Coincidences do happen. Yesterday (Thursday) I was telling the third year Actuarial Science and Risk Management students at USIM about the differences between gambling and insurance. Today I performed my Friday prayer at Salak Tinggi mesjid and the sermon (khutbah) was about gamblling.
After the Friday prayer, I chatted with the khatib about his khutbah. I told him that I have been very interested in the topic of gambling from the perspective of Islam, ever since I got involved in actuarial science, a long time ago. I asked him whether he has a clear definition of gambling from Islamic perspective because I have not been able to get a clear and concise definition from anywhere. His answer was that gambling is anything that involves a wager (pertaruhan) and that was what he said in his sermon.
That set us on a rather lengthy discussion. One of the reasons for the Muslim jurists' fatwa declaring that insurance is not permissible in Islam is that insurance contains elements of gambling. It is not like taking a gamble but that the act involves the action of gambling that has been prohibited in Islam through several verses in the Quran and the saying of the Prophet s.a.w.
However in courses in insurance that we study in the universities in the west, lecturers have been very careful and persistent in differentiating between insurance and gambling. Books written on insurance have argued that insurance is the opposite of gambling. Insurance protects against financial losses due to the occurrences of events that are pure risks, while gambling involves games of chance where the participants gain or lose due to the occurrences of events that are created and that are also speculative risks.
The question is what are the elements in insurance that are considered as gambling by the Muslim jurists? I would like to add a further side question to this. If gambling exists in insurance and thus making it haram, are there other activities that are being carried out by Muslims that also involve gambling?
I would like to site an example that was proposed to me quite sometimes ago. In a donation drive by one charitable organization, the donor was given a ticket with a serial number for every RM10 donation. At the end of the donation drive, lucky draws are carried out and donors stand to win some handsome prizes. The argument for the lucky draw was to encourage donors to give more. The khatib I talked to at the Salak Tinggi masjid said that it would not be gambling if the prizes for the lucky draw were donated by someone else and not taken from the donations.
Here I would like to invite readers to give a clear and concise definition of gambling and then let us argue the differences between insurance and gambling from Islamic perspective.