LONDON (AFP) — The country’s first sharia-compliant insurance company was launched Monday, offering motoring policies in line with the Islamic legal code.
Salaam Halal insurance uses Takaful principles, whereby the risk is spread between all policy holders. In contrast, conventional insurance policies shift the risk from the policy holder to the insurance firm.
People taking out a policy with Salaam Halal pay contributions into a pool, with that money then put into sharia-compliant investments — avoiding companies that are involved in alcohol or pay interest.
The central pool of funds is used to pay any claims that arise, and at the end of the year, if the pool is over-funded, the excess will be distributed back to policyholders through a discount on their next premium.
The policies are aimed at Britain’s 1.6 million Muslims, who constitute 2.7 percent of the total population, according to the 2001 census.
“The launch of Salaam insurance — the first independent, fully sharia-compliant Takaful operator available in this country — is a significant step for the growth of Islamic finance in the UK,” said Abdulaziz Hamad Aljomaih, the chairman of Salaam insurance.
The group, authorised and regulated by the Financial Services Authority, an independent watchdog, hopes to launch home insurance policies later this year.
Their call centres in Britain can take calls in English, Arabic, Bengali, Gujarati or Urdu.
In 2004, the government authorised a 100 percent Islamic bank, the Islamic Bank of Britain. And the Lloyds TSB last year launched Islamic finance products targeted at businesses, and offered sharia-compliant bank accounts.