The concept of mutuality is “with policyholders, rather than other forms of mutuality,” he noted–adding that, similar to a mutual, a mechanism would enable the syndicate's policyholders to share in the ultimate profits derived from the Islamic products.

In the future, after the firm moves into Takaful, it plans to market Takaful reinsurance, he said. “That's a second-phase development as we become established.”

Mr. Graham predicted that growth within the primary Takaful market would be “at least 20 percent per annum. So within five-to-six years we'd expect 500 percent growth. We think it's an extremely rapidly developing market, and we know there are a number of initiatives afoot to assist that development–particularly in places like Malaysia.”

One of the inhibitors to the development of Takaful, he noted, has been availability of secure reinsurance from compliant carriers. “So, we would hope to assist in that capacity, and the growth should at least match the growth in primary business.”

Initially, he said, Creechurch intends to open a service operation within Dubai, with the majority of income derived where Takaful operators are currently established, including Malaysia and Indonesia.

The primary growth is in personal lines, with auto being the key area as coverage becomes compulsory, he noted. This will be followed by personal property and small commercial lines. Large commercial risks are already covered because of “the need to protect the larger marine and energy-type risks,” he said.

“We are working very closely with Lloyd's and it is a brand-new initiative, and so we'll be entering it very cautiously,” he added. “But we do see there is a very large growth prospect.”

The new entity is expected to sit alongside its existing Syndicate 1607.

Theoretically, Takaful is perceived as cooperative insurance, where members contribute a certain sum of money to a common pool. The purpose of this system is not profits but to uphold the principle of “bear ye one another's burden,” according to the Web site of the international Cooperative & Mutual Insurance Federation in the United Kingdom.

Meanwhile, Allianz Indonesia announced recently that it is introducing insurance products which comply with the rules of the Islamic law, Sharia, and expects to have a market share of 20 percent in 20 years. Allianz Indonesia said it will open a new branch office in Banda Aceh.

Jens Reisch, CEO of PT Asuransi Allianz Life, said in a statement that Allianz Indonesia decided to introduce the products, which comply with the rules of the Islamic law, after listening to customers “who increasingly asked for it. They are attracted by the community principle that Islamic financial products represent. This is why Sharia-compliant financial products have tremendous growth rates in Asia and other parts of the world.”

Mr. Reisch noted that although the general market share of Sharia insurance is still below 1 percent, it grew by 28 percent in 2005. “We expect Sharia-compliant insurance to have a market share of 20 percent in 20 years, like today in Malaysia,” he added.

He said the company's plan is to sell at least 1,000 Sharia policies and achieve a premium income of more than five billion Indonesia rupiahs, or about $500,000 in U.S. dollars. He projected that in five years, 10 percent of new life insurance business will be Sharia products.

“Indonesia is the largest Muslim country in the world with an insurance penetration of less than 3 percent,” he said. “That means a huge growth potential. We think that about 15 million people, out of some 230 million Indonesians, will soon be able to afford insurance.”

He said the life products being offered are unit-linked, and the company will invest in funds accepted by the Board of Sharia. By law, he noted, “we are required to invest more than 80 percent in Indonesia itself.”

The main focuses of the company, Mr. Reisch said, are clients open to both types of insurance. “Since the regulation allows it, our agents and other business partners will offer both conventional and Sharia insurance,” he said.

“About half of our 6,000 sales agents are Muslims, but non-Muslims are also allowed to sell Sharia insurance,” he said, noting that agents must complete a three-day training to receive an internal license.