PROPOSALS OF INSURANCE MODEL TO INTEREST FREE BANKING

Abstract

Since the ancient times, humankind has always been faced with hazardous situations, struggled to survive and experienced loss of lives, property and valuables at the end of these combats. Societies have been applied several measures to minimize these losses and damages that they experience along with their lives. Indeed, because it is usually not possible to compensate the economic losses by the people incurred these damages, the insurance mechanism has arisen, which constitutes a precaution mechanism against adverse circumstances that could be faced in the future and this material burden has been shared among individuals by distributing it to extensive masses of people in the expense of a small premium to compensate their losses. In our contemporary era, the insurance sector has economic benefit more than its social dimension; and one of the reasons which prevent its expansion in a country with Muslim majority such as Turkey is the religious preferences and social life style of the people. From this point of view, the present study aims to investigate how insurance process in the interest-free banking can be applied in terms of practical and theoretical ways.