The government has dropped its plan to make a separate law for the country's Islamic insurers. Instead, it has included a set of provisions in the proposed new insurance ordinance to regulate the Shariah-based insurance business, sources said.
"Some specific provisions have been incorporated into the proposed Insurance Ordinance 2008, empowering the authorities concerned to issue necessary rules for regulating the country's Islamic insurance companies," a senior official told the FE Saturday.
The council of advisers recently approved the Insurance Ordinance 2008 along with two other insurance ordinances in order to make the country's insurance industry dynamic and transparent.
The ordinances are: Insurance Regulatory Authority (IRA) Ordinance 2008 and Insurance Corporation (amendment) Ordinance 2008, official sources said.
A senior Commerce Ministry official said with some minor amendments, the aforesaid ordinances would soon be made effective through gazette notifications after getting the President's consent.
Previously, there was a move to frame a separate law to facilitate the operations of Islamic insurance companies in the country.
An eight-member experts' committee, which was formed in early 2005, submitted three separate draft laws, including a 'Takaful' Act for Islami insurance companies, before the government in December 26 of the same year, sources said.
Besides, the committee, headed by the then Chief Controller of Insurance Firoz Ahmed, also placed the same proposals before the present caretaker government in the form of ordinances.
A senior Commerce Ministry official said: "Since a section has been included in the new insurance ordinance exclusively for the Islamic insurance companies, there is no immediate requirement for making a separate law."
He further said under the new provisions, the relevant authorities will be able to make necessary rules for regulating the Islamic insurers.
Highlighting some key provisions, the official said under the new insurance ordinance the companies concerned will require to decide on their operational status.
"Within six months after the new law comes into being, the operators will have to decide whether they will run their business under the Islamic Shariah or the conventional laws," said another government official.
Once a company gets listed as a Shariah-based insurance company, then it will not be allowed to run their business under conventional insurance laws, the official elaborated.
Official sources also mentioned that the new ordinance will also empower the authorities concerned to form an 'Advisory Council', which will oversee whether the insurers are following the Shariah rules or the conventional laws.
Currently, a total of six insurance companies are exclusively running Shariah-based business while some other companies have some Islamic insurance products, they said.
Some 60 insurance companies - 17 life and 43 general -- are now operating in the country in the private sector in addition to the operations of two other state-run insurance companies namely Shadharan Bima Corporation (SBC) and Jibon Bima Corporation (JBC).
