April will see the launch, by a former GE Capital insurance executive, of Britain’s first insurance firm to operate on Muslim principles.
British Islamic Insurance Holdings (BIIH) will operate under a consumer brand name once it has received final approval from the Financial Services Authority. Initially, BIIH will offer car and home insurance, but are launching life insurance, investments, savings and ethical financial products later in the year.
Capita, the outsourcing giant which runs London’s congestion charge and collects the BBC licence fee, revealed the news and will provide front and back office functions for the new business. It will sell it’s policies and also process claims . This deal, which will move Capita further into the area of general insurance, could be worth £87 million to Capita over eight years.
Research conducted for BIHH in Britain found great interest for Islamic insurance products, if the the level of cover and cost are comparable with the conventional insurance policies already in existence. Conventional insurance products in Britain conflict with Islamic beliefs because riba, which loosely translates as interest, is seen by many progressive Muslims as excessive or extortionate interest and is prohibited by the Koran. Also, devout muslims find the elements of uncertainty and gambling in Insurance disagreeable.
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 .”