Question Summary:
Can one work as an actuary and is it permissible to work in an insurance company? Question Detail:
I read the fatwas regarding the job of an actuary. You stated that this job is not haram. But an actuary also has to create and suggest new insurance contracts that will be more favourable to the insurance company he is working in and/or more attractive to potential clients. An actuary also conducts studies to decide whether the insurance company should take an insurance by a re-insurance company. Is this job still not haram ?
Answer :
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
The permissibility or impermissibility of engaging in an occupation depends on two things:
1.) The permissibility of the occupation itself, meaning the duties to be performed.
2.) The source of funds from which the salary is given to the employee.
Permissibility of the Occupation:
Yes, the duties of an actuary can include many impermissible elements such as: designing, testing and administering insurance policies, in which case it will not be permissible to accept this job.
At the same time, the specific duties of an actuary vary from country to country and company to company and one cannot say with certainty that an actuary will always be required to carry out impermissible duties, in addition to the fact that many, but not all actuaries work in the insurance industry. [i][ii]
By way of example, actuaries are often required to “analyze statistical data such as mortality, accident, sickness, disability, and retirement rates and construct probability tables to forecast risk and liability for payment of future benefits.” Other actuaries estimate the economic costs of natural disasters while others identify “geopolitical risks that may affect a company's short-term or long term objectives.” [iii]
In other words, since the job of an actuary entails analysis (as is evident from the above), then if this type of analysis is general in nature such that it can be used by the insurance industry and others to get a general picture of the economic climate, then this work is permissible.
If, however, this analysis is specifically to help the insurance company in its impermissible activities, such as: suggesting new insurance contracts, calculating insurance premiums, analyzing statistical data on insurance contracts, etc. then this work is not permissible.
وقد تكون بعض الوظائف لا صلة بتعاملات البنك، وإنما المقصود بها إجراء الدراسات الاقتصادية. فإن كان المقصود بهذه الدراسات أن تعين البنك في عملياتها المحرمة فإن هذه الوظيفة داخلة في القسم الأول فلا يجوز قبولها. أما إذا كانت الدراسات عامة يستفيد بها البنك وغيره لمعرفة الأحوال الاقتصادية العامة فهي داخلة في القسم الثاني - فقه البيوع، ٢/ ١٠٦٦
As a result, the permissibility or impermissibility of this occupation (i.e. actuary) will then depend on the actual duties the employee is required to perform. The previously-issued fatwa that you have read on Ask Imam is to be understood in this light.
However, there is no doubt that occupations of this sort in the conventional finance sector entail a number of challenges for the believer and are best avoided as the most preferred option.
Source Of Funds From Which Salary Is Given:
The 2nd aspect that needs to be looked at is the source of the salary. Since the majority of actuaries work for insurance companies as mentioned in the Occupational Outlook Handbook, the funds kept by insurance companies need to be scrutinized.
Note: As far as conventional finance is concerned, non-Muslim owned companies and Muslim owned companies have the same ruling. Meaning, if a company earns its funds through gambling [qimar], contractual uncertainty [gharar] and interest [riba], these funds will be labeled haram. The fact that a company is non-Muslim owned will not affect this ruling, the money will still be haram.
والذمي كالمسلم في بيع كصرف وسلم وربا وغيرها (غير الخمر والخنزير وميتة لم تمت حتف أنفها) بل بنحو خنق أو ذبح مجوسي فإنها كخنزير وقد أمرنا بتركهم وما يدينون - رد المحتار، ٥/ ٢٢٨ - ٢٢٩
قال (وأهل الذمة في البياعات كالمسلمين) قال محمد في الأصل: لا يجوز بين أهل الذمة الربا...ومنها البيع فيكون مشروعا في حقهم كما في حق المسلمين، إلا الخمر والخنزير فإن عقدهم عليهما كالعقد على العصير والشاة في كونهما أموالا متقومة في اعتقادهم ونحن أمرنا أن نتركهم وما يعتقدون - العناية شرح الهداية، ٧/ ١٢٢
Insurance companies can generally be divided into two categories in terms of their total capital: 1. Life Insurance and 2. Non-Life Insurance. While both engage in haram activities, the purpose here is to study the possibility of permissible work in these companies by looking at all their sources of capital.
1. Life Insurance Companies. Their total capital is, broadly speaking, composed of the following:
a.) Investment Capital [Halal]: Assumed halal as long as there is no proof to establish otherwise.
b.) Customer Deposits [Halal]: These payments are deposits made by policy owners, similar to a bank deposit, which from the aspect of Islamic law are actually interest-based loans. They are returned to the policy owner along with additional money either in his lifetime (called: accelerated death benefits) or to his beneficiaries after the policy owner's death.
While an interest-based loan is not permissible and a major sin, the life insurance company still owns these deposits by way of the loan.
This loan itself is not invalidated due to a corrupt condition[shart fasid] such as the condition of an additional amount [riba] in return. As a result, these funds are halal.
وأما أقساط التأمين، فهي مودعة من قبل أصحابها لدي شركات التأمين مثل الودائع في البنوك لأنها ترجع إلي أصحابها مع الفائدة الربوية...وقدمنا أن القرض لا يفسد بالشرط الفاسد، ويملكه المستقرض ويفسد شرط الزيادة. فهذه الأقساط كلها مملوكة للشركة بعقد قرض - فقه البيوع ٢/ ١٠٦٧
c.) Profit accrued [Haram]: This money is haram, however its amount in relation to the initial capital and customer deposits is relatively small.
Ruling: Based on the above, the majority of the total capital in a life insurance company is halal, and the ruling for an employee working in a life insurance company will be the same as in a bank.
This means that as long as the employee's job function is permissible and has no connection with impermissible duties (such as for example: designing, testing and administering insurance policies) the salary earned will be deemed halal. However, it will still be better to avoid working in an insurance company.
فظهر إن الأموال الموجودة في ميزانية الشركة مخلوط من الحلال والحرام ونسبة الحلال فيها كثيرة...واما قبول الوظيفة فيها فحكمه وحكم التعامل مع الموظفين فيها مثل حكم الوظائف في البنوك الربوية - المرجع السابق، ص. ١٠٦٧ - ١٠٦٨
2. Non-Life Insurance Companies (property, car, liability, etc). The second type of insurance companies are non-life. They insure houses, cars, etc. Their total capital is broadly speaking, composed of the following:
a.) Investment Capital [Halal]: Assumed halal as long as there is no proof to establish otherwise.
b.) Insurance Premiums [Haram]: The reason this is haram is because the company obtained this amount through a prohibited transaction. Here, this transaction differs from the loan taken by the life insurance company in the previous example because in this case it is not known if the company will have to pay for damage to the car or to the home. This entails contractual uncertainty [gharar] and interest [riba] and as a result, is an invalid [batil] transaction which means these funds are haram.
أما أقساط التأمين فأنها حصلت عليها الشركة بعقد محظور...وعلى هذا فأنه عقد باطل مثل الربوا وأقساط التأمين التي أخذت من أصحابها كلها حرام - المرجع السابق، ص. ١٠٦٨ - ١٠٦٩
c.) Profit accrued [Haram]: This money is haram.
Ruling: The majority of the capital in non-life insurance companies is haram, and an employee of this type of company needs to take into consideration that a large part of the initial investment capital (the only halal source of funds in this case) was quiet possibly spent on infrastructure and start-up costs.
Whatever halal capital is left over, if any, should be equal to or greater than what the employee (performing a permissible function) receives in a non-life insurance company for the duration of his employment there for the entire income to be deemed halal. However, even in this case it will be better to avoid working in any insurance company.
If the halal capital has been exhausted in infrastructure or other costs or is not enough to cover the entire duration of his employment, then whatever wealth the Muslim employee receives from the haram funds of the insurance company will be haram (assuming his duties are all permissible in nature otherwise it would not be permissible to work there in the first place).
An example to clarify the above is what is related from Imam Muhammad (may Allah have mercy on him):
A man usurps [gasb] 10 dinars and adds 1 dinar of his own. The usurper [gasib] then gives another man 1 dinar from these 11 dinars, it will be permissible for the latter to take this 1 dinar (since from that 11 dinars, 1 dinar was from halal wealth.)
If the usurper gives the man another dinar from the remaining 10 dinars, it will not be permissible to take it since this second dinar is from haram wealth. Here, the halal portion of the 11 dinars is much less than 51%, but it was permitted for the person to take up to the amount of halal wealth present in those 11 dinars.
فلم يبق من المحكوم عليه بالحلال في أموال الشركة إلا رأس المال. وحينئذ صارت أموال الشركة مخلوطة بالحلال والحرام...وقدمنا في أحكام هذا القسم أنه لا عبرة في بالغلبة بل يجوز التعامل معها بقدر ما فيها من الحلال...ولكن ينبغي أن يؤخذ في عين الاعتبار أن قدراً كبيراً من رأس المال يصرف عند إنشاء الشركة... - المرجع السابق، ص. ١٠٦٩
Note: A general rule is then established: Even if a company's haram funds are 51% or more of its total capital, the employee's salary will still be deemed halal. This, as long as: a.) the halal and haram wealth of the company is mixed together and not separated from one another b.) the halal funds are enough to cover the employee's salary for the duration of his employment there and c.) the employee is performing a permissible function.
وقد إشتهر على الألسن أن حكم التعامل مع من كان ماله مخلوطاً بالحلال والحرام أنه إن كان الحلال فيها أكثر جاز التعامل معه...ولكن ما يتحقق بعد سبر الكلام الفقهاء الحنفية في هذا الموضوع أن اعتبار الغلبة إنما هو فيما إذا كان الحلال متميزاً عن الحرام عند صاحبه ولا يعلم المتعامل معه أن ما يعطيه من الحلال أو من الحرام...أما إذا كان الحلال مخلوطاً بالحرام دون تمييز أحدهما بالآخر فإنه لا عبرة بالغلبة في هذه الحالة في مذهب الحنفية بل يحل الإنتفاع من المخلوط بقدر الحلال سواءٌ أكان الحلال قليلاً أم كثيراً - المرجع السابق، ص. ١٠٣١ - ١٠٣٢
ينظر: فقه البيوع ٢/ ١٠٢٧ - ١٠٣٨ و ١٠٦٦ - ١٠٦٩ وقد بسط فضيلة الشيخ المفتي محمد تقي العثماني - حفظه الله - الكلام في هذا الموضوع وأثبت بأدلة كثيرة أنه لا عبرة بالغلبة في هذه الحالة في مذهب الحنفية. ونذكر هنا بعضها على سبيل المثال لا الحصر
أ - جاء في الدر المختار: "أو اختلط المغصوب بملك الغاصب بحيث يمتنع امتيازه...ضمنه وملكه بلا حل انتفاع قبل أداء ضمانه" إن الضمير المنصوب في "ضمنه وملكه" يرجع إلى المغصوب لأنه محل الضمان والملك الجديد. أما ماله الحلال فلا هو يضمنه ولا يحدث له فيه ملك جديد. وقوله "بلا حل انتفاع " متعلق بالضمان والملك الجديد، وليس متعلقاً بماله الذي لا يضمنه للمغصوب منه، وهو مملوك له قبل الخلط. فظهر أن عدم حل الإنتفاع متعلق بالحصة المغصوبة فقط
ب - ما روي عن الامام محمد رحمه الله تعالى في حل الإنتفاع بقدر الحلال بصراحة. جاء في التتارخانية عنه: "غصب عشرة دنانير فألقى فيها ديناراً ثم أعطى منه رجلاً ديناراً جاز ثم ديناراً أخرى لا" والحلال ههنا أقل ولكنه أجيز بقدر الحلال بدون اعتبار الغلبة
ج - ما أفتى به الشيخ أشرف علي التهانوي رحمه الله تعالي. فسئل عن رجل يسكن مع أبيه و إخوته الذين يكسبون عن طريق الرشوة ومال السائل حلال. وهو يشاركهم في مصاريف البيت. فأجاب رحمه الله تعالي: "الخلط استهلاك والاستهلاك موجب للملك. فإن كانت هذه المبالغ تصرف مجموعة يجوز للسائل حسب الفتوي وإن كان خلاف التقوى. وإن كان كل أحد يصرف مبلغه على التعاقب مميزاً عن المبالغ الأخرى فعندما يصرف مبلغ الرشوة فإن أكله حرام للسائل" - إمداد الفتاوى ٤/ ١٤٨ سؤال ١٨٢
And Allah Ta’āla Knows Best
Mufti Sohail ibn Arif,
Assistant Mufti, Darul Iftaa
Chicago, USA
Checked and Approved by,
Mufti Ebrahim Desai.
[i] OECD. Insurance Regulation and Supervision in Asia and Latin America. Page 121. 2001. Print.
[ii] U.S. Department of Labor. Occupational Outlook Handbook 2014-2015. Skyhorse Publishing Books. Print
[iii] http://www.bls.gov/oes/current/oes152011.htm
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