In the Name of Allah, the Most-Gracious, the Most-Merciful

Sheikh Abdullah Bin Bayyah, Head of the Shari`ah supervisory board at Saudi Arabia’s Allied Cooperative Insurance Group (ACIG), ascribed Muslims’ weak response to Islamic financial instruments to inadequate marketing and lack of effective trust-building promotional strategies. In an interview with Alriyadh newspaper, Bin Bayyah clarified that insurance in general is associated to traditional financial institutions, which creates more suspicion and reluctance among investors and clients.

The prominent scholar warned Muslim governments and institutions against hasty adoption of real estate mortgage, which can immerse them in an economic recession like that currently suffered by the Western World. He called for enforcing Shar`i limits and guidelines to ensure validity of mortgage transactions, by possession of the mortgaged object, guaranteed delivery, and ascertainment of the mortgagee’s rights and safety from injury, as per the noble Qur’anic verse: {Then let there be a pledge taken (in mortgage)}.

Transactions & Loans

Banks and financial institutions can bolster customer trust by carefully designing their financial instruments and products and by having a Shari`ah advisory board with credible figures to help the client make sure that his property and transactions are Shari`ah-compliant. They also need to make all their rules and dealings as clear as possible, to avoid uncertainty and deception, which have done harm to many Muslims.

Coop Insurance

Commending the recent measures taken by Saudi Arabian government on cooperative (or Takaful) insurance, Sheikh Bin Bayyah said they will be facilitative and helpful for Muslims, provided that the applicable mechanisms are plainly stated, involving no obscurity or uncertainty, and serving the best interest of Muslims and clients. Religion advocates everything that results in benefit for Muslims, within the framework of Shari`ah as explained by scholars and specialists, he pointed out.

Bin Bayyah said that coop insurance, which has been substantiated into a Shari`ah-compliant economic model by Saudi Arabia’s Council of Senior Scholars, is free from any Shar`i violations. Coop insurance, he expounded, is an insurance bought jointly by several persons to cover any future losses incurred by any of the policyholders. The main purpose is to cooperate and minimize liability. Reviewing advantages of coop insurance, Sheikh Bin Bayyah noted that it can take various forms, such as founding a speculation company that trades on corporate assets, so that any loss incurred by one of them is covered by all shareholders.