Britain Launches Its First 'Sharia-Compliant' Insurance Company
01 March 2008


Capita, the outsourcing giant best known for running London's congestion charge, is providing backoffice functions for a new insurance business tailored to comply with Islamic beliefs after landing a new contract from British Islamic Insurance Holdings

"The Capita Group Plc ("Capita") announces that it has been selected by British Islamic Insurance Holdings (`BIIH') as the sole provider of outsourced services for a range of Takaful insurance policies due to be launched in the UK. Capita will provide a full, end-to-end front and back office function - from selling and administering new policies to managing the claims process, outsourced customer relations and IT services."

The initiative, due to launch in April, will see Capita initially sell car and home insurance by working with British Islamic Insurance Holdings. Life insurance, investments, savings and ethical financial products are to be launched later this year.

Capita, also known for collecting the BBC licence fee, will sell the policies as well as process claims and run the company's back office. The deal should be worth £87 million to Capita over eight years.

Conventional UK insurance products are considered by many Mulsims to be in conflict with Islamic beliefs since it contains elements of contractual uncertainty (gharar).

Bradley Brandon-Cross, chief executive of British Islamic Insurance Holdings, 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."

The insurance product will comply with "Takaful" principles. Takaful is an Islamic insurance concept which has been practised in various forms for more than 1400 years. It originates from the Arabic word Kafalah, which means guaranteeing each other or joint guarantee. The Takaful system is a form of mutual insurance based on co-operation and responsibility. The principles of Takaful are that policyholders co-operate among themselves for their common good; each pays a subscription, which eliminates uncertainty and losses are divided and liabilities spread across a community pool. No individual should derive advantage at the expense.

Source