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The country's public sector giant, LIC, is definitely gaining great momentum worldwide. According to recent reports, LIC will very soon start selling insurance policies, in the Middle East- Saudi Arabia.

Insurance is a concept that is not easily accepted by most conservative Muslims worldwide since it contradicts with some Muslim teachings. The Arab world declared insurance unacceptable in 1903. It was much later that an alternate tool, Takaful came into existence in 1970 and officially took off in 1985 when the Grand Counsel of Islamic scholars in Makkah, Saudi Arabia, Majma al-Fiqh, approved of this system. Takaful literally means 'guaranteeing each other'. It stands in lines with Shariah. Shariah is a term that means "path" in Arabic. It prescribes religious codes for Muslims. They believe that Shariah are the commandments from 'Allah.'

Two years back, in 2005, LIC in a new international joint venture with the Indo- Saudi Insurance Company had introduced Takaful in their society. Takaful was a cooperative insurance where policyholders could contribute a certain amount of money to a common pool. In order to help those who needed assistance, each member would pay premium. It was more or less like the chit funds in southern India. Takaful was a policy designed to 'bear each other's burden.' LIC also announced annual bonuses depending on its investment performance.

Then, one year later in 2006, Saudi Arabia, issued licenses to 13 new insurance companies to end the monopoly of the National Company for Cooperative Insurance. LIC International and New India Assurance Co then joined to set up a joint venture company with Saudi partners to bring out life and non- life insurance products.

Now, it seems like the regulatory measures in Saudi Arabia require new insurance companies to offer 40% of the shares to locals before starting their operations.

LIC expects to get its operating license by July/August end. LIC holds 20.4% stake in SICCI (Saudi India Company Cooperative Insurance), while its joint venture partners New India Assurance holds 10.6% and Al- Hokir Group has 29%.

A senior LIC official has said that Saudi India Company is a composite insurance company, which will sell insurance as well as non life insurance products. The initial public offering was quite well received there. The matter is currently in the hands of the Ministry of Commerce - Saudi Arabia and by the end of July or August, the company hopes to get the license.