Insurance scheme is put in place to fall back on in the event of risk or calamity occurrence. Nigerian Statutes require that every motor vehicle owner must possess at least third party insurance policy. However, the conventional insurance contradicts certain elements of Islamic law which make it unlawful and unacceptable. Thus, majority of Muslims (believers) and other adherents have refused to adopt the conventional insurance and subsequently, called for alternative shariah compliant products. Consequently, this research work discusses essentials elements, formation and operation of insurance scheme with specific emphasis on motor vehicle insurance scheme under Nigerian statutes and Islamic law alternative, differences and thereafter considers the relevant provisions in new Takaful Guideline, identifies challenges therein. In the final analysis, observes that there is lack of awareness on the part of public about insurance generally and Islamic alternative (takaaful) specifically and finally recommends inter alia that: NAIOCM should relax some of the stringent conditions/requirements to allow more takaaful companies to come up, intensifies effort to curb use of fake insurance papers and inject sanity into the industry and that co-operative insurance be adopted as means of promoting insurance scheme among association members.

CHAPTER ONE: INTRODUCTION

1.1       Background to Study
Virtually, all legal systems recognized and guaranteed certain rights for human beings. Further to these recognized rights, some selected rights have been regarded as fundamental rights. Among these fundamental rights is right to acquire and own  property.  The Nigerian Constitution like that of other civilized countries, followed suit and recognized these fundamental rights1. Notable among these rights is right to acquire and own property2.
In furtherance to the above, the right to own property was further guided and jealously protected to the extent that tampering with same (somebody property) without prior consent and permission of the owner is regarded as criminal act (i.e. offence) under the law3.
In addition to the above, a Nigerian Citizen is allowed though subject to some limitation to have resort to self-help in an attempt to defend his property4.
Comparatively, Islam and indeed Islamic law equally in comprehensive form provided for, protected and guaranteed the essential rights5 (among which is right to own property). Islamic law did not only recognize and protect the right (referred here specifically to right to own property) but also, in attempt to block all ways to its violation, imposed severe penalty/punishment for the offences of theft and Hirabah (Robbery)6.
It is crystal clear from the above that, both Islamic law and Nigerian Statutes protected the right of people to own property. The laws further criminalized the act of theft, stealing, robbery or any other criminal acts that are inimical to the enjoyment of the right. The reason may not be unconnected with the protection of the interest of the owner in the property rather than the property itself. This is because; the owner may on his own  volition dispose of or alienate the property to somebody else.
All what the laws did was to protect the interest of the owner over the property. It is this interest that always propels the owner of the property (e.g. house, car, company, business, and other things capable of being insured) to take out insurance policy against damage, destruction or loss, etc (these often referred to in commercial law as risks)7.
It has been observed that there is no definite or generally acceptable definition for the contract of insurance or assurance as it is often referred to. This may not be unconnected with the fact that the term insurance is easier to describe than to be defined. To define the contract of insurance is further complicated by the silence of the insurance Act on the definition of the contract. To this ends, Yerokun observed thus: “Since the insurance laws do not provide a definition, it is not easy to define but describe what is insurance.”8
However, judicial definitions have been provided for insurance contract. For Example, it has been held that a contract of insurance in the widest term is: “A contract whereby one person called the insurer undertakes in return for the agreed consideration called the premium, to pay another called the assured, a sum of money or its equivalent, on the happening of a specified event.”9
From the above definitions both theoretical and judicial one, it is clear that emphasis has been placed on the element of the uncertain nature of the contract (of insurance) as to the time of event, and payment of regular arranged premium. These represent the distinguishing features of conventional insurance contract as distinct to other contracts in terms of their elements.
Contrarily, atta?ameen or takaaful (Islamic Alternative to insurance) has been rightly described thus:
A form of assistance premised on righteousness in a situation whereby group members bind and obligated themselves to contribute (in to a form of pool of money) with sole aim of alleviating or relieving any difficulties, hardship, loss of any forms that befall their member. In that wise, they (members) are partners in help by making some contribution in to the pool from which necessary assistance will be rendered to any member faced with calamity.10
Lending credence to the spirit and basis of the above mutual insurance as acceptable form of insurance under Islamic law, Yusuf said: “A co-operative effort at mutual help on the part of a group of similarly individuals is an act of virtue and beneficence.”11
Therefore, it may be correct to discern from the definitions and descriptions of the insurance contract in the two legal systems under consideration, that parties to the contract (of insurance) may be individuals or group of individuals. It is also apposite to state here that mutual insurance concerns majority with the protection of members during the happenings of any loss or risks, while commercial insurance is solely put in place for business of insurance. This motive informs the formation or incorporation of company (as a requirement of law) for business of insurance.12 It may therefore be correct to conclude that the mutual insurance is only for assistance of the members (which is the one sanction by Shari?ah), while commercial insurance is for business transaction. It is not to be suggested that commercial insurance is not permissible under Islamic law. This is because formation of company to carry on businesses/contract, including that of insurance, is not prohibited, provided that the principle of Islamic law guiding the businesses are properly followed and complied with.13
Having said the above, it is interesting to state here that the interest of the property owner in the insured property forms the subject matter of insurance. To this ends, and in relation to motor vehicle, the learned author of commercial law observed thus:
In motor insurance contract, the subject matter of insurance is the motor vehicle which is exposed to accident. In personal insurance contract, it is the physical body of the assured. In burglary insurance, it is the property that is exposed to loss and in fire insurance; it is the building which may be exposed to destruction. In a nutshell, it is the motor vehicle; the bodies of the assured, the property or building, e.t.c. that constitute the physical object of the insurance.14
The summary of the proposition of the above author is to the effect that insurable interest15 (in the property) is important in the formation and enforceability of contact of insurance of whatever kind (including that of motor vehicle which this work intends to discuss).
It may therefore be correct to state here that, since the purpose of insurance is to cover, cater for or alleviate the effect of unforeseen negative circumstance or risks that affect the property, the institution of insurance could therefore be seen to be in existence from and as old as human existence itself. However, the mode and ways of its formation may not be the same16. This is because the primitive insurance contract is in form of mutual insurance and co-operation, whereby the community as a whole will pull the resources together to cater for the loss of individual members whose lives and properties are affected by risks17 (i.e damages, destruction or loss).
It is very interesting to state here that the Motor vehicle insurance scheme involved some elements that are prohibited and as such majority of scholars has issued fataawa18 (Islamic rulings) to the effect that all forms of conventional insurance are Haraam (illegal). The major reasons for declaring same illegal is that it is a form of gambling, involved usury (Riba) and that they are contract that are rooted in Garar (uncertainty)19.
Furthermore, considering the major objective of insurance (protection of property and elevation/amelioration of hardship), the modern scholars have through doctrine/principle of Ijtihad fashioned out alternative scheme termed “atta?meenul Islamiyy or Attakaaful (as commonly called). The Scholars thereafter applied some principle of Islamic law of Commercial and transactions to develop some products that can be used in the industry to render services that are shariah compliant and at the same achieve the same goal for which conventional insurance is targeted (i.e protection of property and elevation/amelioration of hardship).

1.2       Statement of Research Problem
The major constituent elements of contract of insurance under Nigerian Statutes are prompt payment premium as at when due, uncertain nature of the risk and presence of insurable interest of the insured (in the property insured).20 Some basic elements and features of insurance contract, such as payment of premium and uncertain nature of the events/risks (among others) formed the basis or reasons for the modern Islamic scholars to declare the commercial (conventional) contract of insurance illegal.
Conversely, the law mandated every Car user in Nigeria to insure his/her vehicle (at least) against third party21. The Act went further, in order to sanction the compliance of the above provision, to criminalize the act of failure to have insurance policy in respect of user?s vehicle and punishment for the failure was also prescribed.22
The implication of the mandatory provision of the Act is that notwithstanding the position of Islamic law on conventional insurance, every car user/owner must possess it. The question is how will these set of citizens be saved, in view of the Right to religion23 as enshrined in the constitution (which is sacrosanct and cannot be curtailed on this aspect)? How would they cope in this circumstance with a view to practicing their religion which includes full compliance with Islamic dictates?  This question is begging for answer.  It is a factual problematic situation that is looking for solution or way out. It therefore remains constitutional or legal issue.
It is ore imperative to look outside the conventional insurance scheme in order to develop products that would satisfy and accommodate the interest of the adherent of shar?iah as provided in the alternative products. Furthermore, the concept of insurance is novel as same was not institutionalized during the life time of Prophet Mohammed (S.A.W) and the four guided caliphs.24 However, the modern scholars have through ijtihad (analogical deduction) and application of Islamic principles arrived at ruling on conventional insurance25. With the release of Guideline for Takaful operation by NAICOM26, there seems to be way out for adherent of Islamic law in Nigeria, in connection with insurance.  This is because,  it ushered in for the first time, the era of recognition of the alternative Islamic product of insurance referred to as Takaaful. However, there are other issues and challenges that also sprang with the provisions of the Guideline.

1.3       Aims and Objectives of the Research
From what we have stated so far and statement of problem above, the main aim of this research is to make a comparative study of motor vehicle insurance scheme under Nigerian Statutes and Islamic law with a view to achieving the following objectives:
(1)        To evaluate the general principle of motor vehicle insurance.
(2)        To evaluate the guiding principle of insurance/contract of insurance of vehicle under Islamic Law.
(3)        To show the relationship between vehicle insurance under insurance Act and Co- operative insurance under Islamic Law (with specific reference to motor vehicle).
(4)        To present the Islamic Alternative product (Takafu/Ta?ameen) to conventional Insurance (limited to vehicle insurance) to adherent of Shariah rules without violating the provision of Motor vehicle Act.

1.4       Justification of the Study
It has been observed that most muslims and adherent of Shari?ah Legal System have refused to adopt conventional Insurance Scheme due to involvement of prohibited elements such as deceit, uncertainty and Riba (usury). However, unknown to majority, Islamic law has alternative and shariah compliant products which is regarded as takaaful or atta?meenul islaamy, devoid of all the prohibited elements and serve the same purpose.
This work would therefore provide the basis (Ijtihad) for the alternatives products and mode of operations of the product. This work is therefore justified as it would be of assistance to interested stakeholders in the sector and serve as treatise to be built on.

1.5       Scope of the Research
It should be stated from onset that this work would be limited to Motor Vehicle insurance and its Islamic law alternative. Therefore, the work will thoroughly consider the relevant provisions of Insurance Act, 2003 and Motor Vehicle (Third Party Insurance) Act Cap M22 Laws of Federation of Nigeria, 2004, being the statutory Laws governing the aspect, in Nigeria.  These are Federal legislations since Insurance is under exclusive jurisdiction  of the National Assembly27. Reference will also be made to provisions National insurance Commission (NAICOM) Act and the regulation and Guidelines issued by NAICOM in accordance with its the statutory power in regulating and in connection with the Insurance industry.
Conversely, this work also intend to consider Islamic alternative to conventional insurance generally with specific emphasis on motor vehicle insurance, some basic principles of Islamic Law would be referred to. This is because, the area is  novel field  and same was not institutionalized during the Prophet?s life and his companions. However, the Scholars (particularly the modern ones) have utilized the doctrine of ijtihad to formalized, institutionalized and structured products that are shariah complaint and therefore provided the Islamic Alternative to conventional insurance, particularly in the mode of operation.

1.6       Research Methodology
This work invokes the use of doctrinal research methodology. This is comprised of primary sources such as Constitution, Statutes and judicial authorities as well as secondary sources such as articles and journal and publications. In the same vein, the work also made reference to primary sources of Islamic law (such as Qur?an and Sunnah) and secondary sources such as Ijama?, qiyas ijama and the principle of ijtihad (analogical deduction) through which the modern scholars adopted in arriving at ruling on conventional insurance28.

1.7       Literature Review
To the best of the researcher?s knowledge there are many authors and writers on the concepts of insurance generally. Furthermore, even though there are limited works on the concept of vehicle insurance under Islamic Law, there are some works that laid down the guiding principles that govern contracts (Contract of insurance inclusive) under Islamic Law. To achieve this, reference would be made to some Islamic classic texts, works, publications, journals and any other relevant materials.
The following are some of the works and authors written on the aspects touching on the issues involved in this work:
Abdul-Azeez, U29., dealt extensively on Riba (usury) and treated in great detail some transactions that involved or bear semblance of riba. In fact, the title of the work speaks of the content and what one should expect. The author mentioned and explained some of these among which insurance in conventional way is one. He thereafter concluded that no matter where muslim may find himself, he should shun such insurance. He never envisaged the situation faced by the adherent of Islamic faith and indeed Islamic law, as this writer intends.
Achike, O., in his work30, after brief introduction and history of the insurance business in Nigeria, discussed the essential elements of insurance contract, formation and enforcements of the terms and conditions contained in the policy form. Generally, this author categorized the insurance into life and general insurance. He thereafter mentioned motor vehicle insurance and discussed it briefly under sub-heading of general type. This author though recognized and admitted the fact that the insurance Act allowed co- operative /mutual insurance, he failed to discuss the benefit/relevance of this special scheme to economy.
Ahmad, A., on his part, in his work31, focused on the Islamic economic policies. He x- rayed the basic principle of economic in accordance with the shari?ah (Islamic law). Ahmad explained the fact that Islamic law condemned cheating and exploitation of fellow being in order to gain economic power or to be economically viable. It was on this basis, he dealt extensively with contract of insurance in conventional way, juristic arguments on same and concluded that same in not in line with the principle of shariah. He alternatively advocated for the adoption of takaful (Islamic insurance policy). However, he was silent on the modality to be adopted in achieving the goal.
Al-Bagdaady, A32., dedicated a chapter for contracts that have element of deception (garar). He made copious references to prophetic traditions condemning deception. In his discussion of this topic he expatiated on the contract that involved element of uncertainty or the parties are not aware of the consequence of the terms of the contract. The author though did not mention insurance contract but the examples provided pointed to the fact that conventional insurance contract qualified to belong to the categories.
The work of Al- Jamal, G33, focused on the conventional commercial insurance and concluded after analysis of the operation of the policy that it violated Islamic law principle of contract. He however presented the takaful as an alternative available insurance.  He, not being a Nigerian, made no discussion or reference to modus operandi of the offered alternative in Nigeria and in the purview of Nigerian Insurance law.
Al-Jaozy,34 like Al-bagdaady above, created in his textbook, a sub-head tagged transactions of uncertainty. He pointed out that any transaction whose outcome is not certain or involves lack of precision of its occurrence fall among those prohibited by the prophetic traditions on deceit or deception (garar). He equally did not mention insurance but insurance by inference fall in those contracts.
Al- Juzairi35, A., on his part only treated contract as a whole and stipulated essential elements of contract under Islamic law. Furthermore, he explained, according to four orthodox schools of thoughts (Maliki, Hanafi, Shafi?i and Hambali) the vitiating element of contract among which fraud and deceit were mentioned. This made his work qualify to have touched on the topic of this work. This is because the conventional insurance contravened Islamic law principle of contract in the area of deceit and riba among others. The author however failed to treat the aspect of insurance under Islamic law.
Bambale, Y.Y.36, in his work dealt with some variety commercial transactions, their constituents and guiding principles under Islamic law. At the last chapter, the erudite Islamic law expert succinctly explained the concept of Takaful (as Islamic insurance).
Hassan, A. A.37, in his book considered critically various contracts as well as their constituent elements. He dedicated a whole chapter to discuss risks in sale under which he made reference to the prophetic Tradition to the effect that garar (uncertainty) should be avoided in any contract. Thus, he theorized that a contract must not be doubtful or uncertain as far as the rights and obligations of the parties are concerned. He thereafter concluded that all the contracts that are rooted in fraud, risks or uncertainty are not permissible under Islamic law. Those contracts were predominant during pre-Islamic era but Islamic law abrogated them and introduced legitimate ones that are in conformity with the principle of shari?ah. The discussion on risks made the work relevant to this discussion of insurance, even though the work made no mention of insurance explicitly.
Irukwu, J. O.38, a commercial law writer in his book discussed after brief history of introduction of insurance with particular reference to Nigeria, extensively on the essentia l elements of insurance contract generally. He mentioned various categories of insurance wherein he placed vehicle insurance under accident insurance. However, the writer did  not discussed in details the motor vehicle insurance scheme as he treated the topic in less than a page. He made no reference to Islamic law position on motor insurance.
Muhammad, A.39, just like Al-jaozy and Al-Juzairy treated only the essential elements of contract as a whole with mentioning contract of insurance. He treated separately some contracts prohibited by Shariah and reasons for declaring same illegal. One of the reasons is garar (uncertainty) or deceit in contract. On this aspect, work even though contract of insurance is not appeared at all in the work.
Muslehuddeen, M., on his own part in his book40, x-rayed the evolution of insurance  from primitive time up till when same was institutionalized and common law principles were adopted. Similarly, the writer stretched his touch-light in to the history of contract under Islamic law as well as basis upon the scholars (particularly modern ones) arrived at ruling on the modern day contract of insurance. The work also failed to envisaged statutory bondage associated with the Islamic insurance in Nigeria. Blame cannot be apportioned to him (for this failure), as he is a Nigerian.
In his Book41, Omo-eboh, O. considered in a great detail the history of insurance regulation in Nigeria, formation and constituent elements of contract of insurance. He made copious reference to provision of Insurance Act and treated all categories of insurance including otor vehicle insurance on the same length.
Okany, M.C’s work42, just like Achike?s, concentrated on the insurance contracts as applicable in Nigerian commercial system. In fact he followed the same mode of writing and content of Achike. Thus their works are almost the same. He equally dedicated a separate sub-head to the discussion on motor vehicle insurance though a little bit lengthy than that of Achike. Okany did not also consider the insurance under Islamic law.
Saabiq, S., while treating partnership in his work 43only dedicated about one and half page to partnership in insurance. He made reference to fatwa being issued by Shaikh Ahmad Ibrahim to the effect that insurance contract (in conventional way) is allowed. The writer thereafter refuted the fatwa and presented the doctrine of Mudarabah and Musharakah as an alternative mode of operation of insurance (including motor vehicle).
Salahudden, A.44., on his part in his work treated the aspect of insurance under Islamic law in great detail. He dealt extensively and explicitly with the operation of insurance company without categorization in to life, marine and vehicle. He gave statistic of the operation of Takaaful Company in some selected Muslims countries and concluded that takaaful is gaining ground and growing vastly and globally. This work did not consider at all the conventional commercial insurance or any statute on insurance.
Yerokun, O., in his own book45, after brief introduction stated the general principle of insurance law and considered the renovation brought by the new insurance Act. The distinguishing feature of this work is that the author dedicated a whole chapter to the discussion on Motor insurance. The work just like most commercial author did not treat the aspect of motor vehicle insurance under Islamic law.
Yusuf, S. M., in his book46 criticized commercial insurance scheme under any models. In his reasoning, only mutual /co-operative  insurance which is  solely meant  for the  help  of members. According to him, mutual insurance/ assurance is so designed to be liquidated it when the objective of collective payment of indemnity for the acts of an individual member of the group is fulfilled. He concluded that mutual help should not be used as a means of capital formation for purposes of industrialism. He classified insurance contract under Daman (warrant) and as such postulated that the guarantor is prohibited from charging any fees or taking any money in return from the guarantee. This opinion to this writer?s mind is not correct as there is vast different between contract of insurance and guaranty. Therefore, the opinion of Yusuf has not captured what insurance constitute under Islamic law.
Fisher, A. and Taylor, D.Y.47, in their article, after general introduction of takaaful (Islamic Alternative to insurance), basis and guiding principles, greatly discussed the benefits its embracement is capable of injecting in to the economy. In summary, these writers focused only on the beneficial effects of takaful in the economy.
Khan, L. A.48, in his article compare and contrast the conventional commercial insurance with Takaaful (Islamic Alternative to insurance) with a view to bringing out guiding principles for the two. He thereafter concluded that the takaaful system of insurance has potentiality of bringing financial succumb to the economy rather than cheating, and fraud as manifested in conventional insurance.
Mulhim, S. S. and Sabbagh, M. A., in their article49 extensively treated Islamic alternative to insurance and practice in Jordan. The article emphasized the various models, which takaaful company can adopt in carrying out insurance business and they encouraged the citizen to embrace and patronized the alternative shar?iah compliant products. They however did not consider insurance under any other laws/statutes as the writer intends, with a view to identifying differences and guiding principles.
Raiz, S., in his research work50 concentrated only on the degree and rate at which people adopt car Islamic insurance scheme in Pakistan and United Arab Emirate (U.A.E). The research statistically after proper consideration of some factors such Age, Educational status and income demographically showed the variant degree between the two countries. The research though (as preamble) talked of takaaful, but necessary details on car insurance were omitted and no statute was considered.
Yusuf, T.O., in his article51 elaborated only on the benefits accruable to  Nigerian economy should Islamic alternative to insurance (Takaaful) is fully employed. According to him, economy will grow and more funds would be accrued to the participant in takaaful and in case of any loss it will be distributed according to the contribution?s proportion. He however did not consider legislative or statutory frame work for the operation of Islamic insurance law in the country. No reference was made to motor vehicle insurance in specific.
It is imperative to state here that none of the above reviewed publications discussed the insurance scheme on vehicle side by side with Islamic Law Alternative products (Known as Takaaful/Ta?ameen) as intended to be done in this work. Furthermore, this work also intends to briefly consider the provisions of Guideline on Takaaful operation in Nigeria as released by National Insurance Commission (“NAICOM”).

1.8       Organizational Layout
This dissertation is arranged in chapters and comprised of five chapters.
Chapter one focuses on the general introduction encompassing statement of research problem, objectives of the research, justification of the research, scope of the research, research methodology and literature review.
Chapter two focuses on Insurance under the Statutes with reference to motor insurance.
Chapter three presents Islamic Law alternative products to conventional insurance by stating the basis for it, models and mode of operations in an attempt to fulfill the main objectives of insurance but in a Shariah Complaint atmosphere.
Chapter four makes juxtaposition of the operation of insurance Scheme under Nigerian Statutes and Islamic Law alternative and thereafter used Takaful Guideline 2013 as a yardstick for improvement introduced by Shariah? compliant products in Insurance sector/field.
Chapter five provides for summary and conclusion under which observations from the whole discourse in this work are summarily enumerated and recommendations thereto were made to the findings identified.