Capita has adopted Insurance trading platform, KnowledgeKube, to provide high quality administration and processing support behind the first Shariah law compliant underwriting agency, Cobalt Underwriting. And the move has been described as ‘market changing’.
With investment from Capita and the Bank of London and the Middle East, Cobalt is set to use the Insurance Edition of KnowledgeKube to provide Shariah compliant re/insurance products to businesses across the globe.
Importantly, the platform positions Cobalt perfectly to maximise income by reducing time, cost and risk in the end-to-end product-to-market process of complex online products.
It is dedicated to the rapid design, distribution and sale of online insurance products and enables the non-technical to quickly test and adjust ‘live’ ratings, descriptions, documentation and more without dependency on IT support.
KnowledgeKube also supports Cobalt’s global outlook, with other projects using the platform across 170 countries in over 20 languages.
Cobalt has secured underwriting capacity from XL Group to underwrite property risks out of London. The initial focus will be on property cover, with a maximum capacity of up to USD300 million. The products will be offered on a worldwide basis with the exception of the U.S. and Canada.
Richard Bishop, Chief Executive Officer, Cobalt Underwriting said: “We are pleased to announce what is an exciting and market changing initiative that will open up new opportunities for major businesses seeking Shariah compliant re/insurance capacity.
“We are delighted to be in a position to work with market leading companies that includes Capita which will not only be significant investors but also deliver high quality administration and processing support.”
Mr Bishop continued: “We believe what Cobalt is able to deliver will change the industry’s ability to provide access to Shariah-compliant insurance and reinsurance capacity for organisations that require it. We are currently in the process of working closely with Aon Group and XL Group during this initial phase and we will be in a position to provide further details on our future plans at the end of that process.”
He added: “Discussions with customers, brokers and capacity providers are ongoing and we have been extremely encouraged with the response and interest received as we work to expand the range of products we are able to offer to a market with huge potential. We believe that what we are creating will bring a new dynamic to the provision of insurance and reinsurance to organisations requiring Shariah-compliant products.”
Aon Benfield was sole advisor on the strategic planning, feasibility and licensing of Cobalt. Terry Masters, leader of Aon Benfield ReSolutions, said: “The London market is recognised as a global leader in terms of its ability to provide insurance and reinsurance coverage for a full range of risks. As part of this expertise, it is of growing importance to being able to offer sharia-compliant commercial insurance capacity, and this is why we are excited to have been a key partner in the structuring of Cobalt.”
John Holm, Executive Director, Capita Insurance Services added: “This is a very positive development both for the London insurance market and for Capita and we are delighted to be able to help bring to the market a unique business with a highly differentiated offering. The MGA space is currently extremely active and there will be many more opportunities for Capita Insurance Services to invest in talented underwriting teams, allowing them the freedom to establish or grow their businesses on their own terms, while we take care of their non-core operations.”
The potential market is significant. In 2011 it was estimated that total global Islamic financial assets stood at $1.631 trillion. The global Islamic financial services industry is valued at $1.357 trillion and continues to defy the global economic stagnation. The Sukuk asset class grew by 77% to $85 billion in 2011 alone and the growth in the Islamic banking industry was put at 16.4% for the year.
Jason Harris, Chief Executive International P&C insurance for XL Group, commented:
“We are delighted to be the first global insurer in the London market to offer commercial Shariah compliant insurance capacity to large and middle market companies via Cobalt Underwriting. This is a growing, untapped market and as we explore other product offerings, we are looking forward to help develop it.”
“Working closely with Cobalt, which has a prominent Shariah advisory board, we are well placed to put our vast experience in Property risks to work for clients seeking this type of cover. While we expect a significant portion of the business to come in through the London market, our network, which allows us to serve clients in more than 140 countries, represents a strong asset in serving this important market segment.”
Nigel Denison, Director, Bank of London and The Middle East PLC said of the launch: “ We see significant demand for Islamic insurance from our clients and also believe that a strong Shariah-compliant market will support the development of Islamic Asset Management”.
The Norton Rose team advising on the launch is led by partner and Head of the Islamic Insurance team, Susan Dingwall who commented:
“This is a first for the industry and we are delighted to be a part of it. We have been advising on Shariah-compliant insurance for a number of years and seen demand for it grow substantially, particularly from Islamic financial institutions and as part of Islamic financings on major projects and property developments. The launch of Cobalt will be a real boost to the development of the commercial market for Shariah-compliant insurance.”
About XL Group plc’s Insurance Operations
XL Group plc’s insurance companies offer property, casualty, professional and specialty insurance products globally. Businesses that are moving the world forward choose XL as their partner. To learn more, visit xlgroup.com/insurance.
About XL Group plc
XL Group plc (NYSE:XL), through its subsidiaries, is a global insurance and reinsurance company providing property, casualty and specialty products to industrial, commercial and professional firms, insurance companies and other enterprises throughout the world. XL is the company clients look to for answers to their most complex risks and to help move their world forward. Its principal offices are located at No.1 Hatch Street Upper, 4th Floor, Dublin 2, Ireland. To learn more, visit xlgroup.com.
XL Group is the global brand used by XL Group plc’s insurance and reinsurance subsidiaries.