It was only a year ago, at the World Islamic Economic Forum in London, that David Cameron unveiled a 200 million pound Sukuk (Islamic Bond) making Britain the first non-Muslim country to launch a Sharia compliant bond.
At the time the Prime Minister said that it would be a "mistake" to miss the opportunity to encourage more Islamic investment adding, "When Islamic finance is growing 50pc faster than traditional banking and when global Islamic investments are set to grow to 1.3 trillion pounds by 2014, we want to make sure a big proportion of that new investment is made here in Britain."
There’s no doubt that finance industry as a whole has recognised the potential of offering Islamic financial services. More than 20 international banks operating in the UK are working in Islamic finance, 6 of which are fully Sharia compliant; over 25 major law firms in the UK are supplying Islamic legal services; 9 fund managers offer Islamic asset management services and all of the UK’s largest accountants, consultants and professional service firms have Islamic finance departments.
London is now set to rival Dubai and Kuala Lumpur as the capital for International Islamic Finance and it’s a strategy that is bringing clear benefits. Islamic finance is behind recent transformations of London’s skyline by financing in whole or in part, developments such as The Shard, Chelsea Barracks, Harrods, the Olympic Village and the iconic Battersea Power Station site.
It is within this environment that Sharia compliant insurance (Takaful) is becoming essential. Previously, Islamic institutions have been able to purchase non-Sharia compliant protection under “dharura” or the principle of necessity. In essence, it has been permissible if there was no other alternative available.
However, the Arab Spring led to much of Muslim world focussing more intently on business behaviour becoming ‘more Sharia’ and with such a will to accommodate all other aspects of Islamic finance, there was no reason for Sharia compliant insurance not to be developed in Britain.
It is becoming increasingly important. As an example, the Islamic property investment market has tremendous potential and an inability to provide it with Shariah compliant insurance could seriously hamper growth opportunities. The fact is that investment risk that is securitised by conventional insurance cannot achieve full Shariah compliance and as a alternative is now available, any concession or “dharura” is going to be increasingly difficult to justify so Muslim clients will want to opt for the Takaful facilities.
Working with Cobalt Underwriting, London’s only Shariah-compliant underwriting agency, we are able to offer a wide range of compliant insurance products for everything from Real Estate and Development, International Property and Fine Art to General Liability, Financial Institutions, Professional Indemnity and Management Liability.
We will be running a seminar on the principles and applications of Sharia compliant insurance in early 2015 and anyone interested in attending is welcome to contact us.