Insurance companies in Kazakhstan will be able to offer Shariah-compliant products without establishing a separate legal entity. This mechanism, known as "Islamic windows," is envisaged in the Insurance Market Development Program through 2030, according to infohub.kz.
The plans were announced by the Agency for Regulation and Development of the Financial Market (ARDFM). The initiative concerns the development of Islamic insurance, or takaful. The term translates as "mutual provision of guarantees."
Takaful is an insurance system built on the mechanism of profit and loss sharing. It operates on the principles of mutual assistance, solidarity, and full compliance with Shariah norms. Participants contribute funds to a common mutual assistance pool, from which compensation is paid to those affected. The operator company manages the fund for an agreed commission rather than owning it. Any unused funds (surplus) are then distributed back to participants.
"Kazakhstan plans to create additional conditions for the development of Islamic insurance (takaful) and expand the range of insurance products that comply with Shariah principles. The corresponding initiative is envisaged in the Insurance Market Development Program through 2030. One of the key areas will be working out the mechanism of 'Islamic windows,' which will allow existing insurance organizations to offer Islamic insurance products without establishing a separate insurance organization," the published statement says.
The Agency recalled that the legislative framework for the development of Islamic insurance has existed in Kazakhstan since 2015. However, specialized Islamic insurance organizations have not yet been established in the country, and takaful products have not gained wide popularity.
A possible reason for this situation is the need to create a separate legal entity and obtain a separate license to carry out Islamic insurance. In this regard, it is proposed to consider using the "Islamic windows" mechanism, under which existing insurers can develop the takaful line within their existing organization, ARDFM noted.
At the same time, Islamic insurance activities will be separated from conventional insurance. It is expected that separate accounting of participants' funds, assets, liabilities, income, and expenses will be maintained, as well as investment of takaful fund resources in Shariah-compliant assets. The operation of an Islamic window will be carried out in compliance with Shariah governance requirements and relevant regulatory oversight.
The development of the product line is planned to be carried out in stages, taking into account actual demand and market readiness. At the initial stage, basic family and general takaful products may be offered, including life insurance, accident insurance, auto insurance, travel insurance, and medical insurance.
Subsequently, the line may be expanded to include endowment life insurance, critical illness insurance, property insurance for individuals and businesses, liability insurance, as well as more complex investment, pension, and corporate products.
The proposed measures, according to ARDFM, will help reduce barriers to the development of Islamic insurance, expand the availability of Shariah-compliant products for the population and businesses, increase the diversity of offerings in the insurance market, and create conditions for a gradual increase in insurance coverage.