BAKU, Azerbaijan, July 9. Takaful insurance will contribute to the development of the Islamic finance ecosystem in Azerbaijan.
This was reported by the Central Bank of Azerbaijan (CBA) in response to the Trend's inquiry.
According to the CBA, the introduction of Islamic insurance not only brings a new insurance service to the market, but also plays an important role in the formation of an inclusive, sustainable, and international Islamic finance ecosystem in Azerbaijan.
The report emphasized that the development of the financial ecosystem is one of the main strategic goals of the CBA.
''The formation of an ecosystem for Islamic finance, especially Islamic insurance, which is an integral part of the financial ecosystem, is of particular importance. The introduction of Islamic insurance serves to diversify financial services, increase the accessibility of alternative financial instruments, and provide products in accordance with Islamic principles.
The Takaful model (Islamic insurance) involves determining insurance products that meet the needs of both individuals and business entities, concluding and managing insurance contracts, and protecting the interests of policyholders during insurance events, as well as organizing the mutual distribution of risks between participants in accordance with the principles of Islamic finance,'' added the report.
The CBA granted a license for insurance broker activities to ''Saf Takaful Insurance and Reinsurance Broker'' LLC on March 3, 2026.
The latest publication by the Islamic Development Bank Group notes that Takaful products could serve as a catalyst for deeper insurance adoption in Azerbaijan.
''Azerbaijan’s insurance market is small but growing. Total insurance premiums reached 1.35 billion manat ($796 million) in 2024, a 10.7% year-on-year increase. Insurance penetration stands at 1.1% of GDP, up from 0.99% in 2023 but well below the OECD average of 6.2%. The market comprises approximately 16 insurance companies regulated by the CBA. Azerbaijan’s low insurance penetration represents both a structural challenge and an opportunity. The introduction of takaful products could serve as a catalyst for deeper insurance adoption, particularly among segments of the population that may be reluctant to engage with conventional insurance due to concerns about its compatibility with Islamic principles,” says the report of the Islamic Development Bank Institute (IsDBI) and the International Islamic Trade Finance Corporation (ITFC) titled “Islamic Finance in Azerbaijan: Breaking New Ground'' launched during the IsDB Group Annual Meetings in Baku.
