Insurer to launch Shariah-compliant product.
Principle Insurance has become Britain’s first independent Islamic insurance company after receiving authorisation from the FSA this week.
It will initially launch a Shariah-compliant motor insurance product followed by home insurance.
Islamic insurance, also known as takaful, allows Muslims to comply with Shariah law, which prohibits the collecting of interest, gambling and investments in companies that do not comply with Shariah law.
Britain has an estimated two million Muslims.
In addition to offering home and motor products, which will be sold online and by phone, Principle is also pursuing cross-selling opportunities with other companies offering Islamic finance products.
Principle’s products will not be sold through brokers initially, although it has not ruled it out in the future.
Bradley Brandon Cross, chief executive of Principle, said that brokers would need to be trained in different policy wording, and new cash management systems would need to be introduced due to the unique nature of Islamic insurance.
He added that Principle was already working on a range of other Shariah-compliant products, including one aimed at the SME market.
The insurer will be remunerated by a share of the surplus, known as wakala.
Abdulaziz Hamad Aljomaih, chairman of Principle, said: “Principle will go some way in altering the perception of Islamic finance in the UK, by showing that progressive, sensible and profitable businesses can be established in accordance with Islamic law.
“Achieving authorisation is a clear vindication of my belief that Shariah-compliant financial products are not only equitable and profitable, but also conform to the modern day principles of international finance, especially from a regulatory standpoint.”