Halal insurance for Islamic car finance customers

Car finance customers with Muslim beliefs could soon be able to access specialist car insurance. Islamic finance is relatively new to Britain, and is not fully understood by many consumers - not even by consumers of the Muslim faith.

However, a UK Treasury initiative led to the establishment of the Islamic Bank of Britain in 2003, and since then other financial products for Islamic consumers have started to appear.

Principle Insurance Holdings has begun a marketing campaign to sell shariah-compliant car insurance to Britain's 2 million Muslims under the brand name "Salaam Insurance".

Chief Executive Bradley Brandon-Cross, says: "For a long time, Muslims have not been able to buy insurance products compliant with their beliefs so they have had to make do with products that are not empathetic with those beliefs."

Salaam's car insurance is based on the principle of "takaful", according to which policyholders' contributions - equivalent to premiums in conventional insurance - are pooled and invested in shariah-compliant investments. Such investments must not be interest-bearing or support businesses that encourage activities prohibited for Muslims, such as gambling, pornography and alcohol.

If the amount paid into the fund exceeds the amount paid out in claims, the surplus is redistributed to policyholders.

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