3 Contracts in Sharia Insurance ~ Insurance Academy

There are 3 sharia insurance contracts that you need to know, namely the Tabarru contract, the Wakalah Bil Ujrah contract, and the Mudharabah contract.

Tabarru’ contract
In sharia insurance, fellow participants share the risk among participants on the basis of mutual assistance and mutual protection (Tabarru’/Grant Agreement). This Tabarru contract is not carried out for profit because it is carried out on the basis of mutual help and protection.
Therefore, in sharia insurance, participants can have insurance as well as charity. With this contract, participants do not expect profit, but a reward from God.

Wakalah bil Ujrah contract
Wakalah bil Ujrah contract is a participant contract with a sharia insurance company for risk management. The Wakalah bil Ujrah contract, which is also known as the Tijarah Agreement, authorizes the Company as the Participant’s representative to manage the Tabarru’ Fund and/or the Participant’s Investment Fund, in accordance with the power or authority given, in exchange for an ujrah (fee).
Wakalah can also be interpreted as protection (al-hifzh), sufficiency (al-kifayah), dependents (al-dhamah), or delegation (al-tafwidh), which is also interpreted as giving power or representing.

Mudharabah contract
Mudharabah contract is a contract between the participant and the company to arrange for the profit sharing of the tabarru’ fund pool investment. In this case, the contract may not contain gharar (uncertainty), maisir (gambling), usury (interest), and other things that are not in accordance with Islamic law.
The customer also has the right to know the investment profit sharing arrangement, how much is the profit sharing in detail and clearly.

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