Azerbaijan, Baku, Feb. 15 / Trend I.Khalilova /
The Islamic Corporation for Private Sector Development (ICD), a member of the Islamic Development Bank (IDB) is studying possibilities of entering the insurance market of Azerbaijan, IDB representative in Azerbaijan Tamerlan Tagiyev said.
"Given that the study of the Azerbaijani insurance market is underway, it is difficult to say in what from it will take place - through the purchase of companies existing in the market or creating a new Islamic insurance company (Takaful)," Tagiyev said.
"Our insurance company will operate on Islamic principles. Previously, we intend to investigate the situation in the country's insurance market, conditions of entry, and examine the existing legislation governing the insurance sector. A special company must be involved in it and following this we will prepare an informed decision," ICD CEO Khalid Al Aboodi told Trend earlier.
However, the Azerbaijani legislation governing the insurance sector allows creating an Islamic insurance company in the country, the Finance Ministry's State Insurance Service Deputy Head Mahir Abdullayev told Trend.
"Based on the national legislation, one must comply with the relevant requirements to obtain a license to enter the market," Abdullayev said." They are the same both for the participants of the traditional insurance and Islamic insurance."
Takaful is an Islamic insurance concept which is grounded on Islamic muamalat (Islamic banking), observing the rules and regulations of the Islamic law. The system is based on principles of mutual aid (taavun) and voluntary contributions (tabarru) providing for collective bargaining and voluntary risk-sharing among group members. Takaful is a form of insurance that meets the principles of the Islamic law. In Arabic language it means "the mutual granting of a guarantee."
Takaful is a system in which insurers create a special insurance fund at its own expense to provide mutual financial protection against certain adverse events in life. In the event of the specified adverse event in any of the participants, the fund issues a payment of insurance compensation. Thus, the participants in the insurance fund share all risks and losses among themselves. In case of deficit in the fund, the participants are liable for its coverage at the expense of their own (additional) funds.
Islamic insurance actually performs the same function as the traditional, with the only difference being that it does not contradict the provisions of Islamic law. Both Islamic and traditional insurance are tools to provide financial assistance to persons in financial difficulty. In countries where the Islamic insurance market is the most advanced in the world, most of the customers of the takaful-organizations are non-Muslims. In addition, Islamic insurance products are very popular in Europe, particularly in the UK. At present, Europe and Central Asia consider experts in the field of Islamic finance as the most promising in terms of development of Islamic insurance.
ICD was founded in 1999 with its headquarters in Jeddah. The Islamic Corporation for the Development of the Private Sector was established by the IDB.
The Islamic Corporation has its own subsidiaries in Azerbaijan - Caspian International Investment Company (CIIC) and leasing company Ansar Leasing.
Roughly 27 insurance and one reinsurance companies operate in Azerbaijan.