On 28 July 2008, Principle Insurance Company (Principle), the UK's first Shariah-compliant insurance company, launched in the UK.
Principle received authorisation from the FSA on 1 May 2008 to carry on general insurance business and is the first Shariah-compliant company to receive such authorisation. It offers motor insurance under the trading name of Salaam Halal insurance and intends to offer a home insurance product before the end of the year.
Conventional insurance does not comply with the principles of Shariah law because products contain elements of uncertainty, gambling and interest. Investments made by conventional insurance companies may also not be permissible under Shariah law.
Principle will offer Takaful insurance, which is Shariah compliant. In Takaful insurance, policyholders agree between themselves to share the risk of a potential loss to any of them by making a contribution to a Takaful fund, which is used to compensate participants for any loss. Any surplus in the Takful fund is distributed to policyholders by applying a reduction in the following years' premium, in addition to any conventional no claims bonus. Investments are limited to those that are Shariah compliant, and any investment profits are credited to the Takaful fund.