First Islamic Bank to serve 2 million Muslims in GB

As I have said, the giants of the financial world will just 'adapt' and squeeze out any marginal players...

regards

T..

p.s. Happy new year to all


Lloyd's cashes in on Islamic cover
Lisa Buckingham, Mail on Sunday
1 January 2006
LLOYD'S of London is to launch its first insurance syndicate operating under the strict rules of Sharia - Islamic law - in an attempt to grab a slice of a rapidly expanding and highly lucrative market.

Though large commercial ventures in Islamic countries use the conventional insurance and reinsurance markets, substantial growth in Takaful - Sharia-compliant insurance - is expected to be driven by individuals.

The market is estimated to be worth between £900m and £1.1bn a year, but is expected to surge by about 500% over the next five or six years.


Sharia prohibits investing in funds that earn interest or that put money into areas such as the arms trade, gambling, pornography, alcohol or banking.


The new insurance syndicate will operate as a joint venture with the Slama Islamic Arab Insurance Company on a basis of mutuality, with some surpluses shared with policyholders.


The syndicate will also be forbidden from earning interest on the premiums it collects, so it will have to put its money into asset-based funds such as the portfolio of Sharia-compliant investments that has been developed by leading companies, among them the banking giant HSBC.


The syndicate, which will be run by Creechurch Underwriting, will have an initial £41m of capacity. It will start by writing reinsurance risks for Takaful companies, but expects to take on direct risks within a year or more.


Bruce Graham, chief executive of Creechurch, said most of the business was expected to come from companies in Asia, particularly Indonesia and Malaysia, where Takaful, an Arabic word meaning joint guarantee, is most developed.


The market is likely to be boosted by the relaxation of regulations, a more indulgent reading of Islam's financial requirements and the introduction of new rules, such as Saudi Arabia's recent insistence that motorists should buy insurance. Graham said the structure of Lloyd's, whereby participants operate as sole traders and investment funds are clearly delineated, meant the insurance market was an ideal place for such an operation.


'In our framework, there is a concept of separate members and separate trust funds so we can manage different investment policies where a large corporate entity would find this difficult,' he said.


The launch of the new syndicate follows the decision by countries such as Turkey to issue bonds that comply with Islamic norms and the start of a Sharia-compliant share investment index by top US financial information company Dow Jones.