The Insurance Development and Regulatory Authority (IDRA) has instructed Islamic insurance companies to invest in government Islamic bonds (sukuk) or securities.
Under the directive, Islamic life insurance companies must allocate at least 30% of their overall investments to such instruments while Islamic general insurance companies are required to invest a minimum of 7.5%.
Previously, the mandatory investment applied only to conventional insurers while shariah-based insurers were exempt.
IDRA director Abdul Majid issued a letter containing the directive to Islamic insurers on 19 February.
A senior IDRA official said that the government is prioritising sukuk issuance to finance its projects, catering to investors seeking shariah-compliant financial instruments, reported The Business Standard.
There are currently 16 Islamic insurance companies operating in the private sector, comprising 12 family takaful companies and four shariah-compliant general insurers.