Oct 19 (Reuters) - London-based Cobalt Insurance and a unit of British outsourcing group Capita said they have received “in principle” approval from Lloyd’s of London to launch the specialist insurance market’s first sharia-compliant syndicate.
Cobalt, formed in 2012 with capital from Capita insurance services and the Bank of London and the Middle East, said it planned to begin underwriting in the first quarter of 2017.
The syndicate, which will be managed by Capita Managing Agency, will focus initially on developing a property and specialty-focused book of commercial business from emerging and developing markets in the Middle East, North Africa and Asian regions, Cobalt said in a statement.
Lloyd’s of London has been working to boost its credentials in the Islamic finance industry.
“The aim of the syndicate is to look to underwrite new business from emerging markets and in doing so working with others in Lloyd’s to extend their participation in those markets,” Cobalt founder Richard Bishop said.
Under sharia law, firms or individuals are not allowed to charge interest or fees for loans.
The Islamic insurance or takaful industry is based on the concept of mutuality, where a company oversees a segregated pool of funds contributed by all policy holders.
In their investments, takaful firms must follow religious guidelines such as a ban on interest and pure speculation.
Global takaful contributions were expected to reach $25 billion at the end of 2015, according to a report by consultants Ernst & Young last July. (bit.ly/2egwiGo)
Cobalt, hoping to address gaps in the takaful and re-takaful sectors, developed a sharia-compliant insurance platform in 2013 that uses a syndication model to help spread risk across a panel of underwriters. (reut.rs/2e78re5) (Reporting by Noor Zainab Hussain in Bengaluru; editing by Mark Heinrich)