Parsoli begins Islamic insurance foray

Even as the penetration level of insurance and equity funds among the Muslim community is extremely low, Ahmedabad-based Parsoli Corporation has been engaged in providing tailor-made financial products to the community without violating the tenets of the religion.

After launching the Parsoli Global Islamic Equity Fund recently, Parsoli has now announced its plan to provide insurance products to Muslims.

The board of directors of the company on Tuesday approved the formation of a wholly owned subsidiary called Parsoli Takaful Pvt.

Takaful is the Islamic form of insurance. With the liberalisation of the insurance sector, Parsoli Takaful Pvt Ltd (PTPL) plans to target the largely untapped market potential of over 15 crore Indian Muslims by providing them with tailor-made insurance products.

Parsoli has already identified insurance products that comply with the Islamic Shariah and also other products, which with slight modifications, become Islamically acceptable.

This market segment has generally been characterised with a low penetration level of insurance products, said Zafar Sareshwala, managing director, Parsoli Corporation.

He said Islam is not against insurance per se, but against where insurance companies invest premium money.

"We have identified five products in the broad fields of household (home), mediclaim and life insurance, that we will launch shortly," Sareshwala said on Tuesday.

He added that the five products have been referred to three prominent Islamic scholars to ensure that operation of none of these violate the tenets of Islam. "We will launch these products in India to begin with. The UK is also a huge market," he said.

Sareshwala said these products have been picked off the shelf of existing insurance companies.

"We are working those details out, but these five products could be co-branded depending on which product we adopt from which company," Sareshwala said. He added that the main aim of Parsoli is to create a new market segment of independent financial advisors.

"For example, in the UK, IFAs are the link between the people and the product and IFAs are highly regulated in the UK. That is what we intend to replicate in India," Sareshwala said.

Commenting on the premium collection target that Parsoli has set for itself, Sareshwala said this could indeed be huge, as property insurance, mediclaim and life insurance policy linked to equity are almost non-existent among the Muslim community.

Islamic finance has become a major global industry with over 300 institutions worldwide providing services in this sector.

They operate in both, Islamic countries as well as international financial markets. Islamic finance includes Islamic banking, Inslamic insurance, Islamic equity and project financing activities.

It is generally accepted by Muslim jurists that the operation of conventional insurance involves the elements of uncertainty in the contract of insurance, gambling as the consequence of the presence of uncertainty and interest in the investment activities of conventional insurance companies, which violate rules of the Shariah.