Bailed-out AIG offers Islamic insurance to U.S.

After American International Group Inc, or AIG, reached two major bailout agreements totaling $152.5 billion in taxpayer dollars, the company is stepping up its dealings with Islamic finance by offering Shariah-compliant homeowners insurance to the U.S. – outraging critics over AIG's support of a "discriminatory ideology, that is against equality, and that is against liberty."

Specifically, while American taxpayers are loaning money to AIG and hold 80 percent equity interest in the company, AIG owns a Shariah-compliant insurance company, offering accident, health, motor, personal contents, property and casualty insurance coverage.

Now Risk Specialists Companies, Inc., or RSC, a subsidiary of AIG Commercial Insurance, is introducing its Shariah-compliant Takaful Homeowners Policy to the U.S., according to a Dec. 1 AIG announcement. The new insurance is said to be the "first installment" in a "series of Shari'ah-compliant (Takaful) product offerings in the U.S."

The Shariah-compliant policy is underwritten through RSC member company A.I. Risk Specialists Insurance, Inc., in conjunction with Lexington Insurance Co. and in association with AIG Takaful Enaya.

"Takaful" is based on Quranic principles of "Ta'awon" – or mutual assistance. The term originates from the Arabic word "Kafalah," meaning "joint guarantee." Similar to mutual insurance, where policyholders own a stake in the organization, members of a Takaful group pool their resources to help the neediest member, and losses are divided among them.

Cooperation is key in the system, and proponents often point to Surah Al-Maidah, verse 2 of the Quran, to explain the concept. It states: "Help ye one another in righteousness and piety, but help ye not one another in sin and rancor."

According to Ernst & Young's 2008 World Takaful Report, the Shariah-compliant insurance had an estimated $5.7 billion global market in 2006 with more than 130 providers. The market is estimated to exceed $10 billion by 2010.

"The introduction of Takaful products in the U.S. represents an important and emerging growth opportunity for AIG Commercial Insurance," President Matthew F. Power of Risk Specialists Companies, Inc. said."We are pleased to offer socially responsible solutions to this segment of the domestic market."

Unlike mutual insurance, Takaful includes Shariah-compliant stipulations. It prohibits investment in companies that violate Islamic law by selling or promoting products such as alcohol, tobacco, pornography, gambling and even pork. Critics claim Shariah-compliant businesses are even opening doors to U.S. funding of Islamic extremism.

Jeffrey Imm of Family Security Matters and the Anti-Jihad League of America has written extensively on the subject, warning that AIG would expand its Shariah products in the U.S. He has even created a petition demanding the Federal Reserve, Securities Exchange Commission and Department of the Treasury require AIG to divest itself of its Shariah businesses.

"The Sharia legal codification is intended to enforce discriminatory and segregationist practices against women and non-Muslims and to suppress the liberties of those living in Islamic theocracies," Imm writes."... Sharia is incompatible with democratic values and the inalienable right that 'all men are created equal.'"

A part of AIG's government bailout includes its Takaful Sharia-based insurance business, its divisions promoting Sharia finance and Sharia mutual trusts.

"You own it," Imm declares. "That's where your tax dollars are going today."

Imm warns investing in Shariah-compliant businesses is dangerous for the U.S. When the government first considered providing a bailout to AIG it should have first required the company to divest itself of Shariah-based businesses, he wrote.

"How is it in the economic interests of the United States to own part of a corporation with a business based on promoting a discriminatory ideology, that is against equality, and that is against liberty?" Imm asks. "How is it in the economic interests of the United States to own part of business that supports an Islamic supremacist practice that has been used to fund Jihad?"

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