UK: First Sharia-compliant insurance firm

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."


Mr Brandon-Cross spent six years at GE Capital, managing its primary insurance business in Europe and the Far East. He went on to be managing director of the UK insurance business, which was Britain's ninth-largest at the time. He left GE in 2001 to start Rubicon Corporation, an insurance outsourcing venture.


BIIH raised £19million in 2006 from a private placement to institutional and private investors in the Gulf region.


Capita has been operating in the financial services market since 2000, first in the general insurance market and latterly in the life and pensions arena. The insurance sector has provided some of its biggest contract wins in the past year, when it began a £722million contract with Prudential to administer seven million mature life and pensions policies. The contract win has led to 1,750 Prudential UK staff transfering to Capita and a further 1,250 staff in Bombay joining.


Since the turn of the year, the company has been taken on to run the back office in Norwich of Marsh, the United States-based insurance broker, in a deal that is expected to be worth £200million over ten years.


Paul Pindar, the chief executive of Capita, said: "We have been working with BIIH, working to design and build a products infrastructure for over a year, and believe that this deal will provide significant value to both organisations."


Source: The Times (English)