21 Feb

Insurance in Islamic thought: The issue of Qimar, Maisir or Gambling

By Rizwan Ahmed Farid

The Islamic Ideology Council has quoted the definition of Qimar from the book, “Al-Iqtasad ul Islam“, as that, ‘Qimar
is a contract under which the parties agree with each other that one of the parties would pay to other a certain sum upon the happening of a certain event.’ The Fuqaha cite the Qur-ānic verses 5:90-91 of Al-Maida

The Fuq’ah Scholars relying upon the above verses of the Holy Qur-ān rule that, “Any contract containing the element of ‘maisir’ would be void ab-initio.” Further, in a contract of insurance the insurer promises payment till a certain event takes place, as such, the contract contains the element of ‘maisir’
rendering it void in Shari’ah.

The Council of Islamic Ideology defines:

“Briefly, qimar/maisir means every form of gain of money the acquisition of which depends purely on luck and chance and as opposed to others equally eligible, one man may acquire income as a result of lottery, draw or as a result purely of any other chance. Gambling, wagering and all of the games of chance are included in ‘qimar‘.


Since maisir’s main effect is to get something too easily without hard labour where one wins or loses by chance alone. The adverse consequences of maisir/qimar on an individual, families and upon the nations are highlighted succinctly in the Qur’an as: Satan’s plan is (but) To excite enmity and hatred Between you, with intoxicants And Gambling, and hinder you From the remembrance Of Allah, and from prayers: Will ye not then abstain? (5:91)


Bickelhaupt, David L., writes:

“Gambling operations may involve many of the attributes of insurance, such as large numbers, spread and homogeneity of risk, and predictability. Probably this is the reason so many uninformed persons think of insurance as gambling and sometimes even feel that they have “lost the bet” if they fail to have loss equal to the cost of insurance. The distinction is not in the method of operation, which may appear similar, but in the fact that insurance concerns itself with an existing risk. Speculation and insurance are both based upon socially and economically useful risks, too, while gambling is generally regarded as a less desirable method of speculation.”


The presence of the common element of “chance “in both maisir and insurance has led many learned fuqaha scholars to perceive that insurance in vogue tantamount to maisir/qimar or gambling and as such prohibited in Shari’ah. Resemblance between insurance and gambling in both does not cast them identical in purpose, phenomenon and consequences. To comprehend the point of perception the Qur’an clearly emphasizes that, “… because they say:”Trade is like usury,” but Allah hath permitted trade and forbidden usury.” (Al-bakarh 2:275)..


To expunge the element of gambling or wager from insurance operations the Life assurance Act 1774, commonly called the Gambling Act, which is still in force, states in its preamble:

“Whereas it hath been found by experience, that the making insurance on lives, or other events wherein the assured shall have no Interest, hath introduced a mischievous kind of gambling. For remedy whereof, be it enacted … That from and after passing of the Act, no insurance shall be made by any person or persons, bodies politic or corporate, on the lives of any person or persons, or any other event or events whatever, wherein the person or persons for whose use, benefit or on whose account such policy or policies shall be made, shall have no interest , or by way of gaming and wagering; and that every insurance made contrary to the true intent and meaning thereof shall be null and void to all intents and purposes whatsoever”.


The Act laid down three rules as follows:

  1. That no life insurance should be made unless the person effecting the assurance has an interst in the life assured; and, that any life insurance made without such interest shall be null and void.
  2. That there shall be inserted in the policy the name of the person or persons interested in it.
  3. That no greater sum shall be recovered than the amount or value of the interest of the assured.


The nature and extent of insurable interst has been ascertained principally from case law. An insurable interest is a right or relationship in regard to the subject matter of insurance contract of such a nature that the occurrence of the event would cause pecuniary loss to the insured from damage, loss, or destruction of the subject matter of the contact which may be a property, a life, or another interest. Without insurable interest, a contract of insurance is a wager or gambling contract and shall be null and void.


In Lucena v Craufurd, Lawrence J defined insurable interest as:

“The having some relation to, or concern in, the subject of the insurance, which relation or concern, by the happening of the perils insured against may be so affected as to produce a damage, detriment or prejudice, to the person insuring and where a man is so circumstanced with respect to the matters exposed to certain risks or danger, he may be said to be ‘interested in’ the safety of the thing with respect to it so to have benefit from its existence – prejudice from its destruction.” (1806) 2 B&P 269, 301 (NR).


Some of the marked differences between insurance and gambling are as follows:

  1. Risk element is of the essence of insurance contract; the insured seeks insurance cover in view of the inherent risk of loss, and does not create the risk of loss by contract itself, as is the case with wager or gambling.
  2. Insurance contract aims at neutralizing and offsetting already existing risk or chances and their consequences, whereas gambling purposely create new ones.
  3. In gambling one of the parties prays that a certain event may happen, while the other party wishes that the event may not happen. This is not the case in the contract of insurance. Both the parties to the contract whish that the insured event may not happen at all.
  4. The parties in gambling pose a threat of loss on each other. Whereas aim of insurance contract is to save the insured from the inherent loss.
  5. The parties in a contract of insurance agree to certain mutual obligations which they have to discharge. The element of carrying out of mutual obligations is not necessary in wagering.
  6. The money pooled by way of contribution in the insurance operations is mostly employed for productive purposes, whereas in gambling the money generated through premiums is likely to be diverted on unethical or nonproductive ventures.
  7. Gambling may lead to windfalls whereas under a contract of insurance generally the insured is monetarily indemnified to the extent of the loss suffered.