Fatwa ID: 07792

 

 

Answered by Aalimah Saleha Bukhari Islam

 

 

Question:

Assalamu Alaykum, Insha’Allah you are doing well! 

 

I am contacting you to obtain an Islamic assessment of my professional activity as I want to ensure that my income is halal and in line with the principles of Islam.

 

I am 38 years old, live in Berlin and work as an insurance broker. My focus is on arranging legally required and necessary insurance, such as motor vehicle liability insurance and statutory health insurance. These are mandatory for my customers in Germany and I want to offer them transparent and honest advice in this area.

 

In addition, I am actively working to offer Islamic-compliant insurance products, such as Takaful products provided in cooperation with KT Bank. My goal is to advise Muslim customers in particular so that they can fulfill their insurance obligations without violating their religious values.

 

 My questions are:

 

1. Am I allowed to continue to work as an insurance broker if I focus on legally required insurance and promote Islamic alternatives?

 

2. Are the commissions I receive from this activity halal, especially if they also come from conventional insurance, as long as no Takaful option is available?

 

It is very important to me to earn my income on an Islamically permissible basis and to meet the needs of my Muslim clients honestly and correctly. I would be very happy if you could give me a well-founded answer to this.

 

Thank you very much for your time and effort. May Allah (swt) reward you abundantly.

 

 

In the name of Allah, the Most Gracious, the Most Merciful

 

Answer:

Wa alaikum as salām wa rahmatullāhi wa barakātuh,

It will not be permissible to work at any insurance firm that earns its revenue through haram sources. However, one is not required to leave their job immediately but should exert their efforts in finding a job that is Shariah compliant. Only then is it advisable to resign from one’s current job.[1]

We commend you for seeking guidance on what is halal and haram, especially in relation to one’s profession. The permissibility of a job and its income in Islam depends on two key factors:

 

1. Nature of the Job: The work itself must be halal (permissible). If the job involves activities prohibited by Shariah—such as dealing in alcohol, engaging in usury (riba), or participating in haram transactions—it is considered unlawful (haram) regardless of the source of the salary.
2. Source of Income: The salary must come from a halal source. If the job is permissible, but if the salary comes exclusively from haram funds (e.g., stolen money or entirely from usury earnings), accepting such income would still be impermissible.

 

In the case of working as an Insurance Broker, the job demands direct involvement of gharar (uncertainty), qimar (gambling) and riba (usury) which are impermissible in Islamic transactions. Thus, conventional insurance brokerage is prohibited mainly due to these elements being present. 

 

Firstly, there is uncertainty in the amount of compensation one will receive, there is the uncertainty of whether the insured will receive the full compensation as promised, and even the timeframe is unknown and waiting for an insurance compensation can extend to a year or more even. The Shariah law requires for all areas of ambiguity to be removed prior to signing a contract. Secondly, Insurance Brokerage also contains an element of gambling because paying in a certain amount of money does not ensure receiving a certain amount of money as compensation. Thus, it is as if buying money with money which is impermissible. Thirdly, the money that the insured one pays to the insurer is a form of riba (usury) because it becomes a profit for the insurer irrespective of whether the insured one suffers a loss or not. In Islam, this is recognised as usury, whereby the wealth of another is unjustly consumed.

 

This is supported by hadiths where the Prophet Muhammad (ﷺ) cursed those involved in usury, including the payer, receiver, scribe, and witnesses:

 

Jabir said that Allah’s Messenger (ﷺ) cursed the accepter of interest and its payer, and one who records it, and the two witnesses, and he said: They are all equal. [Sahīh Muslim 1598] 

 

Although your focus is on arranging legally required and necessary insurance, such as motor vehicle liability insurance and statutory health– nevertheless, in principle insurance brokerage is not permissible. Insurance may be needed by customers who wish to drive their cars and/or wish to take jobs which offer statutory health care according to the laws of the country, but the one who assists in such a setup will be considered as the receiver, the recorder and/or witnesser of usury. 

 

On the other hand, if you were to offer customers transparent and honest advice in this area without the transaction of selling insurance then there’s still direct involvement with the haram elements of gharar, qimar and riba. In this position, the job would be considered impermissible. 

 

However, if the job has no direct involvement with the haram elements mentioned above and one were to work as a guard, cleaner, or cook, then it is considered permissible, although it is better to avoid it even in that context. This is because the income is considered mixed, Insurance firm funds typically consist of a combination of the money of the insured and the firms’ capital. Much of this mix is usually from lawful sources.

 

In “Contemporary Fatawa,” Shaykh Muhammad Taqi Uthmani addresses the permissibility of working in financial institutions. On pages 543-555, he discusses the implications of employment in roles directly involved with conventional insurance. Shaykh Uthmani emphasises that such positions are impermissible due to their direct engagement with the haram elements which are explicitly prohibited in Islam. 

 

Although all the conventional schemes of insurance violate certain injunctions of Shariah and are therefore not permissible, however, if a Muslim is obligated by the law to have an insurance cover then it is permissible for him to have insurance up to the minimum level required by law. Since third-party insurance is obligatory by law in most countries it has been allowed by the Shariah scholars but if fully comprehensive insurance is cheaper than third-party insurance and it can fulfil the requirement of the law and after that one does not need to enter into a contract for third party insurance then it will be permissible to have fully comprehensive insurance to meet the requirement of law.

 

Therefore, if the job itself is halal and does not directly engage with usury-based transactions, uncertainty and gambling, the income can be accepted. Nonetheless, it is advisable to seek alternative employment where the source of income is pure in its entirety, thus avoiding any doubts or detested (makruh) situations. However, if someone already works in a position directly involved with haram, scholars recommend finding a halal source of income first before resigning, to ensure financial stability. The effort to seek a lawful alternative demonstrates sincerity in avoiding prohibited earnings. 

 

To summarise, a job involving direct participation in haram transactions is impermissible and commissions received from the transactions are also haram. Therefore, to continue to work as an Insurance Broker even if you were to focus on legally required insurance is deemed impermissible as it is still assisting in the impermissible. However, to promote Islamic alternatives would be permissible so long as it’s done in isolation from the haram.

 

 عَنْ جَابِرٍ، قَالَ لَعَنَ رَسُولُ اللَّهِ صلى الله عليه وسلم آكِلَ الرِّبَا وَمُوكِلَهُ وَكَاتِبَهُ وَشَاهِدَيْهِ وَقَالَ هُمْ سَوَاءٌ ‏.

 

 

  آكِلُ الرَّبَّا وَكَاسِبُ الْحَرَامِ أَهْدَى إلَيْهِ أَوْ أَضَافَهُ وَغَالِبُ مَالِهِ حَرَامٌ لَا يَقْبَلُ، وَلَا يَأْكُلُ مَا لَمْ يُخْبِرْهُ أَنَّ ذَلِكَ الْمَالَ أَصْلُهُ حَلَالٌ وَرِثَهُ أَوْ اسْتَقْرَضَهُ، وَإِنْ كَانَ غَالِبُ مَالِهِ حَلَالًا لَا بَأْسَ بِقَبُولِ هَدِيَّتِهِ وَالْأَكْلِ مِنْهَا، كَذَا فِي الْمُلْتَقَطِ.

ص343 – كتاب الفتاوى العالمكيرية الفتاوى الهندية – الباب الثاني عشر في الهدايا والضيافات – المكتبة الشاملة

 

  Mufti Taqi Uthmani, Contemporary Fataawa (Durban: Offset Plate Printing Services, 2000) pg. 543-555

 

Only Allah knows best.

Written by Aalimah Saleha Bukhari Islam

Checked and approved by Mufti Mohammed Tosir Miah

Darul Ifta Birmingham