A Comparative Analysis Of The Concept Of Insurance Under Nigerian Statues And The Islamic Law

1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Every human is prone to face with one or more hazards presently or in the future which is believed to be form part of life, and these hazards may cause him pecuniary loss. This misfortune is uncertain as to time or period it will occur and this among others include: fire outbreak, accident, or even death. It could be seen that all those are beyond human control as their occurrence cannot be controlled by the individual.

It may therefore be correct to state here that, since the purpose of insurance is to cover,cater for or alleviate the effect of unforeseen negative circumstance or risks that affect the property, the institution of insurance could therefore be seen to be in existence from and a sold as human existence itself.However, the mode and ways of its formation may not bethe same[1].This is because the primitive insurance contract is in form of mutual insuranceand co-operation, whereby the community as a whole will pull the resources together tocater for the loss of individual members whose lives and properties are affected by risks[2] (i.e damages,destruction or loss).

Insurance scheme is put in place to fall back on in the event of risk or calamity occurrence. Nigerian Statutes require that every motor vehicle owner must possess at least third party insurance policy.However, the conventional insurance contradicts certain elements of Islamic law which make it unlawful and unacceptable.Thus, majority ofMuslims (believers) and other adherents have refused to adopt the conventional insurance and subsequently, called for alternative shariah compliant products.

It may therefore be correct to state here that, since the purpose of insurance is to cover,cater for or alleviate the effect of unforeseen negative circumstance or risks that affect the property, the institution of insurance could therefore be seen to be in existence from and asold as human existence itself.However, the mode and ways of its formation may not bethe same[3].This is because the primitive insurance contract is in form of mutual insurance and co-operation, whereby the community as a whole will pull the resources together tocater for the loss of individual members whose lives and properties are affected by risks[4](i.e damages,destruction or loss).

It is very interesting to state here that the Motor vehicle insurance scheme involved some elements that are prohibited and as such majority of scholars has issued fataawa[5] (Islamic rulings) to the effect that all forms of conventional insurance are Haraam (illegal).The major reasons for declaring same illegal is that it is a form of gambling, involved usury(Riba) and that they are contract that are rooted in Garar (uncertainty)[6].

Consequently, this research work discusses essentials elements, formation and operation of insurance scheme with specific emphasis on motor vehicle insurance scheme under Nigerian statutes andIslamic law alternative, differences and thereafter considers the relevant provisions in new Takaful Guideline, identifies challenges therein.

Furthermore, considering the major objective of insurance (protection of property and elevation/amelioration of hardship),the modern scholars have through doctrine/principle of Ijtihad fashioned out alternative scheme termed “atta‟ meenul Islamiyy or Attakaaful (as commonly called). The Scholars thereafter applied some principle of Islamic law of Commercial and transactions to develop some products that can be used in the industry torender services that are shariah compliant and at the same achieve the same goal for which conventional insurance is targeted (i.e protection of property and elevation/amelioration of hardship). This study shall discuss the comparative analysis of the concept of insurance under Nigerian statues and the Islamic law.

1.2 Statement of  Research Problem
The major constituent elements of contract of insurance under Nigerian Statutes are prompt payment premium as at when due, uncertain nature of the risk and presence of insurable interest of the insured (in the property insured).[7] Some basic elements andfeatures of insurance contract, such as payment of premium and uncertain nature of the events/risks (among others) formed the basis or reasons for the modern Islamic scholars to declare the commercial (under Nigerian statues) contract of insurance illegal.

Conversely, the law mandated every Car user in Nigeria to insure his/her vehicle (at least) against third party[8].The Act went further, inorder to sanction the compliance of the above provision, to criminalize the act of failure to have insurance policy in respect of user’s vehicle and punishment for the failure was also prescribed.[9]

The implication of the mandatory provision of the Act is that not withstanding the position of Islamic law on conventional insurance, every car user/owner must possess it.Thequestion is how will these set of citizens be saved, in view of the Right to religion[10] asenshrined in the constitution (which is sacrosanct and cannot be curtailed on this aspect)?How would they cope in this circumstance with a view to practicing their religion whichincludes full compliance with Islamic dictates?   This question is begging for answer.It isa factual problematic situation that is looking for solution or way out. It therefore remains constitutional or legal issue.

It is ore imperative to look outside the conventional insurance scheme in order to develop products that would satisfy and accommodate the interest of the adherent of shar’iah as provided in the alternative products. Furthermore, the concept of insurance is novel assame was not institutionalized during the life time of Prophet Mohammed (S.A.W) and thefour guided caliphs. However, the modern scholars have through ijtihad (analogical deduction) and application of Islamic principles arrived at ruling on conventional insurance[11].

1.3 Aims and Objectives of the Research
The main aim of this research is to make a comparative analysis of insurance scheme (such as motor vehicle under Nigerian Statutes and Islamic law with a view to achieving the following objectives:

• To assess the general principle of motor vehicle insurance.
• To appraise the guiding principle of insurance/contract of insurance of vehicle under Islamic Law.
• To show the relationship between vehicle insurance under insurance Act and Co-operative insurance under Islamic Law (with specific reference to motor vehicle).
• To present the Islamic Alternative product (Takafu/Ta’ameen) to conventional Insurance (limited to vehicle insurance) to adherent of Shariah rules without violating the provision of Motor vehicle Act.

1.4 Significance of the study
It has been observed that most muslims and adherent of Shari‟ah Legal System have refused to adopt conventional Insurance Scheme due to involvemen tof prohibited elements such as deceit, uncertainty and Riba(usury). However, unknown to majority, Islamic law has alternative and shariah compliant products which is regarded as takaaful oratta ‟meenulislaamy, devoid of all the prohibited elements and serve the same purpose.

This work would therefore provide the basis (Ijtihad) for the alternatives products andmode of operations of the product. This work is therefore would be of assistance to interested stake holders in the sector and serve as treatise to be built on.

1.5 Scope and limitation of the Research
It should be stated from onset that this work would be limited to comparing the conventional insurance (under Motor Vehicle insurance)and its Islamic law alternative. Therefore, the work will thoroughly consider the relevant provisions of Insurance Act, 2003 and Motor Vehicle (Third Party Insurance) Act CapM22 Laws of Federation of Nigeria, 2004, being the statutory Laws governing the aspect,in Nigeria. These are Federal legislations since Insurance is under exclusive jurisdiction of the National Assembly27. Reference will also be made to provisions National insurance Commission (NAICOM) Act and the regulation and Guidelines issued by NAICOM in accordance with its the statutory power in regulating and in connection with the Insurance industry.

Conversely, this work also intend to consider Islamic alternative to conventional insurance generally with specific emphasis on motor vehicle insurance, some basic principles ofIslamic Law would be referred to.   This is because, the area is novel field and same wasnot institutionalized during the Prophet’s life and his companions.However, the Scholars (particularly the modern ones) have utilized the doctrine of ijtihad to formalized, institutionalized and structured products that are shariah complaint and therefore provided the Islamic Alternative to conventional insurance, particularly in the mode of operation.

1.6 Research Methodology
The project involves the use of doctrinal research methodology. This is comprised of primary sources such as Constitution, Statutes and judicial authorities as well as secondary sources such as articles and journal and publications. In the same vein, the work also made reference to primary sources of Islamic law (such as Qur’an and Sunnah) and secondary sources such as Ijma’a, qiyas and the principle of ijtihad (analogical deduction) through which the modern scholars adopted in arriving at ruling on conventional insurance.

Research Questions
How does Islamic law see the concept of insurance as understood under the common law?
Whether a Muslim can effectively adopt the insurance rules as provided for in the shariah without infringing on the existing regulations under the common law?

Organizational Layout
This research is arranged in chapters and comprised of five chapters. Chapter one focuses on the general introduction encompassing statement of research problem, objectives of the research, justification of the research, scope of the research, research methodology. Chapter two focuses on Insurance under the Statutes with reference to motor insurance. Chapter three presents the comparative analysis of insurance under Nigerian statues and the Islamic law, and literature review. Chapter four makes juxtaposition of the operation of insurance Scheme under Nigerian Statutes and Islamic Law alternative and thereafter used Takaful Guideline 2013 as a yardstick for improvement introduced by Shariah‟ compliant products in Insurance sector/field. Chapter five provides for summary and conclusion under which observations from the whole discourse in this work are summarily enumerated and recommendations thereto were made to the findings identified.