SHARIAsource

This fatwa acknowledges that persons conducting a business enterprise often require insurance from another party via a kafalah agreement, viz. a gurantee provided by an insurer (kafiil) to a third party to fulfil the obligations of a second party or an insured. To meet these needs, shari'a financial institutions are obligated to make available an insurance (kafalah) scheme based on shari'a principles. The fatwa asserts that to ensure shari'a-compliance, shari'a financial institutions require a set of guidelines pursuant to which they can implement kafalah agreements.

More specifically, among other requirements, the fatwa dictates that:

1. statements of consent and accedence must be made by all parties to show their willingness to be a party to an agreement;
2. insurers may accept nominal fees; and
3. kafalah agreements for a fee are binding and may not be terminated unilaterally.