Differences of Shariah and Conventional Insurance

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Differences of Shariah and Conventional Insurance

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 There are seven fundamental differences between Islamic insurance with conventional insurance.
The differences are:
  1. Shariah insurance has a Sharia Supervisory Board (SSB), a product marketed betugas oversee and manage investment funds. Sharia Supervisory Board is not found in conventional insurance.
  2. Transactions are conducted in accordance with Shariah insurance please help. While based on the sale and purchase of conventional insurance
  3. Investment funds based on Shariah insurance profit sharing (mudaraba). While in conventional insurance to use the interest (usury) as the basis for the calculation of investment
  4. Ownership of an insurance fund in the shari'ah is the right candidate. Company only as a fiduciary to manage them. In conventional insurance, funds collected from customers (premium) become the property of the company. Thus, companies are free to choose their investment allocation.
  5. In the mechanism, does not recognize Shariah insurance funds such as those found in the charred conventional insurance. If the contract term participant is unable to continue premium payments and wanted to resign before the reversing period, the funds being entered can be retrieved, except for some small funds that have been intended to tabarru '.
  6. Shariah insurance claim payment in funds drawn from tabarru '(benevolence funds) all participants who have given willingly from the beginning that there is provision for funds to be used as helping fund among the participants in case of disaster. While in conventional insurance claim payment was taken from the account of company funds.
  7. Distribution of profit on Shariah insurance is divided between the company and participants in accordance with the proportion of revenue sharing principles that have been determined. While in conventional insurance all profits belong to the company.

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