UK Islamic insurance company given green light

The first Islamic insurance company in the UK is set to open its doors after receiving approval from the Financial Services Authority (FSA)
Principle Insurance, formerly called British Islamic Insurance Holdings, will now be able to offer shariah-compliant home and motor insurance to the UK's estimated two million Muslims.

Ibdulaziz Hamad Aljomaih, chairman of the new insurance firm, said: "I believe Principle will go some way in altering the perception of Islamic finance in the UK, by showing that progressive, sensible and profitable businesses can be established in accordance with Islamic law”.

Principle has adopted the wakala model of insurance provision, in which policy holders are protected by the company’s shareholders and the firm makes a profit through taking an agreed management fee.

By receiving FSA approval, the firm has become the UK's first independent provider of takaful, an Islamic form of mutual insurance.

Mortgages were the first Islamic financial products to be made available in the UK and have grown in popularity.

According to the FSA, London is becoming a 'global hub' for Islamic finance. The regulator granted a licence to Britain's fifth Islamic bank, Gatehouse, last month.