Muslim scholars agree that the Islamic Insurance is the new study in
the shari’a discourse , but the concept of blood-money which can be considered as embryo of Islamic Insurance was practiced in the era of Jahiliyyah and Islamic caliphate.
a. The Era Before Islam
Peninsula of Arabia, where Arab’s tribes live is the large desert area and small fertile land . In olden days, the desert land of Arabia was inhabited by Bedouin tribes who often had quarrels and family feuds, sometimes lasting for years. Raids by one tribe on another were very common. Sometimes, the raiding tribe would steal camels, women and children of the other tribes, because women and children could be ransomed. The ransom money was collected from all the members of the plundered tribe and paid to the head of the raiding tribe who shared it with the rest of his tribe.
In the case of murder, blood money (monetary compensation) was paid by killer or the tribe of killer to the relative of the killed. Sometimes the individual killer could not pay the blood-money, so, to avoid blood-shed and blood-feud between the tribes, the money was collected from all the members of the tribe and paid to the relatives or the tribe of the killed. This could be called the beginning of mutual insurance which is a device to reduce the burden of any member of the tribe on the basis of mutual sharing .
In short, the object of blood-money is to secure protection against the danger to which all the members of the tribe are equally exposed, and to eliminate a common danger which may fall upon any member of the tribe at any time. Accordingly, the tribe jointly contributed to meet the loss (in blood-money) which might fall upon any of them.
The usual price paid for a killing was a hundred she-camels; for deep wound, a blow penetrating the brain or abdomen at one-third of the amount, for the loss of an eye or hand or foot at half, for a tooth or for a wound exposing the bone at five camels. When the blood-money was paid in cash, it was 1.000 dinars (gold coins) or, sometimes, 1.200 dirhems (silver coins) and the payment being spread over three or four years .
The principle of compensation in kind or cash for the death or injury to any person greatly helped to eliminate or, at least, reduce the tribal warfare and family feuds which lasted for years and caused enormous loss of life and property. This custom had four outstanding benefits for the people of Arabia:
1) It reduced blood-shed and blood-feuds in the country.
2) It replaced individual responsibility with the ultimate collective responsibility of the tribe for the action of its members, and thus helped to achieve social security for individual members of each tribe.
3) It lessened the financial burden of the individual by transferring it to the group or the tribe.
4) It developed a spirit of co-operation and brotherhood among the members as reflected in mutually to share the individual burden amongst the group .
This mutual cooperation between the members of group in amends (blood-money) to the killed family or tribe found on Arab tradition was called by 'aqila . And this concept was representing the starting points of mutual Insurance growth .
b. The Era of Islam
After the advent of Islam, the indiscriminate killing in tribal feuds which followed the murder of one member of a group in the pre-Islamic period was stopped by the commandment of the Qur’an:
يأَيُّهَا الَّذِيْنَ آمَنُوا كُتِبَ عَلَيْكُمُ القِصَاصُ فِي القَتْلَى الْحُرُّ بِالْحُرِّ وَالْعَبْدُ بِالعَبْدِ وَالأُنْثَى بِالأُنْثى، فَمَنْ عُفِيَ لَهُ مِنْ أَخِيْهِ شَيْءٌ فَاتِّبَاعٌ بِالْمَعْرُوْفِ وَأَدَاءٌ إِلَيْهِ بِإِحْسَانٍ، ذلِكَ تَخْفِيْفٌ مِنْ رَبِّكُمْ وَرَحْمَةٌ فَمَن اعْتَدَىْ بَعْدَ ذلِكَ فَلَهُ عَذَابٌ أَلِيْمٌ
“Oye who believe, the law of equality (retaliation) is prescribed to you in cases of murder: the free for the free, the slave for the slave, the woman for the woman. But if any remission is made by the brother of the slain, then grant any reasonable demand, and compensate him with this whoever exceeds the limits shall be in grave penalty”.
The word qisas in above verse rendered as retaliation, it’s derived from qassa meaning to cut or to follow someone’s tracks . Then qisas is used for the punishment for which the criminal is found guilty. This may take any of the two forms : Firstly, life for life, an eye for eye, or an ear for an ear, etc., secondly, diyah or blood-money as financial compensation for the family or relatives of the murdered or injured in case they make a remission.
Another case in which blood-money takes the place of a death sentence is that of unintentional killing. The Qur’an says:
وَمَا كَانَ لِمُؤْمِنٍ أَنْ يَقْتُلَ مُؤْمِنًا إِلاَّ خَطَأً، وَمَنْ قَتَلَ مُؤْمِنًا خَطَأً فَتَحْرِيْرُ رَقَبَةٍ مُؤْمِنَةٍ وَدِيَةٌ مُسَلَّمَةٌ إِلَى أَهْلِهِ إِلاَّ أَنْ يَصَّدَّقُوْا
“Never should a believer kill a believer; but (if it so happens) by mistake, (compensation is due); if one (so) kills a believer, it is ordained that he should free a believing slave, and pay compensation to the deceased’s family, unless they remit it freely”.
This indicates that ‘aqila system was still practiced by Islam as a part of law . In Hadith, the Holy Prophet -peace be upon him- fixed the amount of blood-money for life at one hundred camels, and fixed five camels as the price of compensation for bone-deep wounds. Prophet also fixed ten camels for the loss of every finger or toe. .
c. The Modern Era
In the end of twentieth century, the Islamic economists began to produce and renovate the concept of Islamic Economy . Insurance was one of the economic institutes which become the attention focus of all Muslim experts, so that the concept which was using the form of gambling, usury and probability of risk developed by western experts must be altered to become sharing holder system and mutual helping by motivating the exploiting of tabarru'.
Once around year 1970th, Muslim scholars whom were gathered in the Islamic Council of Jurisprudence League, Mecca, Saudi Arabia agreed the insurance concept based on mutual and cooperative system.
And finally in 1979, the Islamic concept of Islamic Insurance based on mutual and cooperative was actualized through the opening of the first company in Sudan , initiated by Faisal Islamic Bank of Sudan. The company has made many progresses within five years and has been able to found some branches in Saudi Arabia .
In the very year, it was established also Islamic Arab Insurance C. Ltd. in Saudi Arabia, then at 1983, Dar Al-Maal Al-Islami, Geneva, had an eye to broaden its operation in the field of cooperative insurance.
Since than, Islamic Insurance companies have been established in several countries , some of them thriving, especially in Malaysia, Indonesia, Saudi Arabia and other countries. In Indonesia, the Islamic Insurance (PT Asuransi Takaful Indonesia) has been established since 1994.
Sabtu, 25 September 2010
Kamis, 16 September 2010
The History of Conventional Insurance Development
The concept of insurance is closely related to group life. It originated from the human need to find safeguards against the problem risks to himself and his property, but when, how and by what people it was started is shrouded in mystery and obscurity.
All historians agreed that the concept of insurance didn’t appear in primitive era yet. With assumption, in primitive society, people lived together in families or tribe in which their needs fully met and protected through cooperation and mutual. They, therefore, did not feel the need for insurance because they were fully protected against all sorts of risks by community.
The appearance of insurance is closely related to human civilization. The historians have marked Egypt and Mesopotamia as the oldest centers of civilization , with its fertile valleys of Nile, the Euphrates and the Tigris, where men would cease to wander and settle down almost unawares, forgetting all about their nomadic group life . Traders in that territory used the basic of insurance concept since around 4.000 years B.C. They implemented this concept because they felt uncertain accidents would against their security and safety in trading, cause of nature or non-nature factors .
Yet, however the written insurance concept regulation just comes to be known at era of Hammurabi, the fourth king of Babylon (1782-1682 B.C), with archaeological discoveries which shown a law book contained 300 sections. One of these sections contained one of insurance principles; it was “One for all” . The contract found in this book, was the embryo of a concept later to be known the whole world over as the contract of Bottomry or Respondentia. Bottomry is, or rather was, a commercial contract whereby money (or goods) was advanced for trade purposes either as:
a. True loans at a certain fixed rate of interest, under which the lender had no right to any share in the proceeding of the trading venture,
b. Mixed loans and partnerships which, in addition to the payment of a fixed rate of interest to the lender irrespective of the result of the trading, entitled him to receive a share of the profits, if such profits exceeded a certain sum .
The next stage in the evolution of Bottomry was its development by the Greeks during the ninth and tenth centuries B.C., it was not merely adopted, it was also adapted and perfected. Romans, whose adopted business concepts from Babylon, Phoenicia and Greek, developed these concepts to be insurance form.
But the economists are sharply divided on the concept of bottomry; did it can be called as insurance concept. Anyhow, the though kernel of Bottomry was the beginning of modern insurance development.
Any early signs of modern insurance in scientific form and on premium basis seemed to appear in the European countries in the middle of the thirteenth century . This insurance was known as marine insurance. This form was undoubtedly associated with the merchants of the cities of Lombardy and notably Florence in Italy, 1250. Dinsadle said that in the Middle Ages, trade was mainly centered in the Mediterranean, with well-known trade routes to the East; Constantinople and India, and to the North; Florence, Genoa, Palermo and Venice which became the centers for banking, commerce and insurance at that time .
From Italy, then marine insurance spread to Spain, France, England and other countries of Europe. The intensive trading by Barcelona since the end of fourteenth century caused marine insurance to flourish early in Spain. The earliest agreement known bears the date of the April 12th 1428. On November 21st 1435, by the insurance Ordinance of the Magistrates of Barcelona, Marine Insurance was for the first time, regulated by legal confirmation of existing practice . Marine insurance was practiced in London, England and Le Rochele and Merseilles, France on the beginning of fifteenth century. They practiced the same style with the insurance in Italy.
At the sixteenth century, marine insurance contract grew up steadier than before. At that time, the insurance contract has used the printed policies . Those policies were still written in Italian language, cause of Italian traders' domination. In this century, the practice of marine insurance resembled the practice of modern insurance that applied nowadays. Beside policies, they also used the insurance covering system which done collectively. And this collective covering system dominated entire practices of sea transportation insurance during ten years, up to the beginning of nineteenth century.
Specifically, the insurance companies appeared since eighteenth century. And on nineteenth century they developed rapidly in Europe, for instance in France with “Compagnie d’Assurances Generales” on 1753, and in England with “The Sun Fire” on 1710. Meanwhile in USA, were established “Mutual Relief Association” on 1752 and “Insurance Corporation” on 1772 as the first insurance company in Philadelphia .
The insurance arrived in Indonesia far before independent day, brought by Dutch who more than 350 years colonized this country. With proof, on 1845 was established a life insurance “N.V. Levens Verzekering Maatschappy van de Nederlande van” and fire insurance “Bataviasche See” . But, formally, the insurance and its institution be included in agenda of Indonesia law on 1848, herewith the legalization of Dutch Trading Laws in Indonesia.
Furthermore, in the second decade of the beginning of twentieth century, were established many indigene insurance companies, one of the oldest was “Onderlinge Levernverzekering Maatschappy Bumi Putra” established on February 2nd 1912 in Magelang, Central Java. Four years later, the group of Chinese ethnic in Semarang established also a loss insurance company, named by “NV. Indische Llyod, Algemene Verzekering Maatschappy” .
After the independent day on 1945, up toward 1950, the political situation in Indonesia did not give opportunity for insurance to develop. On 1950, Indonesian Government Banking established the insurance company, named by “Maskapai Asuransi Indonesia”, and on the years later came afterward many insurance companies in Indonesia . Up to now, on 2003, hundred insurance companies were established in Indonesia, for only life insurance companies found more that 53 companies. One of them was PT. Asuransi Takaful Keluarga, the only one of life insurance company based on Islamic law .
All historians agreed that the concept of insurance didn’t appear in primitive era yet. With assumption, in primitive society, people lived together in families or tribe in which their needs fully met and protected through cooperation and mutual. They, therefore, did not feel the need for insurance because they were fully protected against all sorts of risks by community.
The appearance of insurance is closely related to human civilization. The historians have marked Egypt and Mesopotamia as the oldest centers of civilization , with its fertile valleys of Nile, the Euphrates and the Tigris, where men would cease to wander and settle down almost unawares, forgetting all about their nomadic group life . Traders in that territory used the basic of insurance concept since around 4.000 years B.C. They implemented this concept because they felt uncertain accidents would against their security and safety in trading, cause of nature or non-nature factors .
Yet, however the written insurance concept regulation just comes to be known at era of Hammurabi, the fourth king of Babylon (1782-1682 B.C), with archaeological discoveries which shown a law book contained 300 sections. One of these sections contained one of insurance principles; it was “One for all” . The contract found in this book, was the embryo of a concept later to be known the whole world over as the contract of Bottomry or Respondentia. Bottomry is, or rather was, a commercial contract whereby money (or goods) was advanced for trade purposes either as:
a. True loans at a certain fixed rate of interest, under which the lender had no right to any share in the proceeding of the trading venture,
b. Mixed loans and partnerships which, in addition to the payment of a fixed rate of interest to the lender irrespective of the result of the trading, entitled him to receive a share of the profits, if such profits exceeded a certain sum .
The next stage in the evolution of Bottomry was its development by the Greeks during the ninth and tenth centuries B.C., it was not merely adopted, it was also adapted and perfected. Romans, whose adopted business concepts from Babylon, Phoenicia and Greek, developed these concepts to be insurance form.
But the economists are sharply divided on the concept of bottomry; did it can be called as insurance concept. Anyhow, the though kernel of Bottomry was the beginning of modern insurance development.
Any early signs of modern insurance in scientific form and on premium basis seemed to appear in the European countries in the middle of the thirteenth century . This insurance was known as marine insurance. This form was undoubtedly associated with the merchants of the cities of Lombardy and notably Florence in Italy, 1250. Dinsadle said that in the Middle Ages, trade was mainly centered in the Mediterranean, with well-known trade routes to the East; Constantinople and India, and to the North; Florence, Genoa, Palermo and Venice which became the centers for banking, commerce and insurance at that time .
From Italy, then marine insurance spread to Spain, France, England and other countries of Europe. The intensive trading by Barcelona since the end of fourteenth century caused marine insurance to flourish early in Spain. The earliest agreement known bears the date of the April 12th 1428. On November 21st 1435, by the insurance Ordinance of the Magistrates of Barcelona, Marine Insurance was for the first time, regulated by legal confirmation of existing practice . Marine insurance was practiced in London, England and Le Rochele and Merseilles, France on the beginning of fifteenth century. They practiced the same style with the insurance in Italy.
At the sixteenth century, marine insurance contract grew up steadier than before. At that time, the insurance contract has used the printed policies . Those policies were still written in Italian language, cause of Italian traders' domination. In this century, the practice of marine insurance resembled the practice of modern insurance that applied nowadays. Beside policies, they also used the insurance covering system which done collectively. And this collective covering system dominated entire practices of sea transportation insurance during ten years, up to the beginning of nineteenth century.
Specifically, the insurance companies appeared since eighteenth century. And on nineteenth century they developed rapidly in Europe, for instance in France with “Compagnie d’Assurances Generales” on 1753, and in England with “The Sun Fire” on 1710. Meanwhile in USA, were established “Mutual Relief Association” on 1752 and “Insurance Corporation” on 1772 as the first insurance company in Philadelphia .
The insurance arrived in Indonesia far before independent day, brought by Dutch who more than 350 years colonized this country. With proof, on 1845 was established a life insurance “N.V. Levens Verzekering Maatschappy van de Nederlande van” and fire insurance “Bataviasche See” . But, formally, the insurance and its institution be included in agenda of Indonesia law on 1848, herewith the legalization of Dutch Trading Laws in Indonesia.
Furthermore, in the second decade of the beginning of twentieth century, were established many indigene insurance companies, one of the oldest was “Onderlinge Levernverzekering Maatschappy Bumi Putra” established on February 2nd 1912 in Magelang, Central Java. Four years later, the group of Chinese ethnic in Semarang established also a loss insurance company, named by “NV. Indische Llyod, Algemene Verzekering Maatschappy” .
After the independent day on 1945, up toward 1950, the political situation in Indonesia did not give opportunity for insurance to develop. On 1950, Indonesian Government Banking established the insurance company, named by “Maskapai Asuransi Indonesia”, and on the years later came afterward many insurance companies in Indonesia . Up to now, on 2003, hundred insurance companies were established in Indonesia, for only life insurance companies found more that 53 companies. One of them was PT. Asuransi Takaful Keluarga, the only one of life insurance company based on Islamic law .
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