HSBC Holdings Plc plans to become the first international bank to offer insurance products compliant with Islamic law, the Financial Times said, citing an executive of the company.
HSBC, the world's second-largest bank by market value, wants to introduce products in the Middle East states, including Saudi Arabia, and in countries with large Muslim populations, such as Britain, according to the Financial Times. The new products may be introduced by the end of this year.
Traditional insurance products were banned under Islamic law because there were elements of gambling and uncertainty involved with setting premium and payment levels and they relied on interest from investments to maintain life funds, the paper said.
The new products differ invest premiums in a way compliant with Islam's syariah code of law, the report said, citing Iqbal Khan, chief executive of the bank's Amanah Finance unit.
Policyholders' funds are kept separate from that of shareholders.
The London-based bank, which operates in 79 countries, introduced mortgages that comply with Islamic law in July. Bloomberg