Industry awaits regulation of first publically available Shariah compliant UK insurance company
As the first publically available Shariah compliant UK insurance company awaits FSA approval, brokers could soon be drawn towards the untapped market provided by British Muslims.
Peter Staddon, technical services manager of BIBA, said it is impossible to put a figure on Sharia-compliant or Takaful market could be worth in Europe and the UK because, as far as he knows, there has been no significant research done in the area.
The sector has been estimated to be worth £250bn worldwide but this would comprise mainly of the Arab nations.
Other financial sectors that have offered Sharia-compliant policies and packages have seen positive results.
Recent research conducted by Datamonitor pegged the total worth of the Islamic UK mortgage book value at about £6bn.
Datamonitor estimates that there are about 5,400 high net worth Muslims in the UK, with potential liquid assets of more than £3bn.
Regardless of whether it’s quantifiable at the moment, Staddon sees real opportunity for brokers interested in distributing Takaful insurance.
He said: “I think there is sufficient income out there for this product to be popular with brokers.”
With an estimated two million Muslims living in the UK, it’s easy to see that potential.
Typically Muslims living in the UK have been faced with a moral dilemma – they need insurance to drive cars and buy homes but many of the policies run counter to their religious beliefs.
Insurance contravenes central tenets of Sharia law: uncertainty, gambling and interest.
In January, then-economic secretary Ed Balls announced the need to further promote the development of Takaful products in the UK.
He said a push was to see guidance on Sharia compliant insurance products being published alongside this budget.
Balls said the UK should establish itself as the financial partner of choice for emerging markets and a leading global centre for Islamic finance.
Takaful caters, but is not exclusive to the Islamic population and Staddon said he expects many non-Muslim people will be interested in purchasing the product because it aligns with their values.
He said: “It wouldn’t surprise me if in two years they are more non-Muslim than Muslim policy holders.”