Offering Catastrophic Risk Management Framework by Alternative Risk Transfer Instruments to Islamic Capital Market with Cat Takaful (CT) Sukuk

Document Type : Original Article


1 PhD. Candidate, Department of Financial Engineering, Rasht Branch, Islamic Azad University, Rasht, Iran.

2 Department of Management, Rasht Branch, Islamic Azad University, Rasht, Iran.

3 Department of Accounting, Rasht Branch, Islamic Azad University, Rasht, Iran.



Out of 64 possible catastrophic events in the whole world, about 34 of them have been experienced in Iran; more than 80% of the regions are exposed to natural disasters risks such as earthquakes exposure. Domestic insurance capacity does not cover this volume of risk and the need for external reinsurance capacity is always felt. Catastrophe bonds structure as a financial & insurance innovative solution (Alternative Risk Transfer Instruments) allows an issuing institution to transfer catastrophic exposures and risk to capital market's investors by creating capital relief and additional risk capacity for our insurance industry. We adjusted the formal cat bonds structure with the Islamic jurisprudence. According to the systematic review research method 8 steps, the Sukuk model was implemented based on the extracted concepts from 23 Farsi articles and 50 English articles. After that interviews by 18 experts who were selected by purposive & Snowball sampling, The Delphi method was used to obtain the opinion of experts and their opinion was modified and implemented in the final model. In the open coding stage, 415 concepts were extracted which were classified into 10 categories and finally presented in 4 Propositions/themes. The trustworthiness and authenticity did base on the four-stage model of Lincoln and Guba and also its complementary step. We finally suggested that the catastrophe bond instrument could be issued in the form of a cat takaful (CT) sukuk contract template, as a solution for transferring catastrophic risks to the Islamic financial market.


AAOIFI. (2015). Shariah Standard no (26). P 879. Islamic Insurance accounting and auditing organization for Islamic financial institutions
Adrc.(2021). Asian disaster reduction centre.
Ariff, Mohamed. (2014). Sukuk securities new ways of debt contracting. John Wiley & sons Singapore pte. Ltd.
Banks, Erik, (2004). alternative risk transfer: integrated risk management through insurance, reinsurance and the capital markets. John Wiley & sons ltd,
Banks, Erik. (2005). catastrophic risk analysis and management. John Wiley & sons ltd,
Billah, m. M. (2005). sharia model of quantum of damages in takaful &re-takaful. International Islamic University Malaysia (Iium).
Chitu, Okol. (2015). A Guide to Conducting a Standalone Systematic Literature Review. (Volume 37 Article 43). Communications of the Association for Information Systems.
Em-dat. (2021). emergency events database,
Iranian studies group at MIT, (2004). earthquake management in Iran a compilation of literature on earthquake management. –
Krutov, Alex. (2010). investing in insurance risk insurance: insurance-linked securities a practitioner's perspective. published by risk books, a division of incisive financial publishing ltd.
Malik, Adnan. (2019). introduction to takaful theory and practice. Springer.
Ma'sum billah, mohd. (2019). Islamic insurance products exploring takaful principles, instruments and structures. Springer.
Mousavian, Seyyed Abbas et al. (2015). Islamic insurance instrument to transfer the risk in the oil industry. (no 8) "Islamic finance researches.
Mousavian, Seyyed abbas. (2007). announced negotiations of Iran shariah board of securities and exchange organization and their descriptions.
 Mousavian, Seyyed abbas. (2009). Islamic financial tools. publication organization of Islamic research institute for culture and thought.
Ndmo. (2017). national disaster management organization of Iran, Iran and catastrophe event. www.
Niehaus, Greg. (2002). the allocation of catastrophe risk. (no 26). Journal of banking & finance.
Pinna, Mariella. (2020). Sustainable Entrepreneurship a Systematic Review of Academic Research. Springer Nature Switzerland.
 RDIS. (2017) . Iran shariah board of securities and exchange organization, classification of Islamic financial instruments (Sukuk).
SECP. (2019). Takaful guide. securities and exchange commission of Pakistan.
Undrr, (2021), United Nations desinventar open source initiative,