Satellite operator Yahsat has announced that it has secured the first Shariah-compliant insurance policy for space operations.
The agreement will cover the launch and operation of the Y1a and Y1b satellites scheduled for launch in 2011.
The Takaful policy – the insurance concept in Islamic finance – was tailored by a number of parties to fit Yahsat’s requirements with Methaq Takaful Insurance and ElseCo providing the coverage. The firms worked with the Willis Inspace specialist division of the UK-based broker Willis Limited.
“Insurance protection is an integral part of our satellite program. With firm roots in the region, we are proud to be the first organisation to use a Shariah-compliant insurance solution for space programs,” said Jassem Al Zaabi, CEO, Yahsat.
What is Takaful insurance?
Takaful activities are different from a conventional Insurance Company, as they are based on a clear segregation between the Takaful Fund (which belongs to Policyholders) and the Takaful Operation, Methaq (which belongs to the Shareholders).
The premium collected by the Takaful Operation, Methaq, from the Policyholder is considered as a donation, which will constitute the Takaful Fund from which all claims are reimbursed.
At the end of each financial year, after expenses are deducted, profits on investments (made from the capital available over the retained reserves) and provisions are added, any remaining cash surplus will be returned to the Policyholders.
Contrary to a Conventional Insurance Operation, the Takaful Operation (Methaq) does not and cannot retain any of the surplus, save if it granted an interest free credit (Qard Al Hassana) to the Takaful Fund in case of a previous loss.