Islamic Treasures

History and Interesting Facts about Sharia Insurance in Indonesia



NOBARTV.CO.ID Sharia Insurance – The basic principle of sharia insurance is to help (takaful/ta'awun) where everyone contributes to helping others in a good way and providing a sense of security when risks occur.

The basic principles of sharia insurance are based on the Al-Quran, Surah Al-Maidah verse 2:

وَتَعَاوَنُوا۟ عَلَى ٱلْبِرِّ وَٱلتَّقْوَىٰ

Meaning: "And help you in (doing) virtue and piety"

Everyone wants a peaceful life, therefore various efforts need to be made, including providing protection for themselves and their families against unexpected risks. Through sharia insurance we can provide this peace with the concept of helping others.

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History of Sharia Insurance

Sharia Insurance
Sharia Insurance (Source: tax.com)

Sharia insurance is an effort to mitigate various unexpected risks that will occur in the future based on sharia rules regulated by the Islamic religion.

Based on the DSN MUI fatwa 21/DSN-MUI/X/2001 concerning General Guidelines for Sharia Insurance, the definition of sharia insurance is an effort to help each other and share among a number of people or parties through investment in the form of assets or tabarru which provides a return pattern to face certain risks. use contracts that comply with sharia.

In the time of Rasulullah SAW, the concept of sharia insurance was not something new. Formerly known as aqilah namely the asabah which shows the father's relationship with the murderer. If a member of a tribe is killed by a member of another tribe, then the heir of the victim will be paid a certain amount of blood money (diyat) as compensation from the murderer's next of kin.

In the time of the Prophet, there was an argument between two women from the Huzail tribe. One of them hit the other and caused the death of the woman, including her unborn baby. Facing this problem, the Prophet Muhammad SAW gave the decision that compensation for killing a baby was to free a male or female slave, while compensation for killing a woman was diyat to be paid by Aqilah (paternal brother) from the accused to the victim's heirs.

The Prophet accepted the system aqilah as part of Islamic law, it was later made mandatory during the period of the 2nd caliph, Umar bin Khattab.

The history of sharia insurance in Indonesia was first established by PT. Family Takaful Insurance on May 5 1994 operates in the sharia life insurance sector, and PT. General Takaful Insurance operates in the general insurance sector.

But before that, February 24 1994 could be called a historical milestone in the sharia-based insurance industry. In that year PT. The Indonesian Takaful Company was founded.

PT. Family Takaful Insurance was then inaugurated by the Minister of Finance, Mar'ie Muhammad and began operating on 25 August 1994.

The General Takaful was inaugurated by the Minister of Research and Technology/Chair of BPPT Prof. Dr. BJ Habibie, who is also the founder of ICMI and started operating on June 2 1995. Since then, the two of them have become pioneers in the leading sharia insurance industry.

In 1997, sharia-based insurance attracted the interest of domestic and foreign investors. One of them is Syarikat Takaful Malaysia, Bhd. (STMB), placed their capital in the company to become one of the shareholders.

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Interesting Facts about Sharia Insurance 

There are several interesting facts you need to know about sharia insurance, including the following.

1. Prioritize the principle of mutual help 

As explained at the beginning of the discussion, the basic principle of sharia insurance is helping each other.

In contrast to conventional insurance which prioritizes profits for both parties, in sharia insurance there are a number of contracts used. However, a number of these agreements return to the main principle, namely helping each other. The following are a number of contracts used in sharia insurance.

Contract Tabarru

In conventional insurance, tabarru known as a premium. In sharia insurance, the contract tabarru is the act of giving something without expecting material gain, commercial purposes, or personal benefits in return. Here the participants will give grant as a contribution and then managed by the company to help other participants.

Tijarah Agreement

Basically tijarah carried out with the aim of making a profit. In sharia insurance through contracts tijarah the company can carry out functions as a manager or mudharib funds from participants.

So, these funds can later be invested so that the profits will be distributed to the participants as property owners or policy holders.

Contract wakalah bill ujrah

Contract wakalah bil ujrah is a wakalah contract which is based on rewards or service fees given to representatives for the work or tasks they carry out.

In sharia insurance, the contract wakalah bill ujrah is the granting of authority from participants to the insurance company to manage funds in exchange for giving ujrah or fee. By granting this ujrah, the insurance company does not have the right to take a share of the investment proceeds.

2. Part of the premium for participants

An interesting fact about sharia insurance is funds tabarru Part of what the participant pays will belong to the participant and part to the company.

This is different from conventional insurance, where the premium paid entirely belongs to the company to finance risk coverage.

3. Principles sharing risk

In sharia insurance, sharing risk is a principle where the risk will be passed on to all policyholder participants. This is different from conventional insurance which charges every risk from a person to the company or so-called transfer risk. 

4. Investment returns are divided equally

In conventional insurance, the results or investment profits will be fully owned by the company. However, in sharia insurance the results of fund investment management tabarru The profits will be shared between participants and insurance companies.

5. Funds are not forfeited

One of the advantages of sharia insurance is premium funds (tabarru) The participant's deposit will not be forfeited even if there are no claims during protection.

In conventional insurance, the policy funds paid will be forfeited if no claim is made during the coverage period.

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6. Supervised by the Sharia Supervisory Board and the Indonesian Sharia Insurance Association

National Sharia Council
Sharia Supervisory Board (Source: depok.pos.com)

Sharia insurance governance is supervised by the Sharia Supervisory Board (DPS) and the Indonesian Sharia Insurance Association (AASI). This is done to ensure management is in accordance with sharia principles so that there is no fraud or fraud.

Meanwhile, for conventional insurance, supervision is carried out by the Financial Services Authority (OJK) and the Indonesian General Insurance Association (AAUI).

7. Obtain benefits from the system surplus underwriting

Another interesting fact about sharia insurance is that policy holders have the right to receive profits or surplus underwriting of the excess value between income and expenditure of funds tabarru every period. This distribution must also be done transparently.

This is different from conventional insurance which does not have a concept like sharia insurance, because all the profits belong to the insurance company.

8. Funds are invested in usury-free instruments

In conventional insurance, premiums managed by companies are free to be placed on any instrument, thereby allowing usury to occur.

Meanwhile in sharia insurance, funds tabarru must be managed and placed in instruments that do not violate Islamic law.

This is an explanation of the history and interesting facts about sharia insurance.

That is a summary of interesting information in the news article entitled History and Interesting Facts about Sharia Insurance in Indonesia which has been a team of writers NOBARTV NEWS ( ) extracts from various trusted sources.

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The author has completed undergraduate studies at the Faculty of Sharia at UIN Sultan Maulana Hasanuddin Banten, currently works as an educator at MA Al-Khairiyah Tegalbuntu Ciwandan, Cilegon