AZE.US
The Central Bank of Azerbaijan has issued a license to Saf Takaful Insurance and Reinsurance Broker LLC to operate as an insurance broker in the country.
According to the regulator, the company plans to work under the takaful model, a form of insurance based on Islamic finance principles.
With the new license, Azerbaijan’s insurance market now has 16 legal entities authorized to operate as insurance brokers.
Economist Akram Hasanov says the takaful system differs significantly from traditional insurance.
In a conventional model, a driver pays an insurance premium and, if no accident occurs during the policy period, the money remains with the insurance company. If a claim is filed, the insurer compensates the damage.
Under the takaful system, however, insurance participants contribute to a shared pool of funds.
For example, if 100 drivers each contribute 100 manats, the total pool would reach 10,000 manats.
At the end of the year, part of the money is used to cover operating costs and the broker’s commission. Another portion goes toward compensating participants who suffered losses, such as damage from road accidents.
If funds remain after all claims and expenses are paid, the remaining amount can be distributed among drivers who did not cause accidents.
Supporters of the system say the model encourages safer driving and promotes a sense of shared financial responsibility among participants.