AFL

What You Should Know

Aflac Incorporated is one of the largest publicly-traded conventional supplemental-insurance companies in the world, with the majority of revenue derived from the Aflac Japan segment (supplemental medical, cancer-care, life-insurance, and annuity products sold primarily through worksite-payroll-deduction distribution to Japanese policyholders — Aflac is the largest provider of supplemental cancer-care and supplemental medical insurance in Japan) and the Aflac US segment (supplemental accident, short-term-disability, dental-and-vision, hospital-indemnity, critical-illness, cancer-care, and life-insurance products sold primarily through worksite-payroll-deduction distribution to US policyholders via the Aflac Duck-branded marketing platform). Aflac generates revenue from insurance-premium income and investment-income on the substantial investment portfolio backing policyholder reserves and capital (the investment portfolio is invested primarily in fixed-income securities — Japanese-government bonds, US Treasuries, corporate bonds, mortgage-backed securities, and other interest-bearing instruments — which generate interest income that is core to the insurance-economics model). Conventional insurance fails Sharia screening on three foundational grounds: (1) gharar (excessive uncertainty) — the contractual exchange of fixed premiums for contingent future payouts involves excessive uncertainty that is not permitted under classical Islamic contract law; (2) maysir (gambling-like element) — the policyholder may receive substantially more or less than the premiums paid, which has gambling-like characteristics; (3) riba (interest) — the insurance company's investment portfolio backing reserves earns interest income that is core to the economic model. The classical Islamic-finance alternative to conventional insurance is takaful (cooperative mutual-protection), which is structurally distinct from conventional commercial insurance. Aflac is unambiguously a conventional commercial-insurance company and fails Sharia screening on all three foundational grounds. The verdict is unanimous across major Sharia screening agencies.