Why Conventional Insurance Is Haram In Islamic Economics. Ahmad and marhaini (2008) study issues of gharar in insurance and conclude that conventional insurance does carry excessive gharar. Conventional and takaful insurances offer standalone plans as well as rider options.
That is why islamic banks are often known as pls banks. Most classical jurists objected to the contract on the venue of excessive presence of gharar in it. So if any financial transaction involves the element of gambling in it, then it is not allowed.