Azerbaijan, Baku, Jan. 12 / Trend I.Khalilova /
The Islamic Corporation for the Development of the Private Sector (ICD belongs to the Islamic Development Bank group) along with the Azerbaijani bank AmrahBank plans to create the first Islamic insurance company - Azerbaijan Takaful Company in the country, an IDB representative in Azerbaijan Tamerlan Tagiyev told Trend today.
According to the ICD, the company will be established with an initial capital of 5 million AMZ (about $6.2 million).
"At present the situation on the Azerbaijani domestic insurance market and in particular legislation governing the insurance sector, is being examined to determine the opportunity to conduct insurance activity on Islamic principles," Mr Tagiyev said.
The State Insurance Control Service said that the Azerbaijani legislation in the insurance domain allows for the creation of an Islamic insurance company in the country.
"Based on the national legislation, one must comply with the relevant requirements to obtain a license to enter the market," Mr Abdullayev said." They are the same for both for the participants of traditional iand Islamic insurance."
Takaful is an Islamic insurance concept which is grounded on Islamic muamalat (Islamic banking), observing the rules and regulations of 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 Islamic law and in Arabic means 'the mutual granting of a guarantee'.
Takaful is a system by 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 with any of the participants, the fund issues a payment of insurance compensation. Thus, the insured share all risks and losses among themselves. In the case of a deficit, the participants are liable for its coverage at their own expense.
Islamic insurance actually performs the same function as the traditional, 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 those in financial difficulty. In countries where the Islamic insurance market is the most advanced in the world, most of the customers of the takaful-organisations are non-Muslims. In addition, Islamic insurance products are very popular in Europe, particularly in the UK. At present, Europe and Central Asia are considered experts in the field of Islamic finance as the most promising in terms of development of Islamic insurance.
Amrahbank is one of the first commercial banks of Azerbaijan (established in 1993). The Bahrain based International Investment Bank has 49 per cent stake. ICD was founded in 1999 with its headquarters in Jeddah. The Islamic Corporation for the Development of the Private Sector was established by IDB.
The Islamic Corporation has its own subsidiaries in Azerbaijan - Caspian International Investment Company (CIIC) and leasing company Ansar Leasing.
Roughly 29 insurance and one reinsurance companies operate in Azerbaijan.