Conventional insurance in conflict with Islam
by Angela Jameson
Conventional insurance products are in conflict with Islamic beliefs for three reasons. Insurance involves an element of uncertainty, gambling and the charging of interest, which are prohibited by the Koran.
Capita announces first UK insurance firm to operate on Muslim principles
by Angela Jameson
Britain's first Sharia-compliant insurance company is to be launched in April by a former GE Capital insurance executive.
British Islamic Insurance Holdings (BIIH) will open for business under a consumer brand name when it has received final approval from the Financial Services Authority.
News of the initiative was revealed by Capita, the outsourcing giant best known for running London's congestion charge, which will provide front and back-office functions for the new business. BIIH will offer car and home insurance initially, but life insurance, investments, savings and ethical financial products will be launched later in the year.
Capita, which is also known for collecting the BBC licence fee, will sell its policies as well as process claims and run the company's back office. The deal, in which Capita will move further into the area of general insurance, should be worth £87million to Capita over eight years.
Conventional British insurance products are in conflict with Islamic beliefs, because the Koran prohibits riba, loosely translated as interest but interpreted by many progressive Muslims as usury or extortionate interest. Insurance also contains elements of uncertainty and gambling that make it unsuitable for devout Muslims.
Research for BIIH in Britain has shown a strong desire for an Islamic insurance product, as long as the cost and level of cover is comparable with existing conventional insurance policies. The insurance product will comply with Takaful, the Muslim insurance concept.
Bradley Brandon-Cross, the chief executive of BIIH, said: “The Muslim faith states that, because of various product features, conventional UK insurance options are in conflict with Islam - and this creates a dilemma for British Muslims. We are planning to create a British insurer that operates in a way that removes this dilemma and creates an exciting new sector in the British insurance market.”
1) Conventional insurance in conflict with Islam
2) Capita announces first UK insurance firm to operate on Muslim principles