Agreement will creates a $50m (£30.1m) capacity for Cobalt to underwrite sharia-compliant casualty risks

QBE has become the second insurer to sign a binder agreement with Cobalt Underwriting, which specialises in sharia-compliant insurance and reinsurance.

The agreement with QBE will increase the size of the MGA’s existing lines from $300m (£180.5m) to $425m (£255.6m) for commercial property risks and from $100m (£60.2m) to $160m (£96.2m) for construction. It will also create a $50 (£30.1m) million capacity for casualty risks.

The move is in a bid to tap into the growing Islamic financial market. In 2011 it was estimated that total global Islamic financial assets stood at $1.631 trillion, while the global Islamic financial services industry is valued at $1.357 trillion. Sukuk Islamic bonds assets grew by 77% to $85bn (£51.1bn) in 2011, while the growth in the Islamic banking industry was put at 16.4% for the year.

Chief executive Richard Bishop said: “Our agreement delivers larger line sizes to our existing products alongside casualty capability which will allow us to meet the demands of those who require quality capacity which is also in keeping with the tenets of sharia law.”

In May 2013 XL Group launched the first sharia compliant insurance for large corporate and middle market clients after signing a binder agreement with Cobalt.