Development of Islamic Insurance (Takaful) in Bangladesh: Legal Barriers and Challenges
Development of Islamic Insurance (Takaful) in Bangladesh: Legal Barriers and Challenges

Summary/Abstract: This study delves into the concept of Takaful, an Islamic insurance model, and its legal framework, focusing on its role and potential within the insurance market of Bangladesh. It examines the challenges and opportunities posed by Takaful, considering its alignment with Islamic principles and its growth compared to conventional insurance systems involving ribā (interest) and ghrār (uncertainty), which raises concerns about Islamic law. The traditional system of insurance's concerns over compatibility with Islamic law has paved the way for Takaful, an alternative insurance model rooted in Islamic fnance principles. Given Bangladesh's Muslim-majority population and substantial market for Islamic banking, understanding and enhancing the Takaful industry's potential is crucial. This study addresses the need for an ethical and Sharia-compliant insurance solution while contributing to the broader discourse on Islamic fnance. The primary objective of this study is to assess the signifcance of Takaful in the context of the Bangladeshi insurance market. It aims to evaluate Takaful's alignment with Islamic principles, its market growth, and its legal framework. By identifying challenges and opportunities, the study seeks to provide recommendations for policymakers and insurance practitioners to promote Takaful efectively in Bangladesh. This study employs a mixed-methods approach. The research assesses Takaful's market share, growth trajectory, and comparison with conventional insurance products. In addition, qualitative analysis is used to identify legal and commercial challenges hindering Takaful's growth. Recommendations are formulated based on the research fndings, aiming to enhance Takaful's role through policy adjustments within the Insurance Act 2010 and addressing challenges related to Islamic commercial law. By scrutinizing the signifcance of Takaful in the specifc context of Bangladesh's insurance market, this study provides valuable insights to stakeholders, guiding the growth and development of the Takaful industry while respecting Islamic principles and ethical considerations.

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