Britain's first Sharia-compliant insurance company is to be launched in April by a former GE Capital insurance executive.

British Islamic Insurance Holdings (BIIH) will open for business under a consumer brand name when it has received final approval from the Financial Services Authority.

News of the initiative was revealed by Capita, the outsourcing giant best known for running London's congestion charge, which will provide front and back-office functions for the new business. BIIH will offer car and home insurance initially, but life insurance, investments, savings and ethical financial products will be launched later in the year.

Capita, which is also known for collecting the BBC licence fee, will sell its policies as well as process claims and run the company's back office. The deal, in which Capita will move further into the area of general insurance, should be worth £87million to Capita over eight years.

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