LONDON: HSBC Bank has become the first bank in the U.K. to offer a Shariah law-compliant building and contents insurance. The new HSBC Home Takaful insurance policy, the bank claimed, is based on the concept of mutual cooperation in the sharing of risk, altering some features of the conventional product to make sure the policy conforms to the Shariah law.
HSBC Amanah's U.K. head Amjid Ali said over 250,000 homeowners of the 1.6 million Muslim population in the country had no proper access to Shariah-compliant insurance until now. The bank's Home Takaful policy is the first of its kind to be nationally available, he said. It has been compiled under the guidance of an independent Shariah supervisory committee.
The policy offers the same benefits of a conventional home insurance policy but in keeping with Islamic principles, no cover is provided for alcohol or pork-related items.
Meanwhile, Lloyds TSB has announced that it is making available Islamic banking facilities in five additional branches, taking the total number of such branches to 22. The branches are in Newcastle, Preston, Sheffield, Bastwell and Sparkhill in Birmingham.
Under the Takaful insurance, which has been readily available only outside Western Europe, policyholders donate their contributions (premiums) into a collective fund (Takaful fund), and jointly share the risk for their mutual benefit. The insurance system will cover buildings and their contents.
HSBC Bank already provides home finance, current account and pension funds complying with the Shariah law.
All accounts under the Shariah law are basic accounts. Customers are given a debit card and they do not earn any interest or enjoy any overdraft facility. For those who want to buy a home through a loan, the bank buys the house outright, contributing 90 per cent of the cost and the customer pays the 10 per cent upfront. The money advanced by the bank is paid back over an agreed period of time, at the same time paying a rent for the home.
Posted
on : Thu, 17 Nov 2005 10:25 GMT | Insurance News
By : Anne Philips
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