Takaful is the Islamic version of insurance, and the size of global takaful industry is about USD$51 billion in 2019. Limited studies have been conducted on the development of takaful sector in Bangladesh and Indonesia using a comparative approach. As such, this review aims at investigating the challenges facing the development of takaful industry in these two countries. Primary sources such as laws and regulations, and the secondary sources such as scholarly articles and books on the subject matter were reviewed to derive conclusions. This review concludes that efficiency of takaful in both countries depend on some common factors, such as having a proper and sophisticated regulatory framework for takaful with the development of required talent pool while focusing on creating awareness and education to ensure that not only the general public have the required takaful literacy; but even the existing and potential customers have the basic knowledge about takaful. Further, it is also found in this review that in order to further develop the takaful industry in both countries, it is imperative to use innovation and technology to promote takaful parallel to the conventional insurance by creating a level playing field. This review also identifies some specific issues in both countries and have suggested recommendations accordingly. It is anticipated that the outcome of this review will assist policy makers and other stakeholders to understand the inhibitions facing the development of takaful industry in these two jurisdictions with hope that these challenges can be eliminated for the sustainable development of takaful sector.


Keywords: Insurance, Islamic insurance, Islamic finance, review, Shariah, Takaful.


Cite as: Lubaba, S., Ahmad, A. U. F., & Muneeza, A. (2022). Challenges facing the development of Takaful industry in Bangladesh and Indonesia: A review.  Journal of Nusantara Studies, 7(1), 100-113.

Author Biographies

Abu Umar Faruq Ahmad, Department of Islamic Economics and Finance, Guidance College, 1902 Baker Road, Houston, Tx 77094, USA.

Dr Abu Umar Faruq Ahmad is an Adjunct Professor of Islamic Economics at the Guidance College, Texas, USA. He earned BA in Shari`ah from the Islamic University of Madinah; PhD (with 'High Distinction') and LLM (Hons.) from the Western Sydney University, Sydney, Australia. His key research interests revolve around laws and regulation of Islamic Finance, Shariah, Fiqh and Usul al-Fiqh. He has held various positions during his over 35 years of professional career, which include Associate Professor, Senior Teacher, Senior Researcher, Executive Director, Journal Editor, Translator, Interpreter, Imam & Islamic Counselor, and Shariah advisor during his work in Australia, Bangladesh, Brunei, Kuwait, Malaysia, UAE and Saudi Arabia.

Aishath Muneeza, School of Graduate and Professional Studies, International Centre for Education in Islamic Finance (INCEIF), Kuala Lumpur, 59100, Malaysia.

Dr Aishath Muneeza is an Associate Professor at INCEIF, Malaysia which is known as the global University of Islamic Finance. She has served as the first female Deputy Minister of Ministry of the Islamic Affairs in Maldives; Deputy Minister of the Ministry of Finance and Treasury in Maldives; Head of Islamic Finance of the Capital Market Development Authority of Maldives; first chairman of the Hajj pilgrimage fund, Maldives Hajj Corporation Limited; and chairman of the Maldives Center for Islamic Finance Limited which was set by the government of Maldives to strategize Maldives as the hub of Islamic finance in South Asia.


Ab Rahman, A. (2009). Exploring Sharia`ah views on the practice of Takaful company reinsuring with reinsurance company. International Shari'ah Research Academy for Islamic Finance Shari’ah Conference on Takaful, Kuala Lumpur, Malaysia.

Ali, K. M. M. (2012). Bangladesh: The need for Takaful regulations.

Alpen Capital. (2021). Islamic finance & wealth management 2021.

Asep, N. (2019). Prospects and development challenges Sharī‘ah insurance in Indonesia.

Azad, M. A. K., & Sir, A. M. R. (2013). Prospects analysis of an Islamic capital market in Bangladesh. Global Journal of Management and Business Research, 13(6), 57-61.

Bhuiyan, M. A. H., Hossain, M. B., & Rahman, M. K. (2012). Islamic management practices in Islamic life insurance companies of Bangladesh. Journal of Novel Applied Sciences, 1(4), 128-136.

COMCEC Coordination Office. (2019). Improving the Takaful sector in Islamic countries.

Effendi, J. (2018). Islamic insurance: A potential niche market of Indonesia. Al-Iqtishad: Jurnal Ilmu Ekonomi Syariah, 10(1), 207-230.

Hidayat, I. P., & Firmansyah, I. (2017). Determinants of financial performance in the Indonesian Islamic insurance industry. Etikonomi, 16(1), 1-12.

International Shari'ah Research Academy for Islamic Finance. (2016). Islamic financial system principles & operations (2nd ed.). International Shari'ah Research Academy for Islamic Finance.

Ministry of National Development Planning. (2019). Indonesia Islamic economic masterplan 2019-2024.

Kalil, M. E. (2011). Islamee banking and insurance (1st ed.). Merit Fair Prokashon.

Khalid, M. (2007). Islamic economy and insurance: Some issues (1st ed.). Shiddikiyah Publication.

Khan, I., Abdul Rahman, N. N. B., Zulkifli, M. Y., Mohd Nor, M. R., & Noordin, K. (2018). A narrative on Islamic insurance in Bangladesh: Problems and prospects. International Journal of Ethics and Systems, 34(2), 186-199.

Khan, I., Rahman, N. N. B. A., Yusoff, M. Y. Z. B. M., & Nor, M. R. B. M. (2016). History, problems, and prospects of Islamic insurance (Takaful) in Bangladesh'. SpringerPlus, 5(1), 785-711.

Khan, M. S. U., & Uddin, M. N. (2013). Insurance industry in Bangladesh: Opportunities and challenges. Thoughts on Economics, 23(4), 55-78.

Middle East Insurance Review. (2020). Indonesia: Sharī‘ah insurance body upbeat about takaful market.ī‘ah-insurance-body-upbeat-about-takaful-market

Pricewaterhouse Coopers, PWC. (2017). Sharia insurance reserving.

Reza, S. M., & Iqbal, M. M. (2007). Life insurance marketing in Bangladesh. Daffodil International Journal of Business and Economics, 2(2), 87-103.

Sarwar, M. J. (2016). Future challenge in Islamic insurance (Takaful) in Bangladesh. Australian Journal of Sustainable Business and Society, 2(1), 69-80.
How to Cite
Lubaba, S., Faruq Ahmad, A. U., & Muneeza, A. (2022). CHALLENGES FACING THE DEVELOPMENT OF TAKAFUL INDUSTRY IN BANGLADESH AND INDONESIA: A REVIEW. Journal of Nusantara Studies (JONUS), 7(1), 100-113.