Sonali Life to become a completely Islamic insurer

Sonali Life Insurance's board of directors has decided to convert it from a traditional life insurance business to a completely Islamic one.

The new generation life insurer would seek shareholders' approval in an extraordinary general meeting to be held on 23 March, according to a disclosure through the Dhaka Stock Exchange.

"Starting as a traditional life insurer, we have already made all our operations 100% Shariah-compliant since having our independent Shariah board a few years ago," said Sheikh Mohammad Danial, a director of the company.

"Now it is time to declare ourselves as an Islamic life insurer," he said, adding that the company is responding to an increasing number of its clients who are serious about Shariah compliance.

Islamic insurance operations, also known as Takaful, mainly embrace the principles of mutual cooperation and shared responsibility instead of the traditional insurance business of risk transfer.

In Takaful, participants pool their contributions to create a collective fund that is used to provide financial protection to members in case of unforeseen events such as death or disability.

Also, the funds are invested in a Shariah-compliant way, and it is a trend nowadays in the financial services industry to convert to Islamic models in the Muslim-majority market.

Of the 35 life insurers registered with the insurance regulator, 11 – mostly new-generation ones – are officially Shariah-compliant, while some others are also offering Islamic products.

However, Bangladeshi insurance clients have had bitter experiences with their favourite Islamic life insurers once – Fareast Life – as some responsible people embezzled gigantic funds of the company and it turned insolvent to pay back their clients.

Sonali Life shares, which have a face value of Tk10, closed at Tk64.1 on the DSE on Monday.