Devout Muslims Turn to Islamic Insurers

Ghayath al-Mahayni, 34, an employee in a private company, refuses to take part in any business that contradicts his religious beliefs.



So when he decided recently to take out a medical insurance plan, he chose an Islamic insurance company, which avoids practices forbidden by Islamic laws such as riba, meaning usury or lending money and receiving interest in return.



“I felt relieved when I got this insurance,” said Mahayni, who pays 300 US dollars a year for his cover with the Aqliah insurance firm.



“When I got sick, I didn’t have to pay exorbitant amounts of money for the treatment,” he added.



The private insurance business in Syria has developed strongly since the government decided in 2005 to end the state monopoly in the sector.



There are currently 13 private insurance firms. Two of them follow Islamic rules: Aqliah, launched in April, and the Syrian Islamic Company, which started operating in September. A third one is in the process of being established.



The companies offer a variety of products like insurance against car accidents, fire, and work-related injuries.



Syria also has three Islamic banks that were established in 2006 after the sector was opened to private enterprise. The banks, which are mostly owned by Syrian and Arab Gulf companies and businessmen, are financially linked to the Islamic insurance companies.



“Islamic insurance companies have been successful in attracting a section of the population keen on respecting Islamic teachings,” said Eyad Zahra, the Damascus-based general director of the insurance regulator.



He said he expected that in the medium term 30 per cent of people with insurance would choose Islamic insurance companies.



According to Ahmad Salouta, a professor of psychology at Damascus University, the interest in Islamic firms springs from the conservative nature of Syrian society, with many people making judgements not only on financial and commercial criteria but also on “a system of values, customs and religious beliefs”.



The idea behind Islamic insurance is to bring together a group of people with limited means to cooperate and help each other, said Abdelkarim al-Saqa, an official at the ministry of religious endowments.



The companies differ from other private firms by giving their clients the possibility to have their funds repaid if they do not make any claims.



Some strictly observant Muslims consider that paying fees to an insurance company, leaving it to fate whether they would receive benefits or not, could be regarded as a form of gambling, which they believe to be against Islamic principles.



Islamic insurance companies also generate income and profit by investing in projects that are deemed to conform to religious beliefs, Saqa said.



He added that these companies do not invest in areas that contradict Islamic teaching such as firms that sell liquor.



In addition to covering individuals against injury, they also distribute excess gains fairly between all the insured.



A council of four religious experts supervises the activities of the companies to make sure they comply with Islamic laws, Saqa said.



Despite their emerging popularity, the development of Islamic insurance companies like their private counterparts has been hindered by a general lack of awareness about their worth among Syrian people, experts say.



Some officials at the endowment ministry suggested that clerics should encourage people to join Islamic insurance companies during Friday sermons.



Another cause of the slow growth of the sector is the relatively high premiums they charge in

comparison to average salaries, some observers say.



In addition, they add, the government has imposed restrictions on investments in these companies – foreign investments are limited to ten per cent of their capital – which could be deterring Arab investors from venturing into this field.



According to Firas al-Ashkar, an official at the state-run Syrian Insurance Company, this has benefited the new sector. By having limited investments outside Syria, insurance companies – especially Islamic ones - have shielded themselves from the effects of the international financial crunch, he argued.