A landmark development has taken place in Azerbaijan’s insurance sector with the official launch of the country’s first Islamic insurance (Takaful) ecosystem, fully aligned with international standards.
According to information presented at the launch event, Saf Takaful Insurance and Reinsurance Broker LLC officially commenced operations and announced the establishment of the “Takaful Window” project in strategic partnership with Qala Insurance OJSC.
Speaking at the event, Saf Takaful Director Eyvaz Jafarli expressed gratitude to Azerbaijani President Ilham Aliyev for supporting the development of alternative financial instruments and fostering a free business environment. He also thanked Central Bank of Azerbaijan Governor Taleh Kazimov and his team for encouraging inclusive solutions in the insurance and financial sectors.
Jafarli emphasized that the newly introduced model is not merely an insurance product but a comprehensive ecosystem operating under the supervision of an independent Shari’ah Compliance Board.
Under the Wakala model, insurance contributions paid by participants are transparently divided into two components:
-
Wakala Fee – the operator’s official service fee covering management, underwriting, and administrative expenses.
-
Takaful Fund – the remaining portion, which is transferred to the Participants’ Takaful Fund and is collectively owned by policyholders.
Jafarli explained that once claims arising from insured events are settled during the year, any remaining Fund Surplus belongs to participants rather than becoming company profit, as is common in conventional insurance.
“Cash withdrawals from the fund are prohibited. Any surplus is distributed through a compensation mechanism. Participants who have not made claims can use their share of the surplus to offset future insurance premiums. If the fund faces a liquidity shortfall, the insurer may provide an interest-free loan, which is repaid once the fund returns to profitability,” he said.
Addressing the event, Qala Insurance Chairman Taleh Yunsurov noted that cooperation with Saf Takaful would make a significant contribution to the development of Islamic insurance in Azerbaijan. He expressed confidence that the Takaful Window project would create new opportunities in the market and lead to a successful partnership.
Strategic Integration with Islamic Banking
Jafarli also highlighted ongoing government discussions regarding legislation on Islamic banking. He noted that due to the asset-backed nature of Islamic finance, banks operating within such a system would eventually find it difficult to function without Takaful solutions.
According to him, the Takaful model allows banks to participate as insured parties in the process, helping reduce administrative costs and improving operational efficiency.
Company representatives called on citizens and business owners to actively engage with the new ecosystem. They stressed that broad participation would help government institutions better assess market demand and further improve the legal framework governing Islamic finance and insurance.
Saf Takaful stated that its long-term objective is not short-term commercial success, but rather the establishment of strong institutional foundations for Islamic insurance in Azerbaijan and the transformation of the country into one of the region’s leading Islamic finance hubs.
It should be noted that the Central Bank of Azerbaijan granted Saf Takaful Insurance and Reinsurance Broker LLC a license to operate as an insurance broker in March this year.
Follow us on Telegram
t.me/apanewsaz
Follow us on Instagram
Follow us on TikTok
Follow us on Facebook
Follow us on X
