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Russia takes interest in the development of Islamic insurance

It is necessary to develop new products based on the principles of counterpart funding, including Islamic insurance (takaful), the Deputy Minister of Finance Ivan Chebeskov stated.
Russia takes interest in the development of Islamic insurance

The Bank of Russia is studying the experience of counterpart funding. The experiment takes place on the territory of Dagestan, Chechnya, Bashkortostan and Tatarstan and is held from September 2023 to September 2025. Takaful (Arabic: تكافل‎ - “providing mutual guarantees”) is an insurance system based on a mechanism for distributing profits and losses between participants and the operator compliant with Shariah standards.

The key rules (“prohibitions”) for takaful are: gharar - uncertainty or speculation, maysir - a game containing risk/betting, riba - usury (in Islam, it is lending money at interest, regardless of the amount of this interest)[1].

Deputy Minister of Finance Ivan Chebeskov notes that since the experiment start, the necessary experience in using counterpart funding instruments has already begun to form. “It is necessary to develop new products on the principles of counterpart funding, including Islamic insurance (takaful), taking into account the results of a detailed analysis of the existing experience in introducing takaful in Russia,” he said.

The takaful insurance market is seeing tremendous growth since the first takaful company has been established in Sudan in 1979. The total global contribution of takaful (equated to premium income from traditional European insurance) is expected to double from US$5.5 billion in 2005 to US$11 billion by 2010.

Ivan Chebeskov reminded that in current conditions, the development of counterpart funding in Russia is an important prerequisite for attracting capital, including from countries in the Middle East and Asia, as well as expanding the geography of trade and investment cooperation in the country, the press service of the Ministry of Finance reports.

Source: https://www.asn-news.ru/news/85629

Photos are from open sources.

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