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| Islamic Home Insurance Launched in the US |
 When Babar Saeed heard about the first Islamic insurance product in the United States his first response was, “Tell me more and how can I sign up?” It’s a fact that true Shari’ah compliant insurance has finally arrived in the United States after various groups tried for 25 years. But now, building on their innovative track record, Zayan has successfully launched the first Islamic homeowner’s insurance program in the US. Takaful is the final step in completing the range of Shari’ah compliant financial services offered in the United States and an impressive milestone for American Muslims.
Takaful is an Arabic word which means “joint or mutual guarantee”. Contrary to popular understanding, Islamic law does not prohibit people from taking measures to protect their assets or personal property. However, to be Shari’ah compliant, the method for providing protection has to be structured in a particular way. Takaful programs provide protection through the idea of mutual solidarity and cooperation (ta’awun) and involves the creation of a common pool of assets through which all members of the takaful program agree to protect each other in the case of a loss or claim. Like other Islamic finance products, Takaful exhibits several socially responsible characteristics which distinguish it from conventional insurance products: Sale of Risk – Conventional insurance treats risk like a commodity for sale. The Shari’ah does not allow this because risk cannot be measured, or quantified, accurately. Prohibited Investments - Premiums are invested in interest bearing instruments and activities related to alcohol, tobacco, pornography, gambling, arms/defense, and riba-based financial instruments. All of these are prohibited in the Shari’ah. Takaful and its Socially Responsible Roots Since Takaful programs cannot invest premium pools in non-Shari’ah compliant investments, policy holders realize the opportunity to align their asset’s protection with their faith by using a socially responsible form of insurance. This investment strategy makes Takaful appeal even to non-Muslims who are attracted to its ethical business model. Zayan’s first non-Muslim takaful policy holder, Telly Stefaneas, is extremely excited about the program. Telly told us, “The Takaful product is appealing to me because of its socially responsible approach to insurance. My money isn’t being invested in ways I would feel uncomfortable and it just makes sense.” Takaful programs also contribute an amount of surplus (generated from investment activities) to worthy, globally recognized charities. Channeling investments away from socially harmful industries, like alcohol, tobacco, pornography, riba-based banking, gambling, and armaments, while also directly supporting charitable causes is a strategy which Muslims and non-Muslims find attractive. Conventional insurance programs pour billions of dollars into industries that have proven negative effects on society. Insurers’ most important consideration is receiving the highest rate of return on their investments; emphasis is not placed on how their investments can/will promote pornography, alcoholism, smoking, and war, among other detrimental social activities. For example, statistics show that tobacco companies’ products kill 36,000 people every month. Smoking actually kills more than 9 times as many people per year as car accidents. Insurance companies also invest in the alcohol industry where historically, more than 100,000 U.S. deaths are caused by excessive alcohol consumption each year. (See box “Facts About Unethical Industries”) Facts About Unethical Industries o Pornography o Every second – Over $3,000 is being spent on pornography o 2006 Global revenues totaled over $97 billion o Average age of first Internet exposure to pornography – 11 years old o Pornography has proven links to instances of rape, domestic violence, and pedophilia o Alcohol o Long-term effects of consuming alcohol include permanent damage to vital organs, cancer, and high blood pressure o In 2006, 16,005 people were killed in the US in alcohol-related motor vehicle traffic crashes o In 2006, 1,794 children age 14 and younger were killed in motor vehicle crashes. o Tobacco o Smoking related-diseases kill one in 10 adults globally, or cause four million deaths. By 2030, if current trends continue, smoking will kill one in six people. o Cigarettes cause more than one in five American deaths. o Half of long-term smokers will die from tobacco. Every cigarette smoked cuts at least five minutes of life on average - about the time taken to smoke it. Farrukh Siddiqui, Chief Operating Officer at Zayan Finance, a leading Shari’ah compliant finance firm in the US feels that it is imperative to have Takaful products available in the market. “American Muslims are looking for ways to not only have Shari’ah compliant financial solutions but also be involved with industries which don’t promote vice or harm. This takaful program is a major step in the right direction”, he said. When asked why for many Muslims the idea of insurance makes them uncomfortable Mr. Siddiqui replied, “The reality is that the idea of insurance is not alien to Islam. One can actually trace the idea of insurance right back to Islam’s earliest days. The takaful program is based on these first principles and makes sure that it has a positive impact on its society.” Zayan Takaful – the next step for American Muslims Islamic Finance continues to grow at a record pace and its expansion is an indicator of the industry’s strength and value despite the losses seen across the global financial sector. Given this global trend, American Muslims have been demanding access to the same types of Shari’ah compliant products and services which are available in other countries. When looking at the current reach of Takaful, programs are currently operated by more than 70 companies in over 20 countries. Up until recently, Takaful options did not exist in the United States. Now, Zayan Takaful has released the country’s first home insurance takaful program. This is a tremendous stride for American Muslims as consumers can now buy homes using fully Shari’ah Compliant solutions with both Islamic financing and insurance. The Takaful Homeowners Policy, available through Zayan Takaful, has been released in partnership with one of the largest property insurance companies in the United States. The arrangement between Zayan and its partners has given Zayan Takaful the opportunity to bring true Islamic insurance to the American Muslim market while leveraging the strength of a large insurance carrier. This takaful program has been brought to market on the back of Zayan’s successful launch of the country’s first commercial real estate financing product in 2007. According to company officers, the response to the program has been overwhelming. As consumers are approached with the possibility of securing a Shari’ah compliant insurance program their reaction is, “How quickly can I sign up?” As the demand and use of Islamic finance continues to grow in the United States, companies will continue to meet the market’s demand with even more innovative products and services.
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