Existing insurance companies in Kazakhstan will be able to establish «Islamic windows» without creating separate legal entities, according to the Agency for Regulation and Development of the Financial Market (ARDFM). The initiative is aimed at developing Islamic insurance, known as takaful.
Takaful means «providing mutual guarantees.» It is an insurance system based on profit- and loss-sharing principles and operates according to the principles of mutual assistance, solidarity and compliance with Sharia law. Participants contribute funds to a common pool, from which compensation is paid to participants who incur losses. An operating company manages the fund for a predetermined fee but does not own the assets. Any surplus is subsequently distributed among the participants.
«Plans are underway in Kazakhstan to create additional conditions for the development of Islamic insurance (takaful) and expand the range of insurance products compliant with Sharia principles. This initiative is outlined in the Insurance Market Development Program through 2030. A key focus will be the development of the ‘Islamic window’ mechanism, which will allow existing insurance companies to offer Islamic insurance products without establishing a separate insurance entity,» the agency said in a statement.
Islamic insurance framework has existed since 2015
The ARDFM noted that Kazakhstan has had a legislative framework for Islamic insurance since 2015. However, no specialized Islamic insurance companies have been established in the country to date, and takaful products have not gained widespread adoption.
One possible reason is the requirement to establish a separate legal entity and obtain a separate license to conduct Islamic insurance operations. Against this backdrop, the ARDFM has proposed considering an «Islamic window» mechanism that would allow existing insurers to develop takaful operations within their existing organizational structures.
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Under the proposed model, Islamic insurance activities would be separated from conventional insurance operations. Separate accounting would be maintained for participants’ funds, assets, liabilities, income and expenses, while takaful fund assets would be invested in Sharia-compliant instruments. Islamic window operations would be conducted in accordance with Sharia governance requirements and subject to appropriate regulatory oversight.
Product range could expand gradually
The product lineup would be developed in stages, taking into account actual demand and market readiness. The initial phase could include basic family and general takaful products, such as life insurance, accident insurance, auto insurance, travel insurance and health insurance.
The range could subsequently be expanded to include endowment life insurance, critical illness insurance, property insurance for individuals and businesses, and liability insurance, as well as more complex investment, pension and corporate products.
According to the ARDFM, the proposed measures would help lower barriers to the development of Islamic insurance, increase the availability of Sharia-compliant products for individuals and businesses, diversify the market and create conditions for the gradual expansion of insurance coverage.
