takaful, according to DSN-MUI, the risks that will occur are shared on the basis of ta’awun, namely the principle of mutual protection and mutual help on the basis of ukhuwah Islamiyah among members in the face of disaster.