The Central Insurance company of Iran (CII), the regulator of the industry, plans to introduce Islamic insurance solutions, known as takaful.
"Our plan is to first introduce takaful in the form of insurance products. After that the High Council of Insurance [the top decision-making body of the industry] will study market feedback and probably approve the establishment of specialized takaful companies," Majid Behzadpour, head of the CII, was quoted as saying by the CII's website.
Introducing takaful is on the government agenda and the regulator is determined to pave the way for the entry of Islamic insurance solutions to the market.
Takaful is a type of Islamic insurance wherein members contribute money to a pool system to guarantee each other against loss or damage. Takaful-branded insurance is based on sharia or Islamic religious law and outlines how individuals are responsible to cooperate and protect one another. Takaful policies cover health, life, and general insurance needs.
All parties or policyholders in a Takaful arrangement agree to guarantee each other and make contributions to a pool or mutual fund instead of paying premium.
The pool creates the Takaful fund. Each participant's contribution is based on the type of coverage they require and their circumstances.
A Takaful contract specifies the nature of the risk and length of coverage similar to that of a conventional insurance policy.
Economy Minister Ehsan Khanduzi has urged the insurance industry to include Islamic finance solutions in their innovation plans.
Earlier in May, Amin Re, a leading reinsurance company, applied for permission for starting Iran's first Takaful insurance company in Kish Island in the Persian Gulf.
The move was welcomed by insurance authorities.
The global takaful insurance market was said to be worth $24.85 billion in 2020 and is projected to reach $97.17 billion by 2030, growing at a compound annual growth rate of 14.6% from 2021 to 2030.
The Takaful market in the (Persian) Gulf Cooperation Council states remains at the forefront of the industry. The latest industry data reveals that the (P)GCC contributes more than 62% of the gross Takaful premium globally.
