Two years ago Gordon Brown outlined a plan to make Britain a world center of Islamic trade and finance. While his government maneuvers to become the first in the West to issue a Shari'a bond, the UK's private sector is already cashing in on the Muslim market. The advent of Islamic-oriented insurance policies represents the latest example:
Britain's first independent Islamic insurance company has received authorization by the Financial Services Authority (FSA).
Principle Insurance will provide unique, Shari'a-compliant (or halal) motor and home insurance to British residents from later this year.
Principle chief executive Bradley Brandon Cross added: "Some elements of conventional UK insurance, such as the earning of interest, the investment of policyholders' funds, and uncertainty mean that it is not in accordance with Muslim beliefs.
"We are going to be offering unique insurance products that meet a genuine need and are also competitively priced."
In a related news item, FoneShield is rolling out the first Shari'a-compliant insurance plans for mobile phones. The director insists that these policies are not just a cynical attempt to earn a few extra pounds: "They also compel us to meet an excellent ethical standard for our business."
Islamic insurance and associated financial structures utilize rather baroque schemes to circumvent Shari'a-dictated prohibitions, particularly those on interest. However, economics professor Mahmoud el-Gamal has argued that they employ interest in all but name. "Islamic finance today is interest-based," he explains. It is "first and foremost about religious identity."
The "genuine need" for Shari'a-compliant insurance therefore exists primarily on the part of those who aim to drive a wedge between Muslims and everyone else. Indeed, Shari'a finance was designed by twentieth-century Islamist intellectual Abul-Ala Mawdudi as a means to "minimize relations with non-Muslims, strengthen the collective sense of Muslim identity, extend Islam into a new area of human activity, and modernize without Westernizing."
Insurance is a mechanism for mitigating risk, but Shari'a-compliant policies may actually promote more of it in the long term.