GOVERNMENT OF KERALA

Law (Legislation–Publication) Department

NOTIFICATION

No. 1075/Leg.Pbn.2/2015/Law.

Dated, Thiruvananthapuram, 21st January 2015.

The following Ordinance, promulgated by the President and published in

the Gazette of India, Extraordinary, Part II, Section I dated the 26th day of

December, 2014 is hereby republished for general information.

By order of the Governor,

C. P. RAMARAJA PREMA PRASAD,

Law Secretary.

Kerala Gazette No. 14 dated 7th April 2015.

PART I

Section i

G. 6/2015/DTP (2).

MINISTRY OF LAW AND JUSTICE

(Legislative Department)

New Delhi, the 26th December, 2014/Pausa 5, 1936 (Saka)

THE INSURANCE LAWS (AMENDMENT)

ORDINANCE, 2014

(NO. 8 OF 2014)

Promulgated by the President in the Sixty-fifth Year of the Republic

of India.

WHEREAS the Insurance Laws (Amendment) Bill, 2008 further to amend the

Insurance Act, 1938, the General Insurance Business (Nationalisation) Act,

1972 and the Insurance Regulatory and Development Authority Act, 1999 was

introduced in the Council of States on the 22nd December, 2008 and was

referred to the Department related Parliamentary Standing Committee on

Finance for examination and Report;

AND WHEREAS the Parliamentary Standing Committee had submitted its

Report on the 13th December, 2011;

AND WHEREAS the said Bill along with the official amendments prepared

on the basis of the recommendations of the Standing Committee could not be

taken up for consideration and passing in the Council of States;

AND WHEREAS the said Bill was further referred to the Select Committee

of the Council of States for examination and Report and the Committee

submitted its Report, along with the Insurance Laws (Amendment) Bill, 2014

incorporating therein the amendments decided by the Committee, on the 10th

December, 2014;

AND WHEREAS the Insurance Laws (Amendment) Bill, 2014, as reported by

the Select Committee, could not be taken up for consideration and passing in

the Council of States;

AND WHEREAS Parliament is not in session and the President is satisfied

that circumstances exist which render it necessary for him to take immediate

action to give effect to the provisions of the said Bill;

NOW, THEREFORE, in exercise of the powers conferred by clause (1) of

article 123 of the Constitution, the President is pleased to promulgate the

following Ordinance:—

CHAPTER I

PRELIMINARY

1. Short title and commencement.—(1) This Ordinance may be called the

Insurance Laws (Amendment) Ordinance, 2014.

(2) It shall come into force at once.

CHAPTER II

AMENDMENTS TO THE INSURANCE ACT, 1938

2. Substitution of references to certain expressions by certain other

expressions.—In the Insurance Act, 1938 (4 of 1938) (hereafter in this Chapter

referred to as the Insurance Act), throughout the Act,—

(a)

for the words and figures “the Indian Companies Act, 1913” (7 of

1913), wherever they occur, the words and figures “the Companies

Act, 2013” (18 of 2013) shall be substituted;

(b)

for the words and figures “the Companies Act, 1956” (1 of

1956) wherever they occur, the words and figures “the Companies Act,

2013” (18 of 2013) shall be substituted’.

3. Amendment of section 2.—In section 2 of the Insurance Act,—

(i)

for clauses (I) and (1A), the following clauses shall be

substituted, namely:—

‘(1) “actuary” means an actuary as defined in clause (a) of

sub-section (1) of section 2 of the Actuaries Act, 2006 (35 of 2006);

(1A) “Authority” means the Insurance Regulatory and

Development Authority of India established under sub-section (1) of

section 3 of the Insurance Regulatory and Development Authority Act,

1999 (41 of 1999);’;

(ii) clause (5A) shall be omitted;

(iii) after clause (6B), the following clause shall be inserted,

namely:—

‘(6C) ‘‘health insurance business” means the effecting of contracts

which provide for sickness benefits or medical, surgical or hospital

expense benefits, whether in-patient or out-patient travel cover and

personal accident cover;’;

(iv) for clause (7A), the following clause shall be substituted,

namely:—

‘(7A) ‘‘Indian insurance company” means any insurer, being a

company which is limited by shares, and,—

(a)

which is formed and registered under the Companies

Act, 2013 (18 of 2013) as a public company or is converted into

such a company within one year of the commencement of the

Insurance Laws (Amendment) Ordinance, 2014;

(b) in which the aggregate holding of equity shares by

foreign investors, including portfolio investors, do not exceed

forty-nine per cent. of the paid up equity capital of such Indian

insurance company, which is Indian owned and controlled, in such

manner as may be prescribed.

Explanation:— For the purposes of this sub-clause, the

expression ‘‘control’’ shall include the right to appoint a majority

of the directors or to control the management or policy

decisions including by virtue of their shareholding or management

rights or shareholders agreements or voting agreements.”;

(c)

whose sole purpose is to carry on life insurance

business or general insurance business or re-insurance business

or health insurance business;

(v) clause (8) shall be omitted;

(vi) in clause (8A),—

(I)

for sub-clause (b), the following sub-clause shall be

substituted, namely:—

“(b) having a minimum paid-up capital of rupees one hundred

crores in case of life insurance business, general insurance

business and health insurance business;”;

(I1) in sub-clause (d), after the words “general insurance

business”, the words “or health insurance business” shall be inserted;

(vii) for clause (9), the following clause shall be substituted,

namely:—

‘(9) “insurer” means—

(a) an Indian Insurance Company, or

(b) a statutory body established by an Act of Parliament to

carry on insurance business, or

(c) an insurance co-operative society, or

(d) a foreign company engaged in re-insurance business

through a branch established in India.

Explanation:—For the purposes of this sub-clause, the

expression ‘‘foreign company’’ shall mean a company or body

established or incorporated under a law of any country outside

India and includes Lloyd’s established under the Lloyd’s Act, 1871

(United Kingdom) or any of its Members;’;

(viii) in clause (10), the words and figures “licensed under section

42” shall be omitted;

(ix) in clause (11), in sub-clause (c), for the words “annuities payable

out of any fund”, the words “benefit payable out of any fund” shall be

substituted;

(x) clauses (12), (13) and (15) shall be omitted;

(xi) in clause (16), for the words, brackets, figures and letter

“clauses (13) and (13A) of section 2 of the Indian Companies Act, 1913”

(7 of 1913), the words, brackets and figures “clause (68) and clause (72)

of section 2 of the Companies Act, 2013” (18 of 2013) shall be

substituted;

(xii) after clause (16), the following clauses shall be inserted,

namely:—

‘(16A) “regulations” means the regulations framed by the

Insurance Regulatory and Development Authority of India established

under the Insurance Regulatory and Development Authority Act, 1999

(41 of 1999);

(16B) “re-insurance” means the insurance of part of one insurer’s

risk by another insurer who accepts the risk for a mutually acceptable

premium;

(16C) “Securities Appellate Tribunal” means the Securities

Appellate Tribunal established under section 15K of the Securities and

Exchange Board of India Act, 1992 (15 of 1992);’;

(xiii) clause (17) shall be omitted.

Insertion of new section 2CB.—After section 2CA of the Insurance

Act, the following section shall be inserted, namely:—

“2CB Properties in India not to be insured with foreign

insurers except with the permission of Authority.—(1) No person

shall take out or renew any policy of insurance in respect of any

property in India or any ship or other vessel or aircraft registered in India

with an insurer whose principal place of business is outside India save with

the prior permission of the Authority.

(2) If any person contravenes the provision of sub-section (1), he shall

be liable to a penalty which may extend to five crore rupees.”.

Omission of section 2E.—Section 2E of the Insurance Act shall be

omitted.

Amendment of section 3.—In section 3 of the Insurance Act,—

(i) for sub-section (2), the following sub-section shall be

substituted, namely:—

“(2) Every application for registration shall be made in such

manner and shall be accompanied by such documents as may be

specified by the regulations.”;

(ii) in sub-section (2A), in clause (d), for the figures, letter and

word “5, 31 A and 32”, the figures, word and letter “5 and 31A” shall

be substituted;

(iii) for sub-section (2C), the following sub-section shall be

substituted, namely:—

“(2C) Any person aggrieved by the decision of the Authority

refusing registration may, within thirty days from the date on which a

copy of the decision is received by him, appeal to the Securities

Appellate Tribunal.”;

(iv) sub-section (2D) shall be omitted;

(v) for sub-section (3), (4), (5) and (5A), the following sub-sections

shall be substituted, namely:—

“(3) In the case of any insurer having joint venture with a person

having its principal place of business domiciled outside India orany

insurer as defined in sub-clause (d) of clause (9) of section 2, the

Authority may withhold registration already made if it is satisfied that

in the country in which such person has been debarred by law or

practice of that country to carry on insurance business.

(4) The Authority may suspend or cancel the registration of an

insurer either wholly or in so far as it relates to a particular class of

insurannce business, as the case may be,—

(a) if the insurer fails, at any time, to comply with the

provisions of section 64VA as to the excess of the value of his

assets over the amount of his liabilities, or

(b) if the insurer is in liquidation or is adjudged as an

insolvent, or

(c) if the busniess or a class of the business of the insurer

has been transferred to any person or has been transferred to or

amalgamated with the business of any other insurer without the

approval of the authority, or

(d) if the insurer makes default in complying with, or acts in

contravention of, any requirement of this Act or of any rule or

any regulation or order made or, any direction issued

thereunder, or

(e) if the Authority has reason to believe that any claim

upon the insurer arising in India under any policy of insurance

remains unpaid for three months after final judgment in regular

court of law, or

(f) if the insurer carries on any business other than

insurance business or any prescribed business, or

(g) if the insurer makes a default in complying with any

direction issued or order made, as the case may be, by the

Authority under the Insurance Regulatory and Development

Authority Act, 1999 (41 of 1999), or

(h) if the insurer makes a default in complying with, or acts

in contravention of, any requirement of the Companies Act, 2013

(18 of 2013) or the General Insurance Business (Nationalisation)

Act, 1972 (57 of 1972) or the Foreign Exchange Management

Act, 1999 (42 of 1999) or the Prevention of Money Laundering

Act, 2002 (15 of 2002), or

(i) if the insurer fails to pay the annual fee required under

section 3A, or

(j) if the insurer is convicted for an offence under any law

for the time being in force, or

(k) if the insurer being a co-operative society set up under

the relevant State laws or, as the case may be, the Multi-State

Co-operative Societies Act, 2002 (39 of 2002), contravenes the

provisions of law as may be applicable to the insurer.

(5) When the Authority suspends or cancels any registration

under clause (a), clause (d), clause (e), clause (f), clause (g), or

clause (i) of sub-section (4), it shall give notice in writing to the

insurer of its decision, and the decision shall take effect on such date

as it may specify in that behalf in the notice, such date not being less

than one month nor more than two months from the date of the receipt

of the notice in the ordinary course of transmission.

(5A) When the Authority suspends or cancels any registration

under clause (b), (c), (j) or (k) of sub-section (4), the suspension or

cancellation, as the case may be, shall take effect on the date on which

notice of the order of suspension or cancellation is served on the

insurer.”.

(vi) for sub-section (5C), the following sub-section shall be

substituted, namely:—

“(5C) Where a registration is suspended or cancelled under

clause (a), clause (d), clause (e), clause (f), clause (g), or clause (i)

of sub-section (4), the Authority may at its discretion revive the

registration, if the insurer within six months from the date on which

the suspension or cancellation took effect complies with the

provisions of section 64VA as to the excess of the value of his assets

over the amount of his liabilities or has had an application under

sub-section (4) of section 3A accepted, or satisfies the Authority that

no claim upon him such as is referred to in clause (e) of sub-section

(4) remains unpaid or that he has complied with any requirement of

this Act or the Insurance Regulatory and Development Authority Act,

1999 (41 of 1999), or of any rule or any regulation, or any order

made thereunder or any direction issued under those Acts, or that he

has ceased to carry on any business other than insurance business or

any prescribed business, as the case may be, and complies with any

directions which may be given to him by the Authority.”.

7. Substitution of new section for section 3A.— For section 3A of the

Insurance Act, the following section shall be substituted, namely:—

“(3A) Payment of annual fee by insurer.—(1) An insurer who has

been granted a certificate of registration under section 3 shall pay such

annual fee to the Authority in such manner as may be specified by the

regulations.

(2) Any failure to deposit the annual fee shall render the certificate of

registration liable to the cancelled.”.

8. Substitution of new section for section 4.— For section 4 of the

Insurance Act, the following section shall be substituted, namely:—

“4. Minimum limits for annuities and other benefit secured by

policies of life Insurance.—The insurer shall pay or undertake to pay on

any policy of life Insurance or a group policy issued, a minimum annuity

and other benefits as may be determined by regulations excluding any profit

or bonus provided that this shall not prevent an insurer from converting

any policy into a paid-up policy of any value or payment of surrender value

of any amount.”.

9. Amendment of section 5.—In section 5 of the Insurance Act,—

(i)

in sub-section (2), both the provisos shall be omitted;

(ii) sub-section (3) shall be omitted.

10. Substitution of new section for section 6.—For section 6 of the

Insurance Act, the following section shall be substitued, namely:—

“6. Requirement as to capital.—(1) No insurer not being an insurer as

defined in sub-clause (d) of clause (9) of section 2, carrying on the

business of life insurance, general insurance, health insurance or re-

insurance in India or after the commencement of the Insurance Regulatory

and Development Authority Act, 1999 (41 of 1999), shall be registered

unless he has,—

(i) a paid-up equity capital of rupees one hundred crore, in case

o f

a person carrying on the business of life Insurance or general insurance; or

(ii) a paid-up equity capital of rupees one hundred crore, in case of a

person carrying on exclusively the business of health insurance; or

(iii) a paid-up equity capital of rupees two hundred crore, in case of a

person carrying on exclusively the business as a re-insurer:

G. 6/2015/DTP (2).

“Provided that the insurer, may enhance the paid up equity capital,

as provided in this section in accordance with the provisions of the

companies Act, 2013, (18 of 2013) the securities Exchange Board of

India Act, 1992 (15 of 1992) and the rules, regulations or directions

issued thereunder or any other law for the time being in force:

Provided further that in determining the paid-up equity capital,

any preliminary expenses incurred in the formation and registration of

any insurer as may be specified by the regulations made under this

Act, shall be excluded.”.

(2) No insurer, as defined in sub-clause (d) of clause (9) of section

2, shall be registered unless he has net owned funds of not less than

rupees five thousand crore.”.

11. Amendment of section 6A.—In section 6A of the Insurance Act,—

(i) for sub-section (1), the following sub-section shall be substituted,

namely:—

“(1) No public company limited by shares having its registered

office in India, shall carry on life Insurance business or general

insurance business or health insurance business or re-insurance

business, unless it satisfies the following conditions, namely:—

“(i) that the capital of the company shall consists of equity

shares each having a single face value and such other form of

capital, as may be specified by the regulations;

(ii) that the voting rights of shareholders are restricted to

equity shares;

(iii) that, except during any period not exceeding one year

allowed by the company for payment of calls on shares, the paid-

up amount is the same for all shares, whether existing or new:

Provided that the conditions specified in this sub-section

shall not apply to a public company which has, before the

commencement of the Insurance (Amendment) Act, 1950 (47 of

1950), issued any shares other than ordinary shares each of which

has a single face value or any shares, the paid-up amount whereof

is not the same for all of them for a period of three years from

such commencement.”;

(ii) in sub-section (2), after the words “paid-up amount of

the”, the word “equity” shall be inserted;

(iii) for sub-section (4), the following sub-section shall be

substituted, namely:—

“(4) A public company as aforesaid which carries on life

insurance business, general and health insurance business and re-

insurance business—

(a) shall, in addition to the register of members

maintained under the companies Act, 2013 (18 of 2013),

maintain a register of shares in which the name, occupation

and address of the beneficial owner of each share shall be

entered including any change of beneficial owner declared to

it within fourteen days from the receipt of such declaration;

(b) shall not register any transfer of its shares—

(i)

unless, in addition to complaince being made

with the provisions of section 56 of the Companies Act,

2013 (18 of 2013), the transferee furnishes a

declaration in the prescribed form as to whether he

proposes to hold the shares for his own benefit or as a

nominee, whether jointly or severaly, on behalf of

others and in the latter case giving the name, occupation

and address of the beneficial owner or owners, and the

extent of the beneficial interest of each;

(ii) where, after the transfer, the total paid-up

holding of the transferee in the shares of the company

is likely to exceed five percent of its paid-up capital

unless the previous approval of the Authority has been

obtained to the transfer;

(iii) where, the nominal value of the shares

intended to be transferred by any individual, firm, group,

constituents of a group, or body corporate under the

same management, jointly or severaly exceeds one per

cent. of the paid-up equity capital of the insurer, unless

the previous approval of the Authority has been obtained

for the transfer.

Explanation.—For the purposes of this sub-clause,

the expressions “group” and “same management” shall

have the meanings respectively assigned to them in the

Competition Act, 2002 (12 of 2003).”.

(iv) sub-sections (3), (6), (7), (8), (9), and (10)

shall be omitted;

(v) in sub-section (11), the words, brackets and

figures “except those of sub-sections (7), (8), and (9)”

shall be omitted;

(vi) in sub-section (11), clause (ii) shall be

omitted; and

(vii)

in the Explanation, in sub-clause (c) of

clause (ii), the words “managing agent” shall be

omitted.

12. Omission of section 6AA.— Section 6AA of the Insurance Act shall be

omitted.

13. Amendment of section 6E.— In section 6B of the Insurance Act,—

(i)

in sub-section (1),—

(a) for the words “life insurance business”, the words “life or

general or health insurance or re-insurance business” shall be

substituted; and

(b) for the words “Central Government”, the word “Authority”

shall be substituted;

(ii) in sub-sections (2) and (3), for the words “High Court”, the

words “the Securities Appellate Tribunal” shall be substituted.”.

(iii) sub-section (4) shall be omitted.

14. Omission of sections 6C, 7, 8 and 9—Sections 6C, 7, 8 and 9 of the

Insurance Act shall be omitted.

15. Amendment of section 10.—In section 10 of the Insurance Act,—

(i)

in sub-section (1), for the words “prescribed in this behalf”, the

words “specified by the regulations” shall be substituted;

(ii) in sub-section (2),—

(a) the words, brackets and figures, “after the expiry of six

months from the commencement of the Insurance (Amendment) Act,

1946 (6 of 1946)” shall be omitted.

(b) the words “under the law of the insurer’s country” occuring

at the end, shall be omitted.

(iii) after sub-section (2A), the following sub-section shall be

inserted, namely:—

“(2AA) Where the insurer carries on the business of insurance,

all receipts due in respect of each sub-clause of such insurance

business shall be carried to and shall form a separate fund, the assets

of which shall be kept separate and distinct from other assets of the

insurer and every insurer shall submit to the Authority the necessary

details of such

funds as may be required by the Authority from

time to time and such funds shall not be applied directly or indirectly

save as expressly permitted under this Act or regulations made

thereunder.”.

16. Substitution of new section for section 11.— For section 11 of the

Insurance Act, the following section shall be substituted, namely:—

“11. Accounts and balance-sheet.— (1) Every insurer, on or after the

commencement of the insurance Laws (Amendment) Ordinance, 2014, in

respect of insurance business transacted by him and in respect of his

shareholders’ funds, shall, at the expiration of each financial year, prepare

with reference to that year, balance-sheet, a profit and loss account, a

separate account of receipts and payments, a revenue account in accordance

with the regulations as may be specified.

(2)

Every insurer shall keep separate accounts relating to funds of

shareholders and policy-holders.

(3)

Unless the insurer is a company as defined in clause (20) of

section 2 of the Companies Act, 2013 (18 of 2013), the accounts and

statements referred to in sub-section (1) shall be signed by the insurer, or

in the case of a company by the chairman, if any, and two directors and

the principal officer of the company, or in case of an insurance

co-operative society by the person incharge of the society and shall be

accompanied by a statement containing the names, descriptions and

occupations of, and the directorships held by, the persons in charge of the

management of the business during the period to which such accounts and

statements refer and by a report on the affairs of the business during that

period.”.

17. Substitution of new section for section 12.— For section 12 of the

Insurance Act, the following section shall be substituted, namely:—

“12. Audit.—The balance-sheet, profit and loss account, revenue

account and profit and loss appropriation account of every insurer, in

respect of all insurance business transacted by him, shall, unless they are

subject to audit under the Companies Act, 2013 (18 of 2013), be audited

annually by an auditor, and the auditor shall in the audit of all such

accounts have the powers of, exercise the functions vested in, and

discharge the duties and be subject to the liabilities and penalties imposed

on, auditors of companies by section 147 of the Companies Act, 2013 (18

of 2013).”.

18. Amendment of section 13.—In section 13 of the Insurance Act,—

(i)

for Sub-section (1), the following sub-section shall be

substituted, namely :—

“(1).

Every insurer carrying on life insurance business shall,

once at least every year cause an investigation to be made by an

actuary into the financial condition of the life insurance business

carried on by him, including a valuation of his liabilities in respect

thereto and shall cause an abstract of the report of such actuary to be

made in accordance with the regulations:

Provided that the Authority may, having regard to the

circumstances of any particular insurer, allow him to have the

investigation made as at a date not later than two years from the date

as at which the previous investigation was made:

Provided further that every insurer, on or after the

commencement of the Insurance Regulatory and Development

Authority Act, 1999 (41 of 1999), shall cause an abstract of the report

of the actuary to be made in such manner as may be specified by the

regulations.”;

(ii)

for Sub-section (4), the following sub-section shall be

substituted, namely :—

“(4)

There shall be appended to every such abstract a statement

prepared in such form and in such manner as may be specified by

the regulations:

Provided that, if the investigation referred to in subsections (1)

and (2) is made annually by any insurer, the statement need not be

appended every year but shall be appended at least once in every three

years.”;

(iii) for Sub-section (6), the following sub-section shall be substituted,

namely :—

“(6) The provisions of this section relating to the life insurance

business shall apply also to any such sub-class of insurance business

included in the class “Miscellaneous Insurance” and the Authority may

authorise such modifications and variations of regulations as may be

necessary to facilitate their application to any such sub-class of

insurance business:

Provided that, if the Authority is satisfied that the number and

amount of the transactions carried out by an insurer in any such sub-

class of insurance business is so small as to render periodic

investigation and valuation unnecessary, it may exempt that insurer

from the operation of this sub-section in respect of that sub-class of

insurrance business.”.

19. Substitution of new section for section 14.—For section 14 of the

Insurance Act, the following section shall be substituted, namely:—

“14 (1) Record of policies and claims.—Every insurer, in respect of

all business transacted by him, shall maintain—

(a) a record of policies, in which shall be entered, in respect of

every policy issued by the insurer, the name and address of the policy-

holder, the date when the policy was effected and a record of any

transfer, assignment or nomination of which the insurer has notice,

(b) a record of claims, every claim made together with the date

of the claim, the name and address of the claimant and the date on

which the claim was discharged, or, in the case of a claim which is

rejected, the date of rejection and the grounds thereof ; and

and (b) may be maintained in any such form, including electronic

mode, as may be specified by the regulations made under this Act.

(2) Every insurer shall, in respect of all business transacted by him,

endeavour to issue policies above a specified threshold in terms of sum

assured and premium in electronic form, in the manner and form to be

specified by the regulations made under this Act.”.

20. Substitution of new section for section 15.— For section 15 of the

Insurance Act, the following section shall be substituted, namely:—

“15. Submission of returns.—(1) The audited accounts and statements

referred to in section 11 or Substitution (5) of section 13 and the abstract

and statement referred to in section 13 shall be printed, and four copies

thereof shall be furnished as returns to the Authority within six months

from the end of the period to which they refer.

(2)

Of the four copies so furnished one shall be signed in the case of

a company by the chairman and two directors and by the principal officer

of the company and, if the company has a managing director by that

managing director and one shall be signed by the auditor who made the

audit or the actuary who made the valuation, as the case may be.”.

21. Omission of section 16.— Section 16 of the Insurance Act shall be

omitted.

22. Omission of sections 17 and 17A.— Sections 17 and 17A of the

Insurance Act shall be omitted.

23. Amendment of section 20.— In section 20 of the Insurance Act,—

(i)

for Sub-section (1), the following sub-section shall be substituted,

namely :—

“(1) Every return furnished to the Authority or certified copy

there of shall be kept by the Authority and shall be open to inspection ;

and any person may procure a copy of any such return, or of any part

thereof, on payment of such fee as may be specified by the

regulations.”;

(ii) in Sub-section (2), the words and figures “or section 16” shall be

omitted;

(iii)

in Sub-section (3), for the words “one rupee”, the words “such

fee as may be specified by the regulations” shall be subtituted.

24. Amendment of section 21.— In section 21 of the Insurance Act,—

(i)

in clause (d) of sub-section (1), the words and figures “or

section 16” shall be omitted;

(ii) for Sub-section (2), the following sub-section shall be substituted,

namely :—

“(2) The Securities Appellate Tribunal may, on the application of

an insurer and after hearing the authority, cancel any order made by

the authority under clause (d) of sub-section (1) or may direct the

acceptance of such a return which the Authority has declined to

accept, if the insurer satisfies the Tribunal that the action of the

Authority was in the circumstances unreasonable:

Provided that no application under this sub-section shall be

entertained unless it is made before the expiration of four months

from the date when the Authority made the order or declined to

accept the return.”.

25. Amendment of section 22.— In section 22 of the Insurance Act,—

(i) In sub-section (1), the words, brackets, letter and figures “or an

abstract of a valuation report furnished under clause (c) of sub-section (2)

of section 16” shall be omitted;

(ii) In sub-section (2), the words, brackets and figures “or, as the case

may be, of sub-section (2) of section 16” shall be omitted.

26. Substitution of new sections for sections 27, 27A, 27B, 27C and

27D.—For sections 27, 27A, 27B, 27C and 27D of the Insurance Act , the

following sections shall be substituted, namely:—

“27. Investment of assets.—(1) Every insurer shall invest and at all

times keep invested assets equivalent to not less than the sum of—

(a)

the amount of his liabilities to holders of life insurance

policies in India on account of matured claims, and

(b) the amount required to meet the liability on policies of life

insurance maturing for payment in India, less—

(i)

the amount of premiums which have fallen due to the

insurer on such policies but have not been paid and the days of

grace for payment of which have not expired, and

(ii) any amount due to the insurer for loan granted on and

within the surrender values of policies of life insurance

maturing for payment in India issued by him or by an insurer

whose business he has acquired and in respect of which he has

assumed liability in the following manner, namely,—

(a)

twenty-five per cent. of the said sum in

Government securities, a further sum equal to not less than

twenty-five per cent. of the said sum in Government

securities or other approved securities; and

(b)

the balance in any of the approved investments, as

may be specified in the regulations subject to the limitations,

conditions and restrictions specified therein.

(2)

In the case of an insurer carrying on general insurance

business, twenty per cent. of the assets in Government Securities, a

further sum equal to not less then ten per cent. of the assets in

Government securities or other approved securities and the balance in

any other investment in accordance with the regulations of the

Authority and subject to such limitations, conditions and restrictions

as may be specified by the Authority in this regard.

Explanation—In this section, the term “assets” means all the

assets of insurer at their carrying value but does not include any

assets specifically held against any fund or portion thereof in respect

of which the Authority is satisfied that such fund or portion thereof,

as the case may be, is regulated by the law of any country outside

India or miscellaneous expenditure or in respect of which the

Authority is satisfied that it would not be in the interest of the insurer

to apply the provisions of this section.

G. 6/2015/DTP (2).

(3)

For the purposes of sub-sections (1) and (2), any specified

assets shall, subject to such conditions, if any, as may be specified, be

deemed to be assets invested or kept invested in approved

investments specified by regulations.

(4)

In computing the assets referred to in sub-sections (1) and

(2), any investment made with reference to any currency other than

the Indian rupee which is in excess of the amount required to meet the

liabilities of the insurers in India with reference to that currency, to

the extent of such excess, shall not be taken into account:

Provided that nothing contained in this sub-section shall

affect the operation of sub-section (2):

Provided further that the Authority may, either generally or in

any particular case, direct that any investment shall, subject to such

conditions as may be imposed, be taken into account, in such manner

as may be specified in computing the assets referred to in subsections

(1) and (2) and where any direction has been issued under this proviso,

copies thereof shall be laid before each house of Parliament as soon

as may be after it is issued.

(5) Where an insurer has accepted re-insurance in respect of any

policies of life insurance issued by another insurer and maturing for

payment in India or has ceded reinsurance to another insurer in

respect of any such policies issued by himself, the sum referred to in

sub-section (1) shall be increased by the amount of the liability

involved in such acceptance and decreased by the amount of the

liability involved in such cession.

(6) The Government securities and other approved securities in

which assets are under sub-section (1) or sub-section (2) to be

invested and kept invested shall be held by the insurer free of any

encumbrance, charge, hypothecation or lien.

(7) The assets required by this section to be held invested by an

insurer incorporated or domiciled outside India shall, except to the

extent of any part thereof which consists of foreign assets held

outisde India, be held in India and all such assets shall be held in trust

for the discharge of liabilities of the nature referred to in sub-section

(1) and shall be vested in trustees resident in India and approved by

the Authority, and the instrument of trust under this sub-section shall

be executed by the insurer with the approval of the Authority, and

shall define the manner in which alone the subject-matter of the trust

shall be dealt with.

Explanation.—This sub-section shall apply to an insurer

incorporated in India whose share capital to the extent of one-third is

owned by, or the members of whose governing body to the extent of

one-third consists of members domiciled elsewhere than in India.

27A. Further provisions regarding invesments.—(1) No insurer

carrying on life insurance business shall invest or keep invested any

part of his controlled fund and no insurer carrying on general

business shall invest or keep invested any part of his assets otherwise

than in any of the approved investments as may be specified by the

regulations subject to such limitations, conditions and restrictions

therein.

(2) Notwithstanding anything contained in sub-section (1) or

sub-section (2) of section 27, an insurer may, subject to the

provisions contained in the next succeding sub-sections, invest or

keep invested any part of his controlled fund or assets otherwise than

in an approved investment, if—

(i)

after such investment, the total amounts of all such

investments of the insurer do not exceed fifteen per cent. of the

sum referred to in sub-section (1) of section 27 or fifteen per cent.

of the assets referred to in sub-section (2) as the case may be;

(ii) the investment is made, or in the case of any investment

already made, the continuance of such investment is with the

consent of all the directors present at meeting and eligible to

vote, special notice of which has been given to all the directors

then in India, and all such investments, including investments

in which any director is interested, are reported without delay to

the Authority with full details of the investments and the extent

of the director’s interest in any such investment.

(3) An insurer shall not out of his controlled fund or assets as

referred to in sub-section (2) of section 27,—

(a) invest in the shares of any one banking company, or

(b) invest in the shares or debentures of any one company,

more than the percentage specified by the regulations.

(4) An insurer shall not out of his controlled fund or assets as

referred to in sub-section (2) of section 27 invest or keep invested in

the shares or debentures of any private limited company.

(5) All assets forming the controlled fund or assets as referred

to in sub-section (2) of section 27, not being Government securities

or other approved securities in which assets are to be invested or

held invested in accordance with this section , shall [except for a part

thereof not exceeding one-tenth of the controlled fund or assets as

referred to in sub-section (2) thereof in value which may, subject to

such conditions and restrictions as may be prescribed, be offered as

security for any loan taken for purposes of any investment], be held

free of any encumbrance, charge, hypothecation or lien.

(6) If at any time the Authority considers any one or more of the

investments of an insurer to be unsuitable or undesirable, the

Authority may, after giving the insurer an opportunity of being heard,

direct him to realise the investment or investments, and the insurer

shall comply with the direction within such time as may be specified

in this behalf by the Authority.

(7) Nothing contained in this section shall be deemed to affect

in any way the manner in which any moneys relating to the provident

fund of any employee or to any security taken from any employee or

other moneys of a like nature are required to be held by or under any

Central Act, or Act of a State Legislature.

Explanation.—In this section “controlled fund” means—

(a) in the case of any insurer carrying on life insurance

business—

(i)

all his funds, if he carries on no other class of

insurance business;

“(ii) all the funds in India appertaining to his life

insurance business if he carries on some other class of

insurance business also.

Explanation.—For the purposes of sub-clauses (i) and (ii), the

fund does not include any fund or portion thereof in respect of which

the Authority is satisfied that such fund or portion, as the case may be,

is regulated by the law in force of any country outside India or it

would not be in the interest of the insurer to apply the provisions of

this section.”;

(b) in the case of any other insurer carrying on life

insurance business—

(i)

all his funds in India, if he carries on no other

class of insurance business;

(ii) all the funds in India appertaining to his life

insurance business if he carries on some other class of

insurance business also; but does not include any fund or

portion thereof in respect of which the Authority is satisfied

that such fund or portion thereof, as the case may be, is

regulated by the law of any country outside India or in

respect of which the Authority is satisfied that it would not

be in the interest of the insurer to apply the provisions of

this section.

27B. Provisions regarding investments of assets of insurer

carrying general insurance business.—(1) All assets of an insurer

carrying on general insurance business shall, subject to such

conditions, if any, as may be prescribed, be deemed to be assets

invested or kept invested in approved investments specified in

section 27.

(2) All assets shall (except for a part thereof not exceeding

one-tenth of the total assets in value which may subject to such

conditions and restrictions as may be prescribed, be offered as

security for any loan taken for purposes of any investment or for

payment of claims, or which may be kept as security deposit with

the banks for acceptance of policies) be held free of any

encumbrance, charge, hypothecation or lien.

(3) Without prejudice to the powers conferred on the

Authority by sub-section (5) of section 27A nothing contained in

this section shall be deemed to require any insurer to realise any

investment made in conformity with the provisions of

sub-section (1) of section 27 after the commencement of the

Insurance (Amendment) Act, 1968 (62 of 1968), which, after the

making thereof, has ceased to be an approved investment within

the meaning of this section.

27C. Investment by insurer in certain cases.—An insurer may

invest not more than five per cent in aggregate of his controlled fund

or assets as referred to in sub-section (2) of section 27 in the

companies belonging to the promoters, subject to such conditions as

may be specified by the regulations.

27D. Manner and condition of investment.—(1) without

prejudice to anything contained in this section, the Authority may, in

the interests of the policy-holders, specify by the regulations, the

time, manner and other conditions of investment of assets to be held

by an insurer for the purposes of this Act.

(2) The Authority may give specific directions for the time,

manner and other conditions subject to which the funds of

policy-holders shall be invested in the infrastructure and social

sector as may be specified by the regulations and such regulations

shall apply uniformly to all the insurers carrying on the business

of life insurance, general insurance, or health insurance or

re-insurance in India on or after the commencement of the

Insurance Regulatory and Development Authority Act, 1999

(41 of 1999).

(3) The Authority may, after taking into account the nature

of business and to protect the interests of the policy-holders,

issue to an insurer the directions relating to the time, manner and

other conditions of investment of assets to be held by him:

Provided that no direction under this sub-section shall be

issued unless the insurer concerned has been given a reasonable

opportunity of being heard.

27E. Prohibition for investment of funds outside India.—No

insurer shall directly or indirectly invest outside India the funds of the

policy-holders.”.

27. Substitution of new section for section 28, section 28A and section

28B.—For section 28, section 28A and section 28B of the Insurance Act, the

following section shall be substituted, namely:—

“28. Statement and return of investment of assets.—Every insurer

shall submit to the Authority returns giving details of investments made, in

such form, time and manner including its authentication as may be

specified by the regulations.”.

28. Substitution of new section for section 29.—For section 29 of the

Insurance Act, the following section shall be substituted, namely:—

“29. Prohibition of loans.—(1) No insurer shall grant loans or

temporary advances either on hypothecation of property or on personal

security or otherwise, except loans on life policies issued by him within

their surrender value, to any director, manager, actuary, auditor or officer

of the insurer, if a company or to any other company or firm in which any

such director, manager, actuary, or officer holds the position of a director,

manager, actuary, officer or partner :

Provided that nothing contained in this sub-section shall apply to such

loans, made by an insurer to a banking company, as may be specified by

the Authority :

Provided further that nothing in this section shall prohibit a company

from granting such loans or advances to a subsidiary company or to any

other company of which the company granting the loan or advance is a

subsidiary company if the previous approval of the Authority is obtained for

such loan or advance.

(2) The provisions of section 185 of the Companies Act, 2013

(18 of 2013) shall not apply to a loan granted to a director of an

insurer being a company, if the loan is one granted on the security of

a policy on which the insurer bears the risk and the policy was issued

to the director on his own life, and the loan is within the surrender

value of the policy.

(3) Subject to the provisions of sub-section (1), no insurer shall

grant—

(a) any loans or temporary advances either on

hypothecation of property or on personal security or otherwise,

except such loans as may be specified by the regulations

including the loans sanctioned as part of their salary package to

the fulltime employees of the insurer as per the scheme duly

approved by its Board of directors;

(b) temporary advances to any insurance agent to facilitate

the carrying out of his functions as such except in cases where

such advances do not exceed in the aggregate the renewal

commission earned by him during the year immediately

preceding.

(4) Where any event occurs given rise to circumstances, the

existence of which at the time of grant of any subsisting loan or

advance would have made such grant a contravention of this section,

such loan or advance shall, notwithstanding anything in any contract to

the contrary, be repaid within three months from the occurance of

such event.

(5) In case of default in complying with the provisions of

sub-section (4), the director, manager, auditor, actuary, officer or

insurance agent concerned shall, without prejudice to any other penalty

which he may incur, cease to hold office under, or to act for, the

insurer granting the loan on the expiry of three months.”.

29. Substitution of new section for section 30.—For section 30 of the

Insurance Act, the following section shall be substituted, namely:—

“30.

Liability of directors, etc., for loss due to contravention of

section 27, 27A, 27B, 27C, 27D or section 29.—If by reason of a

contravention of any of the provisions of section, 27, 27A, 27B, 27C, 27D

or section 29, any loss is sustained by the insurer or by the policyholders,

every director, manager or officer who is knowingly a party to such

contravention shall, without prejudice to any other penalty to which he may

be liable under this Act, be jointly and severally liable to make good the

amount of such loss.”.

30. Amendment of section 31.—In section 31 of the Insurance Act, for

sub-section (1), the following sub-section shall be substituted, namely:—

“(1)

None of the assets in India of any insurer shall, except in so far

as assets are required to be vested in trustees under sub-section (7) of

section 27, be kept otherwise than in the name of a public officer

approved by the Authority, or in the corporate name of the undertaking, if a

company or as the case may be an insurance co-operative society.”.

31. Amendment of section 31A.—In section 31A of the Insurance Act,—

“(a)

in sub-section (1), in clause (c)—

(I)

for sub-clause (i) and (ii) to the proviso, the following

sub-clause shall be substituted, namely:—

“(i) the payment of commission to an insurance agent, in

respect of insurance business procured by or through him;”;

(II) clause (iii) to the proviso shall be omitted ;

(b) in sub-section (3), for the words, figures and letter “or in section

86B of the Indian Companies Act, 1913” (7 of 1913), the words “or in any

other law for the time being in force” shall be substituted.

32. Substitution of new section for section 31B.—For section 31B of the

Insurance Act, the following section shall be substituted, namely:—

“31B. Power to restrict payment of excessive remuneration.—No

insurer shall in respect of insurance business transacted by him, shall pay

to any person by way of remuneration, whether by way of commission or

otherwise in excess of such sum as may be specified by the regulations.”.

8259

33. Omission of section 32.—Section 32 of the Insurance Act shall be

omitted.

34. Amendment of section 32A.—In section 32A of the Insurance Act,—

(i)

in sub-section (1), the words, brackets, letter and figures

“specified in sub-clause (b) of clause (9) of section 2 and,” shall be

omitted;

(ii) sub-sections (2) and (3) shall be omitted.

35. Amendment of section 32B.—In section 32B of the Insurance Act, for

the words “rural or social sector”, the words “rural and social sectors” shall be

substituted.

36. Insertion of new section 32D.—After section 32C of the Insurance

Act, the following section shall be inserted, namely:—

“32D. Obligation of insurer in respect of insurance business in

third party risks of motor vehicles.—Every insurer carrying on gereral

insurance business shall, after the commencement of the Insurance Laws

(Amendment) Ordinance, 2014, underwrite such minimum percentage of

insurance business in third party risks of motor vehicles as may be

specified by the regulations:

Provided that the Authority may, by regulations, exempt any insurer

who is primarily engaged in the business of health, re-insurance,

agriculture, export credit guarantee, from the application of this section.”.

37. Substitution of new section for section 33.—For section 33 of the

Insurance Act, the following section shall be substituted, namely:—

“33.

Power of investigation and inspection by Authority.—(1) The

Authority may, at any time, if it considers expedient to do so by order in

writing, direct any person (hereafter in this section referred to as

“Investigating Officer”) specified in the order to investigate the affairs of

any insurer or intermediary or insurance intermediary, as the case may be,

and to report to the Authority on any investigation made by such

Investigating Officer:

Provided that the Investigating Officer may, wherever necessary,

employ any auditor or actuary or both for the purpose of assisting him in

any investigation under this section.

G. 6/2015/DTP (2).

(2) Notwithstanding anything to the contrary contained in section

210 of the Companies Act, 2013 (18 of 2013), the Investigating

Officer may, at any time, and shall, on being directed so to do by the

Authority, cause an inspection to be made by one or more of his

officers of the books of account of any insurer or intermediary or

insurance intermediary, as the case may be, and the Investigating

Officer shall supply to the insurer or intermediary or insurance

intermediary, as the case may be, a copy of the report on such

inspection.

(3) It shall be the duty of every manager, managing director or

other officer of the insurer including a service provider, contractor of

an insurer where services are outsourced by the insurer, or

intermediary or insurance intermediary, as the case may be, to

produce before the Investigating Officer directed to make the

investigation under sub-section (1), or inspection under sub-section

(2), all such books of account, registers, other documents and the

database in his custody or power and to furnish him

with any statement and information relating to the affairs of the

insurer or intermediary or insurance intermediary, as the case may be,

as the Investigating Officer may require of him within such time as

the said Investigating Officer may specify.

(4) Any Investigating Officer, directed to make an investigation

under sub section (1), or inspection under sub-section (2), may

examine on oath, any manager, managing director or other officer of

the insurer including a service provider or contractor where the

services are outsourced by the insurer or intermediary or insurance

intermediary, as the case may be, in relation to his business.

(5)

The Investigating Officer shall, if he has been directed by

the Authority to cause an inspection to be made, make a report to the

Authority on such inspection.

(6)

On receipt of any report under sub-section (1) or sub-section

(5), the Authority may, after giving such opportunity to the insurer or

intermediary or insurance intermediary, as the case may be, to make a

representation in connection with the report as, in the opinion of the

Authority, seems reasonable, by order in writing,—

(a) require the insurer, to take such action in respect of any

matter arising out of the report as the Authority may think fit; or

(b) cancel the registration of the insurer or intermediary or

insurance intermediary, as the case may be; or

(c) direct any person to apply to the court for the winding up

of the insurer or intermediary or insurance intermediary, as the

case may be, if it is a company, whether the registration of the

insurer or intermediary or insurance intermediary, as the case

may be, has been cancelled under clause (b) or not.

(7)

The Authority may by the regulations made by it specify the

minimum information to be maintained by insurers or intermediary or

insurance intermediary, as the case may be, in their books, the manner

in which such information shall be maintained, the checks and other

verifications to be adopted by insurers or intermediary or insurance

intermediary, as the case may be, in that connection and all other

matters incidental thereto as are, in its opinion, necessary to enable

the Investigating Officer to discharge satisfactorily his functions under

this section.

Explanation.—For the purposes of this section, expression

“insurer” shall include in the case of an insurer incorporated in

India—

(a)

all its subsidiaries formed for the purpose of carrying

on the business of insurance exclusively outside India; and

(b) all its branches whether situated in India or outside India.

(8)

Any insurer or intermediary or insurance intermediary

aggrieved by any order made under this section may prefer an appeal

to the Securities Appellate Tribunal.

(9) All expenses of, and incidental to, any investigation made

under this section shall be defrayed by the insurer or intermediary or

insurance intermediary, as the case may be, shall have priority over the

debts due from the insurer and shall be recoverable as an arrear of

land revenue.”.

38. Amendment of section 34B.—In section 34B of the Insurance Act, for

sub-section (4), the following sub-section shall be substituted, namely:—

“(4) If any person in respect of whom an order is made by the

Authority under sub-section (1) or under the proviso to sub-section (2),

contravenes the provisions of this section, he shall be liable to a penalty

of one lakh rupees for each day during which such contravention continues

or one crore rupees, whichever is less.”.

39. Amendment of section 34C.—In section 34C of the Insurance Act, for

sub-section (1), the following sub-section shall be substituted, namely:—

“(1) If the Authority is of opinion that in the public interest or in the

interest of an insurer or his policy-holders it is necessary so to do, it may,

from time to time, by order in writing, appoint, in consultation with the

Central Goverment with effect from such date as may be specified in the

order, one or more persons to hold office as additional directors of the

insurer:

Provided that the number of additional directors so appointed shall

not, at any time, exceed five or one-third of the maximum strength fixed

for the Board by the articles of association of the insurer, whichever is

less.”.

40. Omission of section 34G.—Section 34G of the Insurance Act, shall be

omitted.

41. Amendment of section 34H.—In section 34H of the Insurance Act,—

(i) In sub-section (1), for the words “an officer authorised by the

Authority”, the words “a Deputy Director or an equivalent officer” shall be

substituted;

(ii) in sub-sections (7) and (8), for the words “Central Government”,

the words “Securities Appellate Tribunal” shall be substituted.

42. Amendment of section 35.—In section 35 of the Insurance Act,—

(i)

for sub-section (1), the following sub-section shall be substituted,

namely:—

“(1) Notwithstanding anything contained in any other law for the

time being in force, no insurance business of an insurer shall be

transferred to or amalgamated with the insurance business of any other

insurer except in accordance with a scheme prepared under this

section and approved by the Authority.”;

(ii) in sub-section (3), for clauses (b) and (c), the following clauses

shall be substitued, namely:—

“(b) balance-sheets in respect of the insurance business of each of

the insurers concerned in such amalgamation or transfer, prepared in

such forms may be specified by regulation;

(c)

actuarial reports and abstracts in respect of the life

insurance business of each of the insurers so concerned, prepared in

conformity with the regulations specified in this regard.’’.

43. Substitution of new section for section 36.—For section 36 of the

Insurance Act, the following section shall be substituted, namely:—

“36. Sanction of amalgamation and transfer by Authority.—When

any application under sub-section (3) of section 35 is made to the

Authority, the Authority shall cause, a notice of the application to be given

to the holders of any kind of policy of insurer concerned along with

statement of the nature and terms of the amalgamation or transfer, as the

case may be, to be published in such manner and for such period as it may

direct, and, after hearing the directors and considering the objections of

the policy-holders and any other persons whom it considers entitled to be

heard, may approve the arrangement, and shall make such consequential

orders as are necessary to give effect to the arrangement.”.

44. Amendment of section 37A.—In section 37A of the Insurance Act,

for sub-section (4), the following sub-sections shall be substituted, namely:—

“(4) The scheme shall thereafter be placed before the Central

Government for its sanction and the Central Government may sanction the

scheme without any modification or with such modifications as it may

consider necessary, and the scheme as sanctioned by the Central

Government shall come into force on such date as the Central

Government may notify in this behalf in the Official Gazette:

Provided that different dates may be specified for different provisions

of the scheme.

(4A) Every policy-holder or shareholder or member of each of the

insurers, before amalgamation, shall have the same interest in, or rights

against the insurer resulting from amalgamation as he had in the company

of which he was originally a policy-holder or shareholder or member:

Provided that where the interests or rights of any shareholder or

member are less than his interest in, or rights against, the original insurer,

he shall be entitled to compensation, which shall be assessed by the

Authority in such manner as may be specified by the regulations.

(4B) The compensation so assessed shall be paid to the shareholder

or member by the insurance company resulting from such amalgamation.

(4C) Any member or shareholder aggrieved by the assessment of

compensation made by the Authority under sub-section (4A) may within

thirty days from the publication of such assessment prefer an appeal to the

Securities Appellate Tribunal.”.

45. Substitution of new sections for sections 38, 39 and 40.—For

sections 38, 39 and 40 of the Insurance Act, the following sections shall be

substituted, namely:—

“38. Assignment and transfer of insurance policies.—(1) A transfer

or assignment of a policy of insurance, wholly, or in part, whether with or

without consideration, may be made only by an endorsement upon the

policy itself or by a separate instrument, signed in either case by the

transferor or by the assignor or his duly authorised agent and attested by

atleast one witness, specifically setting forth the fact of transfer or

assignment and the reasons thereof, the antecedents of the assignee and the

terms on which the assignment is made.

(2)

An insurer may, accept the transfer or assignment, or decline

to act upon any endorsement made under sub-section (1), where it has

sufficient reason to believe that such transfer or assignment is not

bonafide or is not in the interest of the policy holder or in public

interest or is for the purpose of trading of insurance policy.

(3)

The insurer shall, before refusing to act upon the

endorsememt, record in writing the reasons for such refusal and

communicate the same to the policy-holder not later than thirty days

from the date of the policy holder giving notice of such transfer or

assignment.

(4)

Any person aggrieved by the decision of an insurer to

decline to act upon such transfer or assignment may within a period

of thirty days from the date of receipt of the communication from the

insurer containing reasons for such refusal, prefer a claim to the

Authority.

(5)

Subject to the provisions in sub-section (2), the transfer or

assignment shall be complete and effectual upon the execution of

such endorsement or instrument duly attested but except, where the

transfer or assignment is in favour of the insurer, shall not be

operative as against as insurer, and shall not confer upon the

transferee or assignee, or his legal representative, any right to sue for

the amount of such policy or the moneys secured thereby until a

notice in writing of the transfer or assignment and either the said

endorsement or instrument itself or a copy thereof certified to be

correct by both transferor and transferee or their duly authorised

agents have been delivered to the insurer:

Provided that where the insurer maintains one or more places of

business in India, such notice shall be delivered only at the place

where the policy is being serviced.

(6)

The date on which the notice referred to in sub-section (5) is

delivered to the insurer shall regulate the priority of all claims under

a transfer or assignment as between persons interested in the policy;

and where there is more than one instrument of transfer or assignment

the priority of the claims under such instruments shall be governed by

the order in which the notices referred to in sub-section (5) are

delivered:

Provided that if any dispute as to priority of payment arises as between

assignees, the dispute shall be referred to the Authority.

(7)

Upon the receipt of the notice referred to in sub-section (5), the

insurer shall record the fact of such transfer or assignment together with

the date thereof and the name of the transferee or the assignee and shall,

on the request of the person by whom the notice was given, or of the

transferee or assignee, on payment of such fee as may be specified by the

regulations, grant a written acknowledgment of the receipt of such notice;

and any such acknowledgment shall be conclusive evidence against the

insurer that he has duly received the notice to which such acknowledgment

relates.

(8)

Subject to the terms and conditions of the transfer or assignment,

the insurer shall, from the date of the receipt of the notice referred to in

sub-section (5), recorgnise the transferee or assignee named in the notice

as the absolute transferee or assignee entitled to benefit under the policy,

and such person shall be subject to all liabilities and equities to which the

transferor or assignor was subject at the date of the transfer or assignment

and may institute any proceedings in relation to the policy, obtain a loan

under the policy or surrender the policy without obtaining the consent of

the transferor or assignor or making him a party to such proceedings.

Explanation.—Except where the endorsement referred to in sub-

section (1) expressly indicates that the assignment or transfer is

conditional in terms of sub-section (10) hereunder, every assignment or

transfer shall be deemed to be an absolute assignment or transfer and the

assignee or transferee, as the case may be, shall be deemed to be the

absolute assignee or transferee respectively.

(9) Any rights and remedies of an assignee or transferee of a policy

of life insurance under an assignment or transfer effected prior to the

commencement of the Insurance Laws (Amendment) Ordinance, 2014 shall

not be affected by the provisions of this section.

(10) Notwithstanding any law or custom having the force of law to

the contrary, an assignment in favour of a person made upon the condition

that—

(a) The proceeds under the policy shall become payable to the

policyholder or the nominee or nominees in the event of either the assignee or

transferee predeceasing the insured; or

(b) the insured surviving the term of the policy, shall be valid:

Provided that a conditional assignee shall not be entitled to obtain a loan

on the policy or surrender a policy.

(11) In the case of the partial assignment or transfer of a policy of

insurance under sub-section (1), the liability of the insurer shall be limited to

the amount secured by partial assignment or transfer and such policy-holder

shall not be entitled to further assign or transfer the residual amount payable

under the same policy.

39.

Nomination by policy-holder.—(1)

The holder of a policy of life

insurance on his own life may, when effecting the policy or at any time before

the policy matures for payment, nominate the person or persons to whom the

money secured by the policy shall be paid in the event of his death:

Provided that, where any nominee is a minor, it shall be lawful for the

policy-holder to appoint any person in the manner laid down by the insurer, to

receive the money secured by the policy in the event of his death during the

minority of the nominee.

(2)

Any such nomination in order to be effectual shall, unless it is

incorporated in the text of the policy itself, be made by an endorsement on the

policy communicated to the insurer and registered by him in the records relating

to the policy and any such nomination may at any time before the policy matures

for payment be cancelled or changed by an endorsement or a further

endorsement or a will, as the case may be, but unless notice in writing of any

such cancellation or change has been delivered to the insurer, the insurer shall

not be liable for any payment under the policy made bona fide by him to a

nominee mentioned in the text of the policy or registered in records of the

insurer.

(3)

The insurer shall furnish to the policyholder a written acknowledgment

of having registered a nomination or a cancellation or change thereof, and may

charge such fee as may be specified by regulations for registering such

cancellation or change.

11(4)

A transfer or assignment of a policy made in accordance with

section 38 shall automatically cancel a nomination:

Provided that the assignment of a policy to the insurer who bears the risk

on the policy at the time of the assignment, in consideration of a loan granted

by that insurer on the security of the policy within its surrender value, or its

re-assignment on repayment of the loan shall not cancel a nomination, but shall

affect the rights of the nominee only to the extent of the insurer’s interest in the

policy:

Provided further that the transfer or assignment of a policy, whether wholly

or in part, in consideration of a loan advanced by the transferee or assignee to

the policyholder, shall not cancel the nomination but shall affect the rights of the

nominee only to the extent of the interest of the transferee or assignee, as the

case may be, in the policy:

Provided also that the nomination, which has been automatically cancelled

consequent upon the transfer or assignment, the same nomination shall stand

automatically revived when the policy is reassigned by the assignee or

retransferred by the transferee in favour of the policy-holder on repayment of

loan other than on a security of policy to the insurer.

(5)

Where the policy matures for payment during the lifetime of the person

whose life is insured or where the nominee or, if there are more nominees then

one, all the nominees die before the policy matures for payment, the amount

secured by the policy shall be payable to the policy-holder or his heirs or legal

representatives or the holder of a succession certificate, as the case may be.

(6)

Where the nominee or if there are more nominees than one, a nominee

or nominees survive the person whose life is insured, the amount secured by the

policy shall be payable to such survivor or survivors.

(7)

Subject to the other provisions of this section, where the holder of a

policy of insurance on his own life nominates his parents, or his spouse, or his

children, or his spouse and children, or any of them, the nominee or nominees

shall be beneficially entitled to the amount payable by the insurer to him or them

under sub-section (6) unless it is proved that the holder of the policy, having

regard to the nature of his title to the policy, could not have conferred any

such beneficial title on the nominee.

(8)

Subject as aforesaid, where the nominee, or if there are more

nominees than one, a nominee or nominees, to whom sub-section (7) applies, die

after the person whose life is insured but before the amount secured by the

policy is paid, the amount secured by the policy, or so much of the amount

G-6/2015/DTP(2)

secured by the policy as represents the share of the nominee or nominees so

dying (as the case may be), shall be payable to the heirs or legal representatives

of the nominee or nominees or the holder of a succession certificate, as the

case may be, and they shall be beneficially entitled to such amount.

(9)

Nothing in sub-sections (7) and (8) shall operate to destroy or

impede the right of any creditor to be paid out of the proceeds of any policy of

life insurance.

(10)

The provisions of sub-sections (7) and (8) shall apply to all policies

of life insurance maturing for payment after the commencement of the Insurance

Laws (Amendment) Ordinance, 2014.

(11)

Where a policy-holder dies after the maturity of the policy but the

proceeds and benefit of his policy has not been made to him because of his

death, in such a case, his nominee shall be entitled to the proceeds and benefit

of his policy.

(12)

The provisions of this section shall not apply to any policy of life

insurance to which section 6 of the Married Women’s Property Act, 1874,

(3 of 1874), applies or has at any time applied:

Provided that where a nomination made whether before or after the

commencement of the Insurance Laws (Amendment) Ordinance, 2014, in favour

of the wife of the person who has insured his life or of his wife and children or

any of them is expressed, whether or not on the face of the policy, as being

made under this section, the said section 6 shall be deemed not to apply or not

to have applied to the policy.

40.

Prohibition of payment by way of commission or otherwise for

procuring business.—(1)

No person shall, pay or contract to pay any

remuneration or reward, whether by way of commission or otherwise for

soliciting or procuring insurance business in India to any person except an

insurance agent or an intermediary or insurance intermediary in such manner as

may be specified by the regulations.

(2)

No insurance agent or intermediary or insurance intermediary shall

receive or contract to receive commission or remuneration in any form in respect

of policies issued in India, by an insurer in any form in respect of policies

issued in India, by an insurer except in accordance with the regulations specified

in this regard :

Provided that the Authority, while making regulations under sub-sections

(1) and (2), shall take into consideration the nature and tenure of the policy and

in particular the interest of the agents and other intermediaries concerned.

(3) Without prejudice to the provisions of section 102 in respect of a

contravention of any of the provisions of the preceding sub-sections or the

regulations framed in this regard, by an insurer, any insurance agent or

intermediary or insurance intermediary who contravenes the said provisions shall

be liable to a penalty which may extend to one lakh repees.”.

46.

Omission of section 40A.—Section 40A of the Insurance Act shall be

omitted.

47.

Substitution of new sections for sections 40B and 40C.—For sections

40B and 40C of the Insurance Act, the following sections shall be substituted,

namely :—

“40B. Limitation of expenses of management in life insurance

business.—No insurer shall, in respect of insurance business

transacted by him in India, spend as expenses of management in any

financial year any amount exceeding the amount as may be specified

by the regulations made under this Act;

40C.

Limitation of expenses of management in general,health

insurance and re-insurance business.—Every insurer transacting

insurance business in India, shall furnish to the Authoriy, the details

of expenses of management in such manner and form as may be

specified by the regulations made under this Act.”.

48.

Amendment of section 41.—In section 41 of the Insurance Act, for

sub-section (2), the following sub-section shall be substituted, namely :—

“(2) Any person making default in complying with the provisions of this

section shall be liable for a penalty which may extend to ten lakh rupees.”.

49.

Substitution of new section for section 42.—For section 42 of the

Insurance Act, the following section shall be substituted, namely :—

“42.

Appointment of insurance agents.—(1)

An insurer may

appoint any person to act as insurance agent for the purpose of

soliciting and procuring insurance business :

Provided that such person does not suffer from any of the

disqualifications mentioned in sub-section (3).

(2)

No person shall act as an insurance agent for more than one life

insurer, one general insurer, one health insurer and one of each of the

other mono-line insurers:

Provided that the Authority shall, while framing regulations, ensure

that no conflict of interest is allowed to arise for any agent in

representing two or more insurers for whom he may be an agent.

(3)

The disqulifications referred to in the proviso to sub-section (1)

shall be the following:—

(a)

that the person is a minor;

(b)

that he is found to be of unsound mind by a court of

competent jurisdiction;

(c)

that he has been found guilty of criminal misappropriation or

criminal breach of trust or cheating or forgery or an abetment of or

attempt to commit any such offence by a court of competent jurisdiction:

Provided that where at least five years have elapsed since the

completion of the sentence imposed on any person in respect of any such

offence, the Authority shall ordinarily declare in respect of such person

that his conviction shall cease to operate as a disqualification under

this clause;

(d)

that in the course of any judicial proceeding relating to any

policy of insurance or the winding up of an insurer or in the course of

an investigation of the affairs of an insurer it has been found that he

has been guilty of or has knowingly participated in or connived at any

fraud, dishonesty or misrepresentation against an insurer or insured ;

(e)

that in the case of an individual, who does not possess the

requisite qualifications or practical training or passed the examination, as

may be specified by the regulations ;

(f)

that in the case of a company to firm making, a director or a

partner or one or more of its officers or other employees so designated

by it and in the case of any other person the chief executive, by

whatever name called, or one or more of his employees designated by

him, do not possess the requisite qualifications or practical training and

have not passed such an examination as required under clauses (e) and (g);

(g)

that he has not passed such examination as may be specified by

the regulations.

(h)

that he has violated the code of conduct specified by the

regulations.

(4)

Any person who acts as an insurance agent in contravention of

the provision of this Act, shall be liable to a penalty which may extend

to ten thousand rupees and any insurer or any person acting on behalf

of an insurer , who appoints any person as an insurance agent not

permitted to act as such or transacts any insurance business in India

through any such person shall be liable to penalty which may extent to

one crore rupees.

(5)

The insurer shall be responsible for all the acts and omissions of

its agents including violation of code of conduct specified under clause

(h) of sub -section (3) and liable to a penalty which may extend to one

crore rupees.”.

50.

Substitution of new section for section 42A, 42B and 42C.—For

sections 42A, 42B and 42 C of the insurance Act, the following section shall be

substituted, namely:—

“42A.

Prohibition of insurance business through principal agent

special agent and multylevel marketing.—(1)

No insurer shall, on or

after the commencement of the Insurance Laws (Amendment) Ordinance,

2014, appoint any principal agent, chief agent, and special agent and

transact any insurance business in India through them.

(2)

No person shall allow or offer to allow, either directly or

indirectly, as an inducement to any person to take out or renew or

continue an insurance policy through multylevel marketing scheme.

(3)

The Authority may, through an officer authorised in this behalf,

make a complaint to the appropriate police authorities relating to the

entity or persons involved in the multylevel marketing scheme.

Explanation.—For the purpose of the section “multilevel marketing

scheme” means any scheme or programme or arrangement or plan (by

whatever name called) for the purpose of soliciting and procuring

insurance business through persons not authorised for the said purpose

with or without consideration of whole or part of commission or

remuneration earned through such solicitation and procurement and

includes enrolment of persons into a multilevel chain for the said purpose

either directly or indirectly.”.

51.

Amendment of section 42D.—In section 42D of the Insurance Act,—

(i)

for the words “licence” and “licence issued”, wherever they

occur,

the words “registration” and “registration made”, shall respectively

be substituted ;

(ii)

in sub-section (1), in clause (a) of the proviso, for the

word, brackets and figure “sub-section (4)”, the word, brackets and figure

“sub-section (3)” shall be substituted ;

(iii)

in sub-section (3),—

(a)

after the words “directors or partners” the words “or one or

more of its officers or other employees so designated by it and in the

case of any other person, the chief executive by whatever name called, or

one or more of his employees designated by him” shall be inserted ;

(b)

for the words, brackets, letters and figures “in clauses (b),

(c), (d), (e) and (f) of sub-section (4) of section 42”, the words, brackets,

letters and figurs “in clauses (b), (c), (d), (c) and (g) of sub-section (3) of

section 42” shall be substituted ;

(iv)

for sub-sections (8) and (9), the following sub-sections, shall be

substituted, namely:—

“(8) Any person who acts as an intermediary or an insurance

intermediary without being registered under this section to act as such,

shall be liable to a penalty which may extend to ten lakh rupees and any

person who appoints as an intermediary or an insurance intermediary or

any person not registered to act as such or transacts any insurance

business in India through any such person, shall be liable to a penalty

which may extend to one crore rupees.

(9)

Where the person contravening sub-section (8) is a

company or a firm, then, without prejudice to any other proceedings

which may be taken against the company or firm, every director, manager,

secretary or other officer of the company, and every partner of the firm

who is knowingly a party to such contravention shall be liable to a

penalty which may extend to ten lakh rupees.”.

52.

Substitution of new section for section 42E—For section 42 E of the

Insurance Act, the following section shall be substituted, namely:—

“42E.

Condition for intermediary or insurance intermediary—

Without

prejudice to the provisions contained in this Act, the Authority

may, by regulations made in this behalf, specify the requirements of

capital, form of business and other conditions, to act as an intermediary

or an insurance intermediary.”,

53.

Substitution of new section for section 43—For section 43 of the

Insurance Act, the following section shall be substituted, namely:—

“43. Record of insurance agents. —(1) Every insurer and every person

who acting on behalf of an insurer employs insurance agents shall

maintain a record showing the name and address of every insurance

agent appointed by him and the date on which his appointment began

and the date, if any, on which his appointment ceased.

(2)

The record prepared by the insurer under sub-section (1), shall

be maintained as long as the insurance agent is in service and for a

period of five years after the cessation of appointment”.

54.

Omission of section 44.—Section 44 of the Insurance Act shall be

omitted,

55.

Substitution of new sections for section 44A and 45.—For sections

44A and 45 of the Insurance Act, the following section shall be substituted,

namely:—

“44A

Power to call for information—For the purposes of ensuring

complaince with the provisions of sections 40, 40B and 40C, the authority

may, by notice—

(a)

require from an insurer such informaion, certified if so

required by an auditor or actuary, as he may consider necessary ;

(b)

require an insurer to submit for his examination at the

principal

place of business of the insurer in India, any book of account,

specified in the notice ;

(c)

examine any officer of an insurer on oath, in relation to any

such information, book, register, document or statement and the insurer,

shall comply with any such requirement within such time as may be

specified in the notice.

45.

Policy not be called in quetion on ground of misstatement

after three years.—(1)

No policy of life insurance shall be called in

question on any ground whatsoever after the expiry of three years from

the date of the policy, i.e., from the date of issuance of the policy or the

date of commencement of risk or the date of revival the policy or the

date of the rider to the policy, whichever is later.

(2)

A policy of life insurance may be called in question at any time

within three years from the date of issuance of the policy or the date of

commencement of risk or the date of revival of the policy or the date of

the rider to the policy, whichever is later, on the ground of fraud :

Provided that the insurer shall have to communicate in writing to the

insured or the legal representatives or nominees or assignees of the

insured the grounds and materials on which such decision is based.

Explanation I.—For the purposes of this sub-section, the expression

“fraud” means any of the following acts committed by the insured or by

his agent, with the intent to deceive the insurer or to induce the insurer

to issue a life insurance policy :

(a)

the suggestion, as a fact of that which is not true and which

the insured does not believe to be true ;

(b)

the active concealment of a fact by the insured having

knowledge or belief of the fact ;

(c)

any other act fitted to deceive; and

(d)

any such act or omission as the law specially declares to be

fraudulent.

Explanation II.—Mere silence as to facts likely to affect the

assessment of the riskby the insurer is not fraud, unless the circumstances

of the case are such that regard being had to them, it is the duty of the

insured or his agent, keeping silence to speak, or unless his silence is, in

itself, equivalent to speak.

(3)

Notwithstanding anything contained in sub-section (2), no

insurer shall repudiate a life insurance policy on the ground of fraud if

the insured can prove that the mis-statement of or suppression of a

material fact was true to the best of his knowledge and belief or that

there was no deliberate intention to suppress the fact or that such

mis-statement of or suppression of a material fact are within the

knowledge of the insurer :

Provided that in case of fraud, the onus of disproving lies upon the

beneficiaries, in case the policyholder is not alive.

Explanation.—A person who solicits and negotiates a contract of

insurance shall be deemed for the purpose of the formation of the

contract, to be the agent of the insurer.

(4)

A Policy of life insurance may be called in question at any time

within three years from the date of issuance of the policy or the date of

commencement of risk or the date of revival of the policy or the date of

the rider to the policy, whichever is later, on the ground that any

statement of or suppression of a fact material to the expectancy of the life

of the insured was incorrectly made in the proposal or other document on

the basis of which the policy was issued or revived or rider issued :

Provided that the insurer shall have to communicate in writting to the

insured or the legal representatives or nominees or assignees of the

insured the grounds and materials on which such decision to repudiate

the policy of life insurance is based :

Provided further that in case of repudiation of the policy on the

ground of mis-statement or suppression of a material fact, and not on

theground of fraud, the premiums collected on the policy till the date of

repudiation shall be paid to the insured or the legal representatives or

nominees or assignees of the insured within a period of ninety days from

the date of such repudiation.

Explanation.—For the purposes of this sub-section, the

mis-statement of or suppression of fact shall not be considered material

unless it has a direct bearing on the risk undertaken by the insurer, the

onus is on the insurer to show that had the insurer been aware of the

said fact no life insurance policy would have been issued to the insured.

(5) Nothing in this section shall prevent the insurer from calling for

proof of age at any time if he is entitled to do so, and no policy shall be

deemed to be called in question merely because the terms of the policy

are adjusted on subsequent proof that the age of the life insured was

incorrectly stated in the proposal.’.

56. Omission of sections 47A and 48—Sections 47A and 48 of the

Insurance Act shall be omitted.

57. Substitution of new section for section 48A.—For section 48A of the

Insurance Act, the following section shall be substituted, namely:—

“48A. Insurance agent or intermediary or insurance intermediary not

to be director in insurance company.—No insurance agent or intermediary

or insurance intermediary shall be eligible to be or remain a director in

insurance company:

Provided that any director holding office at the commencement of the

Insurance Laws (Amendment) Ordinance, 2014 shall not become ineligible

to remain a director by reason of this section until the expiry of six

months from the date of commencement of the said Ordinance:

Provided further that the Authority may permit an agent or

intermediary or insurance intermediary to be on the Board of an insurance

company subject to such conditions or restrictions as it may impose to

protect the interest of policy- holders or to avoid conflict of interest.”.

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58. Amendment of section 49.—In section 49 of the Insurance Act, in

sub-section (1),—

(i) the words, brackets, letters and figures “being an insurer specified in

sub-clause (a) (ii) or sub-clause (b) of clause (9) of section 2” shall be

omitted;

(ii) the words and figures “or to the Central Government under section

11 of the Indian Life Insurance Companies Act, 1912” (7 of 1912) shall be omitted.

59. Substitution of new sections 52 and 52A. Prohibition of business

on dividing principl.—For sections 52 and 52A of the Insurance Act, the

following sections shall be substituted, namely:—

“52. No insurer shall commence any business upon the dividing

principle, that is to say, on the principle that the benefit secured by a

policy is not fixed but depends either wholly or partly on the result of a

distribution of certain sums amongst policies becoming claims within

certain time-limits, or on the principle that the premiums payable by a

policy-holder depend wholly or partly on the number of policies

becoming claims within certain time-limits:

Provided that nothing in this section shall be deemed to

prevent an insurer from allocating bonuses to holders of policies of

life insurance as a result of a periodical actuarial valuation either as

reversionary additions to the sums insured or as immediate cash

bonuses or otherwise.

52A. When administrator for management of insurance business

may be appointed.— (1) If at any time the Authority has reason to

believe that an insurer carrying on life insurance business is acting in a

manner likely to be prejudicial to the interests of holders of life insurance

policies, itmay, after giving such opportunity to the insurer to be heard

appoint an Administrator to manage the affairs of the insurer under the

direction and control of the authority.

(2) The Administrator shall receive such remuneration as the

Authority may direct and the Authority may at any time cancel the

appointment and appoint some other person as Administrator.”.

60. Amendment of section 52BB.—In section 52BB of the Insurance Act,—

(a) in sub-section (2), for the words “the Central Goverment

and the Central Goverment”, the words “the Securities Appellate

Tribunal and the Securities Appellate Tribunal” shall be substituted;

100

(b) in sub-section (3), for the words “Central Government”, the

words “Securities Appellate Tribunal”, shall be substituted;

(c) in sub-section (10), in clause (a), the words “or the Central

Government” shall be omitted.

61. Substitution of new section for section.—For section 52D of the

Insurance Act, the following section shall be substituted, namely:—

“52D. 52D.Termination of appointment of Administrator.—If at any

time, it appears to the Authority that the purpose of the order appointing

the Administrator has been fulfilled or that, for any reason, it is

undesirable that the order of appointment should remain in force, the

Authority may cancel the order and thereupon the Administrator shall be

divested of the management of the insurance business which shall, unless

otherwise directed by the Authority, again vest in the person in whom

it was vested immediately prior to the appointment of theAdministrator or

any other person appointed by the insurer in this behalf.”.

62. Amendment of section 52E.—In section 52E of the Insurance Act, for

the words “Central Government”, the word “Authority” shall be substituted.”.

63. Amendment of section 52F.—In section 52F of the Insurance Act, for

the words “punishable with imprisonment which may extend to six months, or

with fine which may extend to one thousand rupees, or with both”, the words

“liable to penalty of rupees ten thousand each day during which such failure

continues or rupees ten lakh, whichever is less” shall be substituted.

64. Amendment of section 52G.—In section 52G of the Insurance Act, in

sub-section (2), the words “Central Goverment or” shall be omitted.

65. Omission of sections 52H, 52-I, 52J, 52K, 52L, 52M and 52N.—Sections

52H, 52-I, 52J, 52K, 52L, 52M and 52N of the Insurance Act shall be omitted.

66. Amendment of section 53.—In section 53 of the Insurance Act,—

(a) in sub-section (1), the following Explanation shall be inserted at

the end, namely:—

“Explanation.—For the purpose of sections 53 to 61A, “Tribunal”

means the National Company Law Tribunal constituted under sub-section

(1) of section 408 of the Companies Act, 2013 (18 of 2013).”;

101

(b) in sub-section (2), in clause (b), sub-clause (i), shall be omitted.

67. Amendment of section 58.—In section 58 of the Insurance Act, for

sub-section (4), the following sub-section shall be substituted, namely:—

“(4) An order of the Tribunal confirming a scheme under this section

whereby the memorandum of a company is altered with respect to its

objects shall as respects the alteration have effect as if it were an order

confirmed under section 4 of the Companies Act, 2013 (18 of 2013), and

the provisions of sections 7 and 17 of that Act shall apply accordingly.”.

68. Omission of section 59.—Section 59 of the Insurance Act shall be

omitted.

69. Amendment of heading.—In Part II A of the Insurance Act, for the

heading “INSURANCE ASSOCIATION OF INDIA, COUNCILS OF THE

ASSOCIATION AND COMMITTEES THEREOF” the following heading shall be

substituted, namely:—

“LIFE INSURANCE COUNCIL AND GENERAL INSURANCE COUNCIL

AND COMMITTEES THEREOF.”.

70. Omission of sections 64A and 64B.—Sections 64A and 64B of the

Insurance Act, shall be omitted.

71. Substitution of new sections for sections 64C and 64D.—For sections

64C and 64D of the Insurance Act, the following sections shall be substituted,

namely:—

“64C. Councils of Life Insurance and General Insurance.—On and from

the date of commencement of the Insurance Laws (Amendment)

Ordinance, 2014,—

(a) the existing Life Insurance Council, a representative body of

the insurers, who carry on the life insurance business in India; and

(b) the existing General Insurance Council, a representative body of

insurers, who carry on general, health insurance business and re-

insurance in India,

shall be deemed to have been constituted as the respective Councils

under this Act.

102

64D. Authorisation to represent in Councils.—It shall be lawful for

any member of the Life Insurance Council or the General Insurance

Council to authorise any of its officer to act as the representative of such

member at any meeting of the Council concerned.”.

72. Substitution of new section for section 64F.—For section 64F of the

Insurance Act, the following section shall be substituted, namely:—

“64F. Executive Committees of the Life Insurance Council and the

General Insurance Council—(1) The Executive Committee of the Life

Insurance Council shall consist of the following persons, namely:—

(a) four representatives of members of the Life Insurance Council

elected in their individual capacity by the members in such manner as

may be laid down in the bye-laws of the Council;

(b) an eminent person not connected with insurance business,

nominated by the Authority; and

policy holders respectively as may be nominated by the Authority;

(d) one representative each from self-help groups and Insurance

Co-operative Societies:

Provided that one of the representatives as mentioned in clause (a)

shall be elected as the Chairperson of the Executive Committee of the

Life Insurance Council.

(2) The Executive Committee of the General Insurance Council shall

consist of the following persons, namely:—

(a) four representatives of members of the General Insurance Council

elected in their individual capacity by the members in such manner as

may be laid down in the bye-laws of the Council;

(b) an eminent person not connected with insurance business,

nominated by the Authority; and

administrators, surveyors and loss assessors and policyholders

respectively as may be nominated by the Authority:

103

Provided that one of the representatives as mentioned in clause (a)

shall be elected as the Chairperson of the Executive Committee of the

General Insurance Council.

(3) If anybody of persons specified in sub-sections (1) and (2) fails to

elect any of the members of the Executive Committees of the Life

Insurance Council or the General Insurance Council, the Authority may

nominate any person to fill the vacancy, and any person so nominated

shall be deemed to be a member of the Executive Committee of the Life

Insurance Council or the General Insurance Council, as the case may be,

as if he had been duly elected thereto.

(4) Each of the said Executive Committees may make bye-laws for the

transaction of any business at any meeting of the said Committee.

(5) The Life Insurance Council or the General Insurance Council may

form such other committees consisting of such persons as it may think

fit to discharge such functions as may be delegated thereto.

(6) The Secretary of the Executive Committee of the Life Insurance

Council and of the Executive Committee of the General Insurance Council

shall in each case be appointed by the Executive Committee concerned:

Provided that each Secretary appointed by the Executive Committee

concerned shall exercise all such powers and do all such acts as may be

authorised in this behalf by the Executive Committee concerned.”.

73. Amendment of section 64G.—In section 64G of the Insurance Act, in

sub-section (2), for the words “by nomination by the Authority”, the words “in

such manner as may be laid down in the byelaws of the Council concerned”

shall be substituted.

74. Omission of section 64-I.—Section 64-I of the Insurance Act shall be

omitted.

75. Amendment of section 64J.—In section 64J of the Insurance Act, for

sub-section (2), the following sub-section shall be substituted, namely:—

“(2) For the purpose of enabling it to effectively discharge its

functions, the Executive Committee of the Life Insurance Council may

collect such fees as may be laid down in the bye-laws made by the

Council from the insurers carrying on life insurance business.”.

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76. Amendment of section 64L.—In section 64L of the Insurance Act, for

sub-section (2), the following sub-section shall be substituted, namely:—

“(2) For the purpose of enabling it to effectively discharge its

functions, the Executive Committee of the General Insurance Council may

collect such fees as may be laid down in the bye-laws made by the

Council from the insurers carrying on general insurance business.”.

77. Amendment of section 64N.—In section 64N of the Insurance Act, for

the words “the Central Government may prescribe”, the words “the Authority

may specify” shall be substituted.

78. Amendment of section 64R.—In section 64R of the Insurance Act, in

sub-section (1),—

(a) for clause (c), the following clause shall be substituted, namely:—

“(c) keep and maintain up to date a copy of list of all insurers who are

members of the either Council.”.

(b) in clause (d), for the words “with the previous approval of the

Authority make regulations for”, the words “make bye laws for” shall be

substituted.

79. Omission of sections 64S and 64T. —Sections 64S and 64T of the

Insurance Act shall be omitted.

80. Omission of sections 64U, 64UA, 64UB, 64UC, 64UD, 64UE, 64UF,

64UG, 64UH, 64UI, 64UJ, 64UK and 64UL.—Sections 64U, 64UA, 64UB, 64UC,

64UD, 64UE, 64UF, 64UG, 64UH, 64UI, 64UJ, 64UK and 64UL of the Insurance

Act shall be omitted.

81. Insertion of new section 64ULA.—After section 64UL of the Insurance

Act, the following section shall be inserted, namely:—

“64ULA. Transitional provisions.—(1) Notwithstanding anything

contained in this Part, until the rates, advantage and terms and conditions

laiddown by the Advisory Committee under section 64UC are de-notified

by the Authority with effect from such date as the Authority may by

notification in the Official Gazette determine, and the rates, advantages

and terms and conditions are decided by the insurer concerned, the

rates, advantages and terms and conditions notified by the Advisory

Committee shall continue to be in force and shall always be deemed to

have been in force and any such rates, advantages and terms and

conditions shall be binding on all the insurers.

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(2) The Authority shall, in consultation with the Central Government,

prepare a scheme for the existing employees of the Tariff Advisory

Committee on its dissolution, keeping in view the interests of such

employees on such terms and conditions as it may, by order, determine.

82. Substitution of new section for section 64UM.—For section 64UM of

the Insurance Act, the following section shall be substituted, namely:—

64UM. Surveyors or loss assessors.—(1) Save as otherwise provided in

this section, no person shall act as a surveyor or loss assessor in

respect of general insurance business after the expiry of a period of one

year from the commencement of the Insurance Laws (Amendment)

Ordinance, 2014, unless he—

(a) possesses such academic qualifications as may be specified by the

regulations made under this Act; and

(b) is a member of a professional body of surveyors and loss

assessors, namely, the Indian Institute of Insurance Surveyors and Loss

Assessors:

Provided that in the case of a firm or company, all the partners or

directors or other persons, who may be called upon to make a survey or

assess a loss reported, as the case may be, shall fulfil the requirements

of clauses (a) and (b).

(2) Every surveyor and loss assessor shall comply with the code of

conduct in respect of his duties, responsibilities and other professional

requirements, as may be specified by the regulations made under the Act.

(3) Notwithstanding anything contained in the foregoing provisions, a

class or class of persons acting as a licensed surveyor or loss assessor

prior to the commencement of the Insurance Laws (Amendment)

Ordinance, 2014 shall continue to act as such for such period as may be

specified by the regulations made under this Act:

Provided that the surveyor or loss assessor shall, within the period as

may be notified by the Authority, satisfy the requirements of clause (a)

and clause (b) of sub-section (1), failing which, the surveyor or loss

assessor shall be automatically disqualified to act as a surveyor or loss

assessor.”.

(4) No claim in respect of a loss which has occurred in India and

requiring to be paid or settled in India equal to or exceeding an amount

specified in the regulations by the Authority in value on any policy of

insurance, arising or intimated to an insurer at any time after the expiry of a

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period of one year from the commencement of the Insurance Laws

(Amendment) Ordinance, 2014, shall, unless otherwise directed by the

Authority, be admitted for payment or settled by the insurer unless he has

obtained a report, on the loss that has occurred, from a person who

holds a licence issued under this section to act as a surveyor or loss

assessor (hereafter referred to as “approved surveyor or loss assessor”):

Provided that nothing in this sub-section shall be deemed to take away

or abridge the right of the insurer to pay or settle any claim at any

amount different from the amount assessed by the approved surveyor or

loss assessor.

(5) The Authority may, at any time, in respect of any claim of the

nature referred to in sub-section (4), call for an independent report from

any other approved surveyor or loss assessor specified by him and such

surveyor or loss assessor shall furnish such report to the Authority

within such time as may be specified by the Authority or if no time limit

has been specified by him within a reasonable time and the cost of, or

incidental to, such report shall be borne by the insurer.

(6) The Authority may, on receipt of a report referred to in sub-section

(5), issue such directions as it may consider necessary with regard to the

settlement of the claim including any direction to settle a claim at a figure

less than, or more than, that at which it is proposed to settle it or it was

settled and the insurer shall be bound to comply with such directions:

Provided that where the Authority issues a direction for settling a claim

at a figure lower than that at which it has already been settled, the

insurer shall be deemed to comply with such direction if he satisfies the

Authority that all reasonable steps, with due regard to the question

whether the expenditure involved is not disproportionate to the amount

required to be recovered, have been taken with due despatch by him:

Provided further that no direction for the payment of a lesser sum shall

be made where the amount of the claim has already been paid and the

Authority is of opinion that the recovery of the amount paid in excess

would cause undue hardship to the insured:

Provided also that nothing in this section shall relieve the insurer from

any liability, civil or criminal, to which he would have been subject but

for the provisions of this sub-section.

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107

(7) No insurer shall, after the expiry of a period of one year from the

commencement of the Insurance Laws (Amendment) Ordinance, 2014 pay

to any person any fee or remuneration for surveying, verifying or

reporting on a claim of loss under a policy of insurance unless the

person making such survey, verification or report is an approved surveyor

or loss assessor.

(8) Where, in the case of a claim of less than the amount specified in

sub-section (4) in value on any policy of insurance it is not practicable

for an insurer to employ an approved surveyor or loss assessor without

incurring expenses disproportionate to the amount of the claim, the

insurer may employ any other person (not being a person disqualified for

the time being for being employed as a surveyor or loss assessor) for

surveying such loss and may pay such reasonable fee or remuneration to

the person so employed as he may think fit.

(9) The Authority may in respect of any claim of value of less than the

amount specified in sub-section (4) on an insurance policy, if the claim

has not been or is not proposed to be reported upon by a surveyor or

loss assessor, direct that such claim shall be reported upon by an

approved surveyor or loss assessor and where the Authority makes such

direction, the provisions of sub sections (5) and (6) shall apply in respect

of such claim.

(10) Where, in relation to any class of claims, the Authority is satisfied

that it is customary to entrust the work of survey or loss assessment to

any person other than a licensed surveyor or loss assessor, or it is not

practicable to make any survey or loss assessment, it may, by an order,

exempt such class of claims from the operation of this section.

83. Substitution of new sections for sections 64V and 64VA.—For sections

64V and 64VA of the Insurance Act, the following sections shall be substituted,

namely:—

“64V. Assets and liabilities how to be valued.—(1) For the purpose of

ascertaining compliance with the provisions of section 64VA, assets shall

be valued at value not exceeding their market or realisable value and

certain assets may be excluded by the Authority in the manner as may be

specified by the regulations made in this behalf.

(2) A proper value shall be placed on every item of liability of the

insurer in the manner as may be specified by the regulations made in

this behalf.

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(3) Every insurer shall furnish to the Authority along with the returns

required to be, filed under this Act, a statement, certified by an Auditor,

approved by the Authority, in respect of general insurance business or an

actuary approved by the Authority in respect of life insurance

business, as the case may be, of his assets and liabilities assessed in

the manner required by this section as on the 31st day of March of

each year within such time as may be specified by the regulations.

64 VA. Sufficiency of assets.—(1) Every insurer and re-insurer shall at all

times maintain an excess of value of assets over the amount of liabilities

of, not less than fifty per cent. of the amount of minimum capital as stated

under section 6 and arrived at in the manner specified by the regulations.

(2)

An insurer or re-insurer, as the case may be, who does not

comply with subsection (1), shall be deemed to be insolvent and may be

wound-up by the court on an application made by the Authority.

(3)

The Authority shall by way of regulation made for the purpose,

specify a level of solvency margin known as control level of solvency on

the breach of which the Authority shall act in accordance with the

provisions of sub-section (4) without prejudice to taking of any other

remedial measures as deemed fit:

Provided that if in respect of any insurer the Authority is satisfied that

either by reason ofz an unfavourable claim experience or because of a

sharp increase in the volume of new business, or for any other reason,

compliance

with the provisions of this sub-section shall cause undue

hardship to the insurer, it may direct that for such period and subject to

such conditions as it may specify, the provisions of this sub-section shall

apply to that insurer with such modifications provided that such

modifications shall not result in the control level of solvency being less

than what is stipulated under sub-section (1).

(4)

If, at any time, an insurer or re-insurer does not maintain the

required control level of solvency margin, he shall, in accordance with the

directions issued by the Authority, submit a financial plan to the Authority,

indicating a plan of action to correct the deficiency within a specified period

not exceeding six months.

(5)

An insurer who has submitted a plan, as required under

sub-section (4), the Authority shall propose modifications to the plan, if

the Authority considers the same inadequate, and in such an eventuality,

the Authority shall give directions, as may be deemed necessary, including

direction in regard to transacting any new business, or, appointment of an

administrator or both.

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(6)

An insurer or re-insurer, as the case may be, who does not

comply

with the provisions of sub-section (4) shall be deemed to have

made default in complying with the requirements of this section.

(7)

The Authority shall be entitled at any time to take such steps as

it may consider necessary for the inspection or verification of the assets and

liabilities of any insurer or re-insurer, or for securing the particulars

necessary to establish that the requirements of this section have been

complied with as on any date, and the insurer or re-insurer, as the case may

be, shall comply with any requisition made in this behalf by the Authority,

and in the event of any failure to do so within two months from the receipt

of the requisition, the insurer or re-insurer, as the case may be, shall be,

deemed to have made default in complying with the requirements of

this section.

(8)

In applying the provisions of sub-section (1) to any insurer or

re-insurer,as the case may be, who is a member of a group, the relevant

amount for that insurer shall be an amount equal to that proportion of the

relevant amount which that group, if considered as a single insurer, would

have been required to maintain as the proportion of his share of the risk on

each policy issued by the group bears to the total risk on that Policy:

Provided that when a group of insurers ceases to be a group, every

insurer in that group who continues to carry on any class of insurance

business in India shall comply with the requirements of sub-section (1) as if

he had not been an insurer in a group at any time :

Provided further that it shall be sufficient compliance of the provisions

the foregoing proviso if the insurer brings up the excess of the value

of his assets over the amount of his liabilities to the required amount

within a period of six months from the date of cessation of the group :

Provided also that the Authority may, on sufficient cause being shown,

extend the said period of six months by such further periods as it may think

fit, so, however that the total period may not in any case exceed one year.

(9)

Every insurer shall furnish to the Authority return giving details of

solvency margin in such form, time, manner including its authentication as

may be specified by the regulations.”.

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84. Substitution of new section for section 64VC.— For section

64VC of the Insurance Act, the following section shall be substituted,

namely:—

“64VC Restrictions on opening of new place of business.—No insurer

shall, after the commencement of the Insurance (Amendment) Act, 1968,

open a new place of business or close a place in India or outside India

or change otherwise than within the same city, town or village, the location

of an existing place of business situated in India or outside India, except in

the manner as may be specified by the regulations.”.

85. Ommission of Part III and IIIA.— PART III and IIIA of the Insurance

Act shall be omitted.

86. Ommission of Part IV.—PART IV of the Insurance Act shall be omitted.

87. Amendment of Section 102.—In section 102 of the Insurance Act,

for the words “not exceeding five lakh rupees for each such failure and

punishable with fine”, the words “of one lakh rupees for each day during

which such failure continues or one crore rupees, whichever is less” shall be

substituted.

88. Substitution of new sections for sections 103 and 104.—For

sections 103 and 104 of the Insurance Act, the following sections shall be

substituted namely:—

“103.

Penalty for carrying on insurance business in contravention

of section 3.—If a person carries on the business of insurance without

obtaining a certificate of registration under section 3, he shall be liable

to a fine not exceeding rupees twenty-five crores and with

imprisonment which may extend to ten years.

104. Penalty for contravention of sections 27, 27A, 27B, 27D and

27E.—If a person fails to comply with the provisions of section 27,

section 27A, section 27B, section 27D and section 27E he shall be

liable to a penalty not exceeding twenty-five crore rupees.”.

89. Amendment of Section 105.—In section 105 of the Insurance Act,

for the words “not exceeding two Lakh rupees for each such failure”, the

words “not exceeding one crore rupees” shall be substituted.

90. Substitution of new sections for sections 105B and 105 C.—For

sections 105B and 105C of the Insurance Act, the following sections

shall be substituted, namely:—

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“ 105B. Penalty for failure to comply with sections 32B, 32C

and 32D.— If an insurer fails to comply with the provisions of

section 32B, section 32C and section 32D, he shall be liable to a

penalty not exceeding twenty-five crore rupees.

105C. Power to adjudicate.—(1) For the purpose of adjudication

under sub-section (2) of section 2CB, sub-section (4) of section 34 B

sub-section (3) of section 40, sub-section (2) of section 41,

sub-sections (4) and (5) of section 42, sub-sections (8) and (9) of

section 42D, section 52F and section 105B, the authority shall appoint

any officer not below the rank of a Joint Director or an equivalent

officer to be an adjudicating officer for holding an inquiry in the

prescribed manner after giving any person concerned a reasonable

opportunity of being heard.

(2)

Upon receipt of the inquiry report from the officer so

appointed, the Authority after giving an opportunity of being heard to

the person concerned may impose any penalty provided in sections

aforesaid.

(3)

While holding an inquiry, the adjudicating officer shall

have power to summon and enforce the attendance of any person

acquainted with the facts and circumstances of the case to give

evidence or to produce any document which in the opinion of the

adjudicating officer, may be useful for or relevant to the subject matter

of the inquiry and if on such inquiry, is satisfied that the person as

failed to comply with the provisions of any of the sections specified in

sub-section (1), he may recommend such penalty as he thinks fit in

accordance with the provisions of any of those sections.

105D. Factors to be taken into account by the adjudicating officer.—

While recommending the quantum of penalty under section 105C, the

adjudicating officer and while imposing such penalty, the Authority shall

have due regard to the following factors, namely:—

(a)

the amount of disproportionate gain or unfair advantage,

wherever quantifiable, made as a result of the default;

(b) the amount of loss caused to the policy-holders as a result of the

default; and

91. Amendment of section 106A.— In section 106A of the Insurance Act,

in sub-section (2)—

(i) clauses (a), (b) and (f) shall be omitted;

112

(ii) clause (d), the words “or a provident society” shall be omitted.’.

92.

Ommission of section 107 and 107A.—Sections 107 and 107A of

the Insurance Act shall be omitted.

93.

Substitution of new section for section 109.— For section 109 of

the Insurance Act, the following section shall be substituted, namely:—

“109. Cognizance of offence.—No court shall take cognizance of any

offence punishable under this Act or any rules or any regulations made

thereunder, save on a complaint made by an officer of the Authority or

by any person authorised by it.”.

94.

Substitution of new section for section 110.—For section 110 of

the Insurance Act, the following section shall be substituted, namely:—

“110. Appeal to Securities Appellate Tribunal.—(1) any person

aggrieved—

(a) by an order of the Authority made on and after the commencement

of the Insurance Laws (Amendment) Ordinance, 2014, or under this Act,

the rules or regulations made thereunder, or

(b) by an order made by the Authority by way of adjudication under

this Act, may prefer an appeal to the Securities Appellate Tribunal having

jurisdiction in the matter.

(2) Every appeal made under sub-section (1) shall be filed within a

period of forty-five days from the date on which a copy of the order made

by the Authority is received by him and it shall be in such a form and be

accompanied by such fees as may be prescribed:

Provided that the Securities Appellate TribunaI may entertain an appeal

after the expiry of the said period of forty-five days if it is satisfied that

there was sufficient cause for not filing it within that period.

(3) On receipt of an appeal under sub-section (1), the Securities

Appellate Tribunal may after giving parties to the appeal, an opportunity

of being heard, pass such orders thereon as it thinks fit, conforming,

modifying or setting aside the order appealed against.

(4) The Securities Appellate Tribunal shall make available copy of order

made by it to the Authority and parties.

113

(5) The appeal filed before the Securities Appellate Tribunal under

sub-section (1) shall be dealt with by it as expeditiously as possible and

endeavour shall be made by it to dispose of the appeal finally wthin six

months from the date of receipt of appeal.

(6) The procedure for filing and disposing of an appeal shall be such

as may be prescribed.

(7) The provision contained in section 15U, section 15V, section 15W,

section 15Y and section 15Z of the Securities and Exchange Board of

India Act, 1992 (15 of 1992) shall apply to the appeals arising out of the

provisions of this Act, as they apply to the appeals under the Securities

and Exchange Board of India Act, 1992.

95. Omission of section 110E.—Section 110E of the Insurance Act shall be

omitted.

96. Omission of sections 110 G and 110 H.—Sections 110G and 110H of the

Insurance Act shall be omitted.

97. Insertion of new section 110HA.—After section 110H of the Insurance

Act, the following section shall be inserted, namely :—

“110HA. Penalty to be recoverable as arrear of land revenue.—Any

penalty imposed by the Authority under this Act shall be recoverable as an

arrear of land revenue.”.

98. Amendment of section 111.—In section 111 of the Insurance Act,—

(a) in sub-section (1), the words “or provident society” occurring at

both the places shall be omitted;

(b) in sub-section (2), in the proviso, the words “or to a provident

society” shall be omitted.

99. Substitution of new section for section 113.— For section 113 of the

Insurance Act, the following section shall be substituted, namely:—

“113. Acquisition of surrender value by policy.—(1) A policy of life

insurance shall acquire surrender value as per the norms specified by the

regu1ations.

(2) Every policy of life insurance shall contain the formula as

approved by the Authority for calculation of guaranteed surrender value of

the policy.

114

(3) Notwithstanding any contract to the contrary, a policy of life

insurance under a non-linked plan which has acquired a surrender value

shall not lapse by reason of non-payment of further premiums but shall be

kept in force to the extent of paid-up sum insured, calculated by means of

a formula as approved by the Authority, and contained in the policy, and

the reversionary bonuses that have already been attached to the policy:

Provided that a policy of life insurance under a linked plan shall be

kept

in force in the manner as may be specified by the regulations.

(4) The provisions of sub-section (3) shall not apply—

(i) where the paid-up sum insured by a policy, inclusive of attached

bonuses, is less than the amount specified by the Authority or takes the

form of annuity of amount less than the amount specified by the

Authority; or

(ii) when the parties after the defau1t has occurred in payment of

the premium agree in writing to other arrangement.”.

100.

Amendment of section 114.—In section 114 of the Insurance Act,—

(a) In sub section (2)—

(i) clause (aa) shall be omitted;

(ii) after clause (aa) as so omitted, the following clause shall be

inserted, namely:—

“(aaa) the manner of ownership and control of Indian insurance

company under sub-clause (b) of clause (7A) of section 2";

(iii) clause (c) and clause (f) shall be omitted; .

(iv) after clause (l), the following clauses shall be inserted, namely:—

“(la)

the manner of inquiry under sub-section (1) of

section 105C;

(lb)

the form in which an appeal may be preferred under

sub-section

(2) and the fee payable in respect of such appeal and the

procedure for filing and disposing of an appeal under sub-section

(6) of section 110;

(b) in sub-section (3), the words, brackets, figures and letters “or

under sub-section (1) of section 64UB and every regulation

made under sub-section (3) of section 64UB” shall be omitted.’.

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115

101. Amendment of section 114A.— In section 114A of the Insurance

Act, in sub-section (2),—

(i) for clauses (a) and (aa ), the following clause shall be substituted,

namely:—

“(a) manner of making application for registration and documents to

be accompanied under sub-section (2) of section 3;”;

(ii) for clause (d) the following clause shall be substituted, namely:—

“(d) such annual fee to the Authority and manner of payment

under sub-section (1) of section 3A;”;

(iii) after clause (d), the following clauses shall be inserted, namely:—

“(da) such minimum annuity and other benefits to be secured by the

insurer under section 4;

(daa) determination of preliminary expenses that may be excluded for

calculation of the stipulated paid-up equity capital for the insurers under

sub-section (1) of section 6;

(db) such equity capital and such forms of capital including hybrid

capital required under sub-section (I) of section 6A;”;

(iv) clause (e) shall be omitted;

(v)

after clause (e), as so omitted, the following clause shall be

inserted, namely:—

“(ea)

separation of account of all receipts and payments in respect of

each classes and sub-classes of insurance business as required under

sub-section (1) and sub-section (2A) of section 10; and its waiver under

the said section;”;

(v) in clause (f), for the words, brackets, figures and letter “under

sub-section (lA) of section 11”, the words, brackets and figures

“under sub-section (1) of section 11” shall be substituted;

(vii)

for clause (g), the following clause shall be substituted,

namely:—

“(g)

the manner in which an abstract of the report of the actuary to

be specified and the form and manner in which the statement referred to

in section 13 shall be appended;”;

(viii) after clause (g), the following clauses shall be inserted,

namely:—

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“(ga) maintenance of records of policies and claims under clause (c)

of sub-section (1) on of section 14;

(gb)

manner and form of issuance of policies in electronic form

under sub-section (2) of section 14.”;

(ix)

for clause (h), the following clause shall be substituted,

namely:—

“(h)

the fee for procuring a copy of return or any part there of

under sub-section (1) of section 20;

(x) for clause (i), the following clause shall be substituted, namely:—

“(i) investment of assets and further provisions regarding

investments by an insurer and investment by insurers in certain cases

under sections 27, 27A, 27B, 27C and time manner and other conditions

of investment of assets under section 27D;”;

(xi) for clauses (ia), (ib), (ic), (id) and (ie), the following clauses

shall be substituted, namely:—

“(ia)

the form in which a return giving details of investments made,

time and manner including its authentication under section 28;

(ib) the loans including the loans sanctioned to the fulltime on

employees of the insurer under clause (a) of sub-section (3) of section 29;

(ic) the sum to be paid by the insurer to any person under

section 31 B;

(id) the obligation of insurer in respect of rural or social or

unorganised sector and backward classes under section 32B and 32C;

(ie) the minimum percentage of insurance business in third party

risks of motor vehicles under section 32D;”;

(xii) for clause (j), the following clause shall be substitued, namely:—

“(j) the minimum information to be maintained by insurers or

intermediary or insurance intermediary, as the case may be, in their books,

the manner in which such information shall be maintained, the checks and

other verifications in that connection and all other matters incidental

thereto under sub-section (7) of section 33;’’;

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(xiii) after clause (j), the following clauses shall be inserted, namely:—

“(ja) the form in which balance-sheets in respect of the insurance

business of each of the insurers concerned and the manner in which

actuarial reports and abstracts in respect of the life insurance business

are to be prepared under clauses (b) and (c) of sub-section (3) of

section 35;

(jb) the manner of assessment of compensation under the proviso to

sub-section (4A) of section 37A;

(jc) the fee to be charged by the insurer under sub-section (3) of

section 39;

(jd) the manner and amount of remuneration or reward to be paid or

received by way of commission or otherwise to an insurance agent or an

intermediary or insurance intermediary under section 40;

(je) the manner and form of expenses of management under sections

40B and 40C.”;

(xiv) clauses (k) and (l) shall be omitted;

(xv) for clause (m), the following clause shall be substitued, namely:—

“(m) the requisite qualifications or practical training or examination to

be passed for appointment as an insurance agent under clause (e) of

sub-section (3) of section 42 and code of conduct for agents under

sub-section (5) of section 42;

(xvi) c1ause (n) shal1 be omitted;

(xvii) for clause (o), the fol1owing clause shall be substituted,

namely:—

“(O) the code of conduct under clause (h) of sub-section (3) of

section 42;”;

(xviii) clause (p) shall be omitted;

(xix) c1ause (va) shall be omitted;

(xx)

in clause (vb), the words, brackets and figure sub-section

(2) of ” shall be omitted;

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(xxi) for clause (x), the following clauses shall be substituted, namely:—

“(x) academic qualifications and code of conduct for surveyors and

loss assessors under sub-sections (1) and (2) of section 64UM;

(xa) the period for which a person may act as a surveyor or loss

assessor under sub-section (3) of section 64 UM;”.

(xxii) clause (w), shall be omitted;

(xxiii) for clause (y), the fol1owing clause shall be substituted,

namely:—

“(y) the manner of exclusion of certain assets under sub-section (l).

the manner of valuvation of liabilities under sub-section (2) and time for

furnishing statement under sub-section (3) of section 64V;”;

(xxiv) for clause (za), the following clause shall be substituted,

namely:—

“(za) the matters specified under sub-section (l) of section 64 VA

relating to sufficiency of assets;”;

(xxv) after clause (zaa), the following clauses shall be inserted,

namely:—

(zab) the form, time, manner including authentication of the return

giving details of solvency margin under sub-section (9) of section 64VA;

(zac)

the manner of opening and closing places of business under

section 64VC;”:

(xxvi) after clause (zb), the following clause shall be added,

namely:—

“(zba)the norms for surrender value of life insurance policy under

sub section (l) of section 113;”;

l02.

Ommission of Fifth, Sixth and Eighth Schedules.—In the

Insurance Act, the Fifth Schedule, the Sixth Schedule and the Eighth

Schedule shall be omitted.

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CHAPTER III

AMENDMENTS TO THE GENERAL INSURANCE BUSINESS

(NATIONALISATION) ACT, 1972

103. Insertion of a new section 10 B.—In the General Insurance

Business (Nationalisation) Act, 1972, (57 of 1972) after section l0A, the

following section shall be inserted, namely:—

“l0B. Enhancement of equity capital of General Insurance companies.—

The General Insurance Corporation and the insurance companies

specified in section l0A may, raise their capital for increasing their

business in rural and social sectors, to meet solvency margin and such

other purposes, as the Central Government may empower in this behalf:

Provided that the share holding of the Central Government shall not

be less than fifty one per cent. at any time.”.

104.

Ommission of section 25.— Section 25 of the General Insurance

Business (Nationalisation) Act, 1972 (57 of 1972) shall be omitted.

CHAPTER IV

AMENDMENTS TO THE INSURANCE REGULATORY

AND DEVELOPMENT AUTHORITY ACT, 1999

105. Amendment of section 2.— In section 2 of the Insurance

Regulatory and Development Authority Act, 1999, (41 of 1999) in

sub-section (l),—

(i)

in clause (b), after the words “Development Authority”, the

words “ of lndia”, shall be inserted;

(ii)

for clause (f), the following clause shall be substituted namely:—

“(f)

“Intermediary” or “insurance intermediary” includes insurance

brokers, re-insurance brokers, insurance consultants, corporate agents,

third party administrator, surveyors and loss assessors and such other

entities, as may be noified by the Authority from time to time.”.

106. Amendment of section 3.—In section 3 of the Insurance

Regulatory and Development Authority Act, 1999 (41 of 1999), in sub

section (1), after the words “Development Authority” the words “of

India” shall be inserted.

107. Amendment of section 16.—In section 16 of Insurance

Regulatory and Development Authority Act, 1999 (41 of 1999), in sub section (1),

clause (c) shall be omitted.

PRANAB MUKHERJEE,

President.

P. K. MALHOTRA,

Secy. to the Government of India.

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