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UK Firms Place a Premium on Shari'a-Compliant Insurance
by David J. Rusin • May 12, 2008 at 9:26 am
Two years ago Gordon Brown outlined a plan to make Britain a world center of Islamic trade and finance. While his government maneuvers to become the first in the West to issue a Shari'a bond, the UK's private sector is already cashing in on the Muslim market. The advent of Islamic-oriented insurance policies represents the latest example:
In a related news item, FoneShield is rolling out the first Shari'a-compliant insurance plans for mobile phones. The director insists that these policies are not just a cynical attempt to earn a few extra pounds: "They also compel us to meet an excellent ethical standard for our business."
Islamic insurance and associated financial structures utilize rather baroque schemes to circumvent Shari'a-dictated prohibitions, particularly those on interest. However, economics professor Mahmoud el-Gamal has argued that they employ interest in all but name. "Islamic finance today is interest-based," he explains. It is "first and foremost about religious identity."
The "genuine need" for Shari'a-compliant insurance therefore exists primarily on the part of those who aim to drive a wedge between Muslims and everyone else. Indeed, Shari'a finance was designed by twentieth-century Islamist intellectual Abul-Ala Mawdudi as a means to "minimize relations with non-Muslims, strengthen the collective sense of Muslim identity, extend Islam into a new area of human activity, and modernize without Westernizing."
Insurance is a mechanism for mitigating risk, but Shari'a-compliant policies may actually promote more of it in the long term.