Answer
In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
In this fatwa:
The permissibility of working for insurance companies depends on the type of insurance and its compliance with Shari’ah principles. While social and Islamic insurance are generally permissible, commercial insurance often involves elements that are not allowed in Islam.
Answering your question, The Assembly of Muslim Jurists of America, states:
Introduction to Insurance and Its Importance
Working for insurance companies Insurance is one of the afflictions of the age on which modern fatwa scholars have already spoken, whether in their role as individual scholars or on the level of official fatwa councils and assemblies.
Types of Insurance and Their Shari`ah Compliance
There are many difference types of insurance; some of which are permissible and some of which are prohibited, while some are subject to scholarly differences of opinion (ijtihad).
The ruling on working for insurance companies varies according to the judgment on the insurance policy itself. Whichever of these contracts is valid, it would be permissible to work for their institutions and whichever contracts are invalid, it would not be permissible to work for them or to assist them with said contracts.
The basic principle regarding insurance is that it is a system based on providing a helpful service, solidarity (mutual responsibility), and charitable assistance. With this meaning and in this context, it is one of the essential Islamic values, when it is restricted in its organization and contracts, as well as the investment of its funds, to the rules of Shari`ah. In fact, it would not be an exaggeration to say that providing it in this context and in light of recent developments has become a general communal obligation.
Systems of insurance and their contracts in this day and age fall into three basic categories:
Commercial Insurance
Commercial insurance contracts and social or mutual insurance contracts, each being subject to its own verdict.
The basic principle regarding commercial insurance contracts, regulated by commercial insurance laws and practiced by commercial insurance providers (such that the company is a real partner in the contract and is obliged to pay should the damage insured against actually occur, in return for fixed premiums paid by the insured throughout the period of insurance), is that it is an invalid contract due to the presence of uncertainty (Gharar), unknown elements (Jahalah) and other causes of invalidity.
The basic principle is that no commercial insurance is permissible, except when required by law or resorted to under conditions of general necessity when this takes the place of exigent need. Working in the field of marketing these contracts or providing any assistance for them is not permissible, except in cases of exigent need or general necessity when it takes its place. Whoever is forced by need to resort to work in this field must also have the intention to leave this line of work as soon as he is able to do so.
Social insurance
Then there is social insurance, which is not intended for profit, but rather is meant to provide social protection or health coverage to recipients. It is—usually—arranged by governments or public companies and institutions by deducting a portion of the employee’s salary, either with a contribution from the insured or without, over the course of his employment.
This is legitimate in Shari`ah and, as such, it is permissible to accept it and to work for institutions involved in it, whether by establishing it or by marketing it, because it is essentially based on a legitimate concept.
This must be accompanied by avoidance of any illegitimate activities involved in its application, such as interest-based investments and the like.
Islamic insurance
Islamic insurance (which resembles mutual or cooperative insurance in many of its characteristics) is based on charitable donations, cooperation and mutual benefit. The role of the company is merely that of agent (managing the insurance process) and entrepreneur (financing the funds).
This is a legitimate contract and, as such, it is permissible to use it and to work for any of its institutions, as long as one abides by the remaining Islamic restrictions in terms of investing insurance funds.
Almighty Allah knows best.
Source: AMJA Online