Shariah compliant insurance company launched (From Asian Image)

Shariah compliant insurance company launched

10:10am Tuesday 29th July 2008

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Britain's two million Muslims will now be able to take out motor insurance that complies with their faith, with the launch of the UK's first independent Islamic insurance operator in the UK.

Salaam Halal insurance will offer Shariah-compliant motor insurance and there are plans to launch a home insurance product before the end of the year.

About Takaful - how does it work?

Takaful is a new concept in the UK because, unlike conventional insurance where the risk is shifted from the policyholder to the insurance company, Takaful is a structure in which risk is shared between all policyholders.

Takaful insurance allows participants to pay their contribution into a pool (Takaful Fund). The pooled contributions are invested strictly in Shariah-compliant investments (i.e. not in interest bearing investments or investments linked to prohibited goods and activities such as alcohol or pork) and any investment profits are distributed back to the Takaful Fund.

The fund is used to pay claims, and at the end of the year, if the Takaful Fund is over-funded it is then distributed back to Policyholders as a Participation Discount on their next year's premium. This will be in addition to any conventional No Claim Bonus.

Mr. Abdulaziz Hamad Aljomaih, Chairman of Salaam insurance commented: "The launch of Salaam insurance - the first independent, fully Shariah-compliant Takaful operator available in this country - is a significant step for the growth of Islamic finance in the UK."

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