Dr.Monzer Kahf, a prominent economist and counselor states: Islamic insurance is permissible. You know its authenticity from trusting the truthfulness of the company that provides it, the supervisory authority that allows it to make such a claim and the Shari’ah advisory board of the company. If you trust all these then the claim is correct, but if you don’t trust them the claim may not be correct.
In brief, the difference is: Islamic insurance is provided on cooperative basis and its premium is not a price of covering the risk but a membership in that cooperative that provides these services. Conventional insurance is based on exchange between two parties and the premium is a price of covering the risk.”