Compliance Or Contradiction? A Critical Analysis of The Insurance Industry in Bangladesh in The Context of Shari’ah-Compliant Standards of Islamic Insurance and Reinsurance

Abstract

This paper is a critical analysis on whether the insurance sector of Bangladesh fits the Shari’ah-Compliant criteria of Islamic insurance (Takaful) and Islamic reinsurance (Retakaful). Based on directives issued by AAOIFI, Islamic Fiqh Academy and other academic bodies, the paper presents a discussion of the extent, to which the Bangladesh insurance framework measures up to Islamic ethical and legal principles. The study, using both the comparative analysis and empirical evaluation, demonstrates that there are significant gaps in the realization of fundamental Shari’ah requirements, such as ownership; profit orientation; a risk-sharing mechanism and governance. The paper provides important regulatory reforms, institutional alignment and growth of ethical Islamic financial practices as a conclusion.