Global Insurance has started providing insurance policies in which members contribute funds into a pool to guarantee each other against losses or damages. The service, dubbed takaful, was launched as of this month across the firm's 23 branches in the country.

The new service makes Global the first insurance firm to provide an insurance policy that is in compliance with Islamic sharia law. The firm launched the service after getting approval from the National Bank of Ethiopia (NBE) in mid-July. Global will provide the service through a window-based approach called the wakalamodel, in which the takafuloperator works as an agent on behalf of the takafulparticipants.

The parliament legislated the proclamation that allows interest-free insurance services on January 9, 2020. Then the central bank issued a directive to activate the service on June 15, 2020. The service was not allowed in the country until Prime Minister Abiy Ahmed (PhD) came to power and opened doors for interest-free banking and insurance services.

Global has availed 16 takafulproducts that cover losses on both movable and immovable assets due to theft or robbery and different kinds of accidents including fire and traffic. Boiler and pressure vessel, burglary, commercial vehicle and contractor risk are all takafulpolicies provided by the company.

Global will provide the service at its 15 branches in the capital and more branches in Harar, Adama, Dire Dawa, Hawassa, Jigjiga, Bahir Dar, Meqelle and Dessie.

Before launching the product, the company hired Al-Huda Centre of Islamic Banking Economics to study the feasibility of the business in the country. Al-Huda Centre of Islamic Banking Economics, a Dubai-based Islamic banking and insurance service consultancy company, found out the possibility of the business and market opportunities.

The study suggested that there is a huge potential market for the product, according to Tibebe Tesfaye, CEO of Global.

The service is a relief for those who were obliged to use conventional insurance, which involves risk transfers with uncertainty, which is essentially gambling, according to Ahmed Sherief, board chairperson of Global, which netted 22.4 million Br during the 2018/19 fiscal year. Its capital during the just ended fiscal year was 151 million Br.