According to the National Sharia Board Fatma (DSN), Sharia Insurance is defined as an effort to protect and help each other among a number of people or parties through investments in the form of assets or tabarru 'money giving a pattern of return to face certain risks through contracts that are in accordance with sharia.

Three guidelines owned by Islamic insurance:

  1. Al-Ta'minyang, means mutual trust (guarantee) in various positive things among fellow members (participants).
  2. Al-Takaful, means an effort of mutual sufficiency between members (participants) when one of its members is hit by a disaster.
  3. Al-Tadhammun, means mutual bearing and covering losses for an accident experienced by members or participants.

Conventional Insurance is an agreement between two or more parties, in which the insurer binds himself to the insured by receiving insurance premiums to provide compensation to the insured due to loss, damage or loss of expected profits.

Difference between Sharia and Conventional Insurance

Besides being different in terms of understanding, Sharia insurance and conventional insurance also have other differences:

No Differences Sharia Insurance Convebtional Insurance
1 Agreement / Agreement The tabarru contract '(fellow participants) and the contract of tijarah, mudharabah, mudharabah musytarakah are used, wakalah bil ujrah, wadiah, syirkah (between participants and companies). Using a tabadduli agreement
2.  Fund Supervision There is a Sharia Supervisory Board (DPS) in each Sharia-based company, including insurance companies. His job is to oversee the company to always adhere to Islamic principles in managing insurance funds. DPS is responsible to the Indonesian Ulema Council (MUI). Supervision of funds is carried out internally by management, no outsiders can enter.
3 Investment Fund Calculation Based on profit sharing so free from gharar, usury maisir. Using the interest system as an investment calculation.
4 Funds Ownership Funds as much as possible processed to benefit participants insurance. The management is also more transparent. The company unilaterally sets premiums and other costs, for example administration, to get maximum profit.
5 Fund Status Funds deposited by insurance participants can be taken if they are unable to pay in their journey. There is only a small deduction in the form of Tabarru funds in this case. If you are unable to pay premiums, all funds that have been deposited are forfeited, aka the property of the company.
6 Payment of claims Taken from tabarru funds'. Taken from company fund accounts.
7 Profit sharing Profits are shared between the participants and the company according to the results that have been determined at the beginning. All profits are fully the company's rights.
8 Accounting Concepts Using the concept of cash basis accounting. Using the concept of accrual basis accounting.
9 Alms There is an obligation to pay zakat from the profits. Not charged to pay zakat.
10 Type of Investment (Unit Link) Unit-linked insurance funds should only be invested in areas that are not considered haram. Investments in gambling-related companies, for example, are prohibited. Free funds are insured in any field, as long as it has the potential to bring benefits.


- Labib Nubahai. 20 Mei 2017. Asuransi Syariah dan Perbedaannya Dengan Asuransi Konvensional. –
- Hardian. 30 Oktober 2016. Penjelasan Simpel Perbedaan Asuransi Syariah dan Konvensional.