| March 28
March 28 London-based Cobalt Underwriting said
it was signing the European unit of QBE to its
sharia-compliant insurance platform, helping address capacity
constraints in the takaful (Islamic insurance) industry.
The Cobalt platform is part of a range of initiatives aimed
at boosting London's credentials in the Islamic finance
industry, which follow religious guidelines such as a ban on
interest and pure monetary speculation.
Cobalt will has increased its capacity to underwrite
property risks to $425 million from $300 million, construction
to $160 million from $100 million and an additional $50 million
for casualty risks, the firm said in a statement.
"It has long been our intention to broaden the range of
products we offer since our launch last year, and we will
continue to do so," said Cobalt chief executive Richard Bishop.
The platform uses a syndication model to help spread risk
across a panel of underwriters, allowing multiple insurers to
pool their capacity while each can subscribe to the desired
level of risk though individual Islamic windows.
The risk is priced by a lead insurer and other firms must
then subscribe under similar terms, a similar approach to the
subscription model used in London's Lloyds insurance market.
Cobalt, formed with capital from Capita insurance services
and the Bank of London and The Middle East, hopes to
address gaps in the takaful and re-takaful sectors.
Takaful is based on the concept of mutuality, where a
company oversees a segregated pool of funds contributed by
The firm seeks to underwrite large transactions of no less
than $30 million in value, and further capacity could be added
for other risks including trade finance, Islamic finance
institutions, energy and aviation.
Operators in the takaful sector, which has its core markets
in the Gulf and southeast Asia, have been limited in their
ability to take on large commercial risks partly due to a lack
Reinsurance options are also scarce, with some takaful firms
forced to reinsure through conventional lines, a practice
allowed under the concept of darura, or extreme necessity.
Industry purists, however, are increasingly challenging
whether the darura concept is still applicable in today's market
and are encouraging alternatives.
(Editing by Eric Meijer)