BAKU, Azerbaijan, July 9. Takaful insurance
will contribute to the development of the Islamic finance ecosystem
in Azerbaijan.


This was reported by the Central Bank of Azerbaijan (CBA) in
response to the Trend's inquiry.


According to the CBA, the introduction of Islamic insurance not
only brings a new insurance service to the market, but also plays
an important role in the formation of an inclusive, sustainable,
and international Islamic finance ecosystem in Azerbaijan.


The report emphasized that the development of the financial
ecosystem is one of the main strategic goals of the CBA.


''The formation of an ecosystem for Islamic finance, especially
Islamic insurance, which is an integral part of the financial
ecosystem, is of particular importance. The introduction of Islamic
insurance serves to diversify financial services, increase the
accessibility of alternative financial instruments, and provide
products in accordance with Islamic principles.







The Takaful model (Islamic insurance) involves determining
insurance products that meet the needs of both individuals and
business entities, concluding and managing insurance contracts, and
protecting the interests of policyholders during insurance events,
as well as organizing the mutual distribution of risks between
participants in accordance with the principles of Islamic
finance,'' added the report.


The CBA granted a license for insurance broker activities to
''Saf Takaful Insurance and Reinsurance Broker'' LLC on March 3,
2026.


The latest publication by the Islamic Development Bank Group
notes that Takaful products could serve as a catalyst for deeper
insurance adoption in Azerbaijan.


''Azerbaijan’s insurance market is small but growing. Total
insurance premiums reached 1.35 billion manat ($796 million) in
2024, a 10.7% year-on-year increase. Insurance penetration stands
at 1.1% of GDP, up from 0.99% in 2023 but well below the OECD
average of 6.2%. The market comprises approximately 16 insurance
companies regulated by the CBA. Azerbaijan’s low insurance
penetration represents both a structural challenge and an
opportunity. The introduction of takaful products could serve as a
catalyst for deeper insurance adoption, particularly among segments
of the population that may be reluctant to engage with conventional
insurance due to concerns about its compatibility with Islamic
principles,” says the report of the Islamic Development Bank
Institute (IsDBI) and the International Islamic Trade Finance
Corporation (ITFC) titled “Islamic Finance in Azerbaijan: Breaking
New Ground'' launched during the IsDB Group Annual Meetings in
Baku.