Lloyd’s chairman Lord Levene has today spoken of the group’s desire to enter the Islamic insurance market, which provides insurance services that comply with the strict financial prohibitions laid out in the Muslim Shariah law that prevent betting or gambling on future outcomes.
Expressing his interest today with Bloomberg, Lord Levene suggested that the market for Islamic insurance was growing rapidly and was one of the key areas for expansion of the industry in the coming ten years, particularly as services become more widespread and more developed by Western insurance groups.
Amongst the firms already offering Islamic insurance are Swiss Re, Allianz and AIG, who all have their own range of products that comply with the requirements of the Islamic faith.
A proportion of the Muslim faith believe that traditional insurance contravenes Shariah law, which forbids certain cornerstones of Western financial practice like interest payments, and specifically the perceived ‘gambling’ element of insurance that relies on certain future outcomes.
As a result the demand for Islamic insurance is increasing, which would offer a faith-sensitive alternative to traditional insurance to ensure there are no ‘holes’ left by a lack of cover derived from religious points of view.
It remains to be seen whether Lloyd’s move into the market will prove to be successful commerically, following steps by a number of other insurers to already offer Islamic financing and insurance, which is seen as a hotspot for future development of the industry on a global scale.
With just 1% of the world insurance market coming from the Middle East, it is possible that the introduction of more widespread alternatives to Western insurance could open a massive and lucrative hidden market for cover in the Eastern regions and in some emerging economic