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It is prohibited to deal with commercial insurance in the Islamic economy because the commercial insurance contracts include al-Gharar. The Gharar contracts are prohibited contracts in the Islamic jurisprudence on which the Islamic economy is based in its modern concept.
Insurance is always covered in uncertainty, and is a form of acquiring others' money through innoble ways. for instance, the insured might continue to pay premium to the insurer for years without encountering any insurable damage.
so, the insurer continues to benefit and reap for what he didn't sow. and viceversa.
Islam encourages mutual insurance (takaful) as evident from the verse number 25 in surat as-Saffat, which says "Why are you not helping one another?" while discourages trading of risk (commercial insurance), which only transfers the risk to another party for a premium.
In some cases, insurance looked at as a gambling game.
Insurance is not prohibited in Islam.
Insurance relates to a term where A and B enters into a contract that A shall fulfill a task decided and accepted by both parties and B shall take care of A in events well defined, understood and accepted by both the parties.
It makes the terms clearly and cannot be interpreted otherwise.
If either one violates the terms the contract becomes void.
The simple reason one puts forward terming Insurance as prohibited is that one's reliance on Allah is moved.
If its the reason then why go out to work when Allah has promised you bread?
Other simple examples : Marrying the daughter of another clan or country etc is still termed as the best insurance, and this was the practice organized even during the life of Prophet Muhammad PBUH,
