Insurance Wikala Sukuk for Hedging Catastrophic Events

Insurance industry faced a kind of doubt and damage in the start of 90th decade through middle of it after series of catastrophic events that resulted in lack of the world’s reinsurance capacity and the increase of reinsurance contracts’ prices in the world. On the other hand, increased value of insured assets in accident-prone areas resulted in disability of reinsurance corporations in hedging all of the risk. From then the thought of using capital market’s capacity and transformation of some share of insurance risks to this market was proposed. One of efficient and effective instruments for relating insurance industry and capital market – so called “securitization”- was presented and financial insurance instrument was introduced. These securities are based on bonds and therefore cannot be used in Iran. This paper tries to explain a model for issuance of these securities under the sharia’ rules and Iran’s laws. Therefore, according to the researches and interviews, the structure of financial wikala sukuk is suggested for implementation of catastrophic events securities.