Will the real Shariah compliance insurance please stand up?

Although an age-old concept, the modern history of Shariah-compliant finance starts just a few decades back. Initially a response to the need of a growing Muslim community to invest and protect their finances, its rapid growth over recent years is telling of another sign: the conventional world too, is beginning to see its many advantages.

For insurance, this translates in the concept of Takaful – a mutual, Shariah-compliant form of insurance founded on the principles of cooperation, responsibility and solidarity.


So what makes insurance Shariah-compliant?

Simply put, meeting certain criteria based on economic concepts as specified by Shariah, aimed at ensuring transparency, certainty and fairness in any transaction. For you, this means:

  • Your money is protected from unethical dealings. Keeping your funds completely separate from conventional funds ensures they are never used to derive interest, or to conduct any business, like the sale of alcohol, which goes against your beliefs.
  • You are protected from ambiguity or uncertainty. Shariah law ensures the presence of honest and transparent information to all parties entering a contract, including the exact amount of fees, deductions, commissions, earnings, and expenses.


What else you should look for in Shariah-compliant insurance:

Apart from the above criteria which must always be clearly stated in your policy or the company prospectus, companies should also explicitly conform to the following:

  • The existence of a Shariah Supervisory Board

A permanent committee of trustworthy and highly qualified Shariah scholars, who continually supervise contracts, transactions, and procedures – and whose fatawa and resolutions are binding upon the management.

  • Compliance with AAOIFI Standards

The Accounting and Auditing Organization for Islamic Financial Institutions has issued and published a number of accounting and auditing standards that all Islamic financial institutions should strictly adhere to.

But on top of all that is the company’s commitment and dedication to these criteria and to putting justice, responsibility and ethical treatment at the center of their dealings.


At EZTakaful, we take pride in designing and offering simple, affordable protection in keeping with Islamic Shariah law. Our products are underwritten by Zurich Takaful and are 100% Shariah-approved by renowned and respected Shariah scholars.

Next week we’ll be taking a closer look at the principles of Takaful and how it compares to conventional insurance. In the meantime, you can learn more about it here.