Azerbaijan, Baku, Jan.17 / Trend N.Ismayilova /
Azerbaijani AmrahBank plans to establish one more subsidiary insurance company which is expected to be in partnership with Islamic Corporation for the Development of the Private Sector (ICD, member of the Islamic development Bank), AmrahBank told Trend on Tuesday.
At present AmrahBank is represented in Amrah Sighorta insurance company which renders insurance services traditional for Azerbaijani market - insurance of cars and property.
"The Bank plans to establish one more insurance company, which activities will be based on takaful principle, i.e. risk will be divided between all participants of insurance system. However it's early to speak about exact time of establishing Islamic insurance company", AmrahBank said.
According to the ICD, a company will be established with the initial authorized capital to the amount of 5 million manat (about $6.2 million).
The State Service on Insurance Supervision believes the Azerbaijani legislation makes is possible to establish in the country an Islamic insurance company.
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 (established in 1993) is one of the first commercial banks of Azerbaijan. Some 49 percent of its shares belong to Bahrain-based International Investment Bank.
Islamic Corporation for Private Sector Development was established by the Board of Directors of the IDB in the 24th annual meeting of the Bank, held in Jeddah in 1999. Its headquarters is located in Jeddah.
The Islamic Corporation has its subsidiaries in Azerbaijan - Caspian International Investment Company and Ansar Leasing company.
There are 29 insurance companies and one reinsurance company in Azerbaijan.
