The insurence act,1938(4 of 1938): Bare act with short notes (Bare Act)/ Bare act with short notes Universal Law Publishing

THE INSURANCE ACT, 1938
Sections

Introduction
PART I
PRELIMINARY
Short title, extent and commencement
Definitions Interpretation of certain words and expressions Appointment of Controller of Insurance
PART II
PROVISIONS APPLICABLE TO INSURERS
Prohibition of transaction of insurance business by certain persons
Power of Central Government to apply provisions of this Act to Special Economic Zones Insurers to be subject to this Act while liabilities remain unsatisfied
This Act not to apply to certain insurers, ceasing to enter into new contracts before conunencement of Act
Registration
Renewal of registration
Certification of soundness of terms of life insurance business
Minimum limits for annuities and other benefits secured by policies of life insurance
Restriction on name of insurer
Requirement as to capital Requirements as to capital structure and voting rights and maintenance of registers of beneficial owners of shares
Manner of divesting excess shareholding by promoter in certain cases
Provision for securing compliance with requirements relating to capital structure
Conversion of company limited by shares into company limited by guarantee
Deposits
Reservation of deposits
Refimd of deposit
Separation of accounts and funds
Accounts and balance-sheet i: ;
Audit I <r
Actuarial report and abstract Register of policies and register of claims
Submission of returns
Returns by insurers established outside India Exemption from certain provisions of the Indian Companies Act, 1913 This Act not to apply to preparation of accoimts, etc., for periods prior to this Act coming into force

18. Furnishing reports 19. Abstract of proceedings of general meetings 20. Custody and inspection of documents and supply of copies 21. Powers of Authority regarding returns
22. Powers of Authority to order revaluation
23. Evidence of documents
24. [Repealed] 25. Returns to be published in statutory forms 26. Alterations in the particulars furnished with application for registration to be reported Investment, Loans and Management
27. Investment of assets
27A. Further provisions regarding investments
27B. Further provisions regarding investments
27C. Prohibition for investment of funds outside India
27D. Manner and conditions of investment
28. Statement of investment of assets 28A. Return of investments relating to controlled fund and changes therein 28B. Returns of investments relating to the assets and changes therein
29. Prohibition of loans 30. Liability of directors, etc., for loss due to contravention of sections 27, 27A, 27B and 29
31. Assets of insurer how to be kept
31A. Provisions relating to managers, etc. 31B. Power to restrict payment of excessive remuneration 32. Limitation on employment of managing agents and on the remuneration payable to them 32A. Prohibition of common officers and requirement as to whole-time officers 32B. Insurance business in rural or social sector 32C. Obligations of insurer in respect of rural or unorganised sector and backward classes i Investigation
33. Power of investigation and inspection by Authority Appointment of Staff
33A. Power to appoint staff
Power to issue directions
34. Power of the Authority to issue directions Control over Management
34A. Amendment of provisions relating to appointments of managing directors, etc., to be subject to previous approval of the Authority 34B. Power of Authority to remove managerial persons from office 34C. Power of Authority to appoint additional directors
34D. Sections 34B and 34C to override other laws
34 E. Further powers 34F. Power of Authority to issue directions regarding re-insurance treaties, etc. 34G. Power of Authority to order closure of foreign branches
34H. Search and seizure
Amalgamation and Transfer of Insurance Business 35. Amalgamation and transfer of insurance business 65 36. Sanction of amalgamation and transfer by Authority 66 37. Statements required after amalgamation and transfer 67 37A. Power of Authority to prepare Scheme of Amalgamation 68 Assignment or transfer of policies and nominations 38. Assignment and transfer of insurance policies . 71 39. Nomination by policy-holder . 73 Commission and Rebates and Licensing of Agents
40. Prohibition of payment by way of commission or otherwise for procuring business • 74 40A. Limitation of expenditure on commission . 75 40B. Limitation of expenses of management in life irwiurance business . 77 40C. Limitation of expenses of management in general insurance business 78 41. Prohibition of rebates • 79 42. Licensing of insurance agents . 80 42A. Registration of principal agents, chief agents and special agents . 82 42B. Regulation of employment of principal agents . 83 42C. Regulation of employment of chief agents and special agents . 84 42D. Issue of licence to intermediary or insurance intermediary . 86 42E. Commission, brokerage or fee payable to intermediary or insurance intermediary 43. Register of insurance agents 44. Prohibition of cessation of payments of commission 44A. Power to call for information . 89 Special Provisions of Law
45. Policy not to be called in question on ground of mis-statement after two years • 46. Application of the law in force in India to policies issued in India. 90 47. Payment of money into court . 90 47A. Claims on small life insurance policies . 91 48. Directors of insurers being comparues . 92 48A. Life insurance agents not to be directors of life insurance companies 93 48B. Further provision regarding directors . 93 48C. [Repealed] ■ 49. Restriction on dividends and bonus . 94 50. Notice of options available to the assured on the lapsing of a policy 95 51. Supply of copies of proposals and medical reports . 95 52. Prohibition of business on dividing principle ^ . 95 Management by Administrator
52A. When Administrator for management of insurance business may be appointed ^ ' 96 52B. Powers and duties of the Administrator . 97 52BB. Powers of Administrator respecting property Uable to attachment under section 106 • 97
52C. Cancellation of contracts and agreements . 99 52D. Termination of appointment of Administrator . 99

52E. Finality of decision appointing Administrator
52F. Penalty for withlrolding documents of property from Admiiristrator
52G. Protection of action taken imder sections 52A to 52D Acquisition of the Undertakings of Insurers in certain cases
52H. Power of Central Government to acquire undertakings of insurers in certain cases
52-1. Power of Central Government to make Scheme 52J. Compensation to be given to the acquired insurer
52K. Constitution of the Tribunal
52L. Tribunal to have powers of Civil Court
52M. Procedure of the Tribunal 52N. Special provisions for the dissolution of acquired msurers Winding up
53. Winding up by the court 53A. Unpaid-up share capital 54. Volimtary winding up
55. Valuation of liabilities 56. Application of surplus assets of life insurance fund in liquidation or insolvency
57. Winding up of secondary companies 58, Scheme for partial winding up of insurance companies
59. Retiun of deposits
60. Notice of policy values 61. Power of Tribunal to reduce contracts of insurance 61A. Appeal to National Company Law Appellate Tribunal Special Provisions relating to External Companies
62. Power of Central Government to impose reciprocal disabilities on non-Indian companies
63. Particulars to be filed by insurers established outside India 64. Books to be kept by insurers established outside India
PART 11 A
INSURANCE ASSOCIATION OF INDIA, COUNCILS OF THE ASSOCIATION AND COMMITTEES THEREOF 64A. Incorporation of tlie Insmance Association of India 64B. Entry of names of members in the register
64C. Councils of the Insurance Association of India 64D. Autlrority of members of Association to act through agents
64E. Authorities of the Life Insurance Council and the
General Insurance Council
64F. Executive Committees of the Life Insurance Council and the
General Insurance Council
64G. Resignation and filling up of casual vacancies
64H. Duration and dissolution of Executive Committees
64-1. Power of Executive Committee of Life Insurance Council to hold examinations for insurance agents 64J. Functions of Executive Conunittee of Life Insurance Council 64K. Executive Committee of Life Insurance Council may advise in controlling expenses

64L. Functions of the Executive Committee of General Insurance Council 64M. Executive Committee of General Insurance Council may advise in controlling expenses 64N. Powers of the Executive Committees to act together in certain cases 64-0. [Repealed]
64P. [Repealed]
64Q. [Repealed] 64R. General powers of Life Insurcmce Council and General
Insurance Council
64S. Power of Central Government to remove difficulties 64T. Power to exempt
PART IIB
TARIFF ADVISORY COMMITTEE AND CONTROL OF TARIFF RATES
Establishment of Tariff Advisory Committee
Composition of the Advisory Committee Power to make rules in respect of matters in this Part 64UC. Power of the Advisory Committee to regulate rates, advantages, etc. 64UD. Transitional provisions 64UE. Power of the Advisory Committee to require informaHon, etc.
-64UF.- Assets and liabilities of the General Insurance Council to vest in the Advisory Committee 64UG. Contracts, etc., to be effective by or against the Advisory Committee 64UH. Employees, etc., to continue 64UI. Duty of person having custody or control of property to deliver such property to the Advisory Committee 64UJ. Power of the Advisory Committee to constitute Regional Committees 64UK. Levy of fees by the Advisory Committee
64UL. Power to remove difficulties 64UM. Licensing of surveyors and loss assessors
PART lie
SOLVENCY MARGIN, ADVANCE PAYMENT OF PREMIUM AND RESTRICTIONS ON THE OPENING OF A NEW PLACE OF BUSINESS
64V. Assets and liabilities how to be valued 64VA. Sufficiency of assets
64VB. No risk to be assumed unless premium is received in advance 64VC. Restrictions on the opening of a new place of business . . ' .
PART III
PROVIDENT SOCIETIES

65. Definition of provident society
134
65A. Prohibition of transaction of msurance business by provident societies other than public companies or co-operative societies
135 66. Restrictions on provident societies 135 67. Name . • 135 68. [Repealed] 136 69. Dividing business 136 70. Registration 136 70A. Renewal of registration . 139
70B. Supplementary informafion and reports of alterations in 139particulars furnished with application for registration 71. Certain provisions of Part II to apply to provident sodeli^ 140 72. Working Capital 140 73. Deposits 140 73A. Restriction on name of provident society 140 74. Rules 141
75. Amendment of rules 142 76. Supply of copy of rules 142 77. Registered office 142 78. Publication of authorised capital to contain also subscribed and paid-up capital 142 79. Registers and books 142 80. Revenue account, balance-sheet and annual statements 143 81. Actuarial report and abstract 143 82. Submission of returns to Authority 144
83. Actuarial examination of schemes 145 84. Separation of accoimts and funds 146
85. Investment fimds 146 86. Inspection of books 147 .87. Inquiry by or on behalf of Authority 147 87A. Amalgamation and transfer of insurance business 148 88. Winding up by court and voluntary winding up 150
89. Reduction of Insurance contracts 151 90. Appointment of liquidator 151 90A. Application of Act to liquidators 151
91. Powers of liquidator 151 92. Procedure at liquidation 152 93. Dissolution of provident society 154
94. Nominations and assignments 154 PART IIIA
INSURANCE CO-OPERATIVE SOCIETIES 94A. Insurance co-operative society to be an insurer 155
PART IV
MUTUAL INSURANCE COMPANIES AND CO-OPERATIVE LIFE INSURANCE SOQETIES 95. Definitions 155 96. Application of Act to Mutual Insurance Companies and 156Co-operative Life Insurance Societies 97. Working capital of Mutual Insurance Companies and 156Co-operative Life Insurance Societies 98. Deposits to be made by Mutual Insurance Companies and 156Co-operative Life Insurance Societies 98A. Prohibition of loans 157 99. Transferees and assignees of policies not to become members 157
100. Publication of notices and documents of Mutual Insurance Companies and Co-operative Life Insurance Societies 157 101. Supply of documents to members 157
PART IV A
RE-INSURANCE lOlA. Re-insurance with Indian re-insurers 15g lOlB. Advisory Committee I59 lOlC. Examination of re-insurance treaties irq
PART V
MISCELLANEOUS 102. Penalty for default in complying with, or act in
contravention of, this Act
159
103. Penalty for carrying on insurance business in contravention of sections 3, 7 and 98
160 104. Penalty for false statement in document 160 105. Wrongfully obtaining or withholding property 160. 105A. Offences by companies 160 105B. Penalty for failure to comply with section 32B 161 105C. Penalty for failure to comply with section 32C 161 106. Power of court to order restoration of property of insurer or compensation in certain cases 161 106A. Notice to and hearing of Authority 163 107. Previous sanction of Advocate-General for institution of proceedings 164 'i07A; Chairman, etc. to be public servant 164 108. Power of court to grant relief 165 109. Cognizance of offences 165 110. Appeals 165 IIOA. Delegation of powers and duties of Chairperson of the Authority 165 HOB. Signature of documents 166 HOC. Power to call for information \ 166 HOD. Certain claims for compensation barred 166 IIOE. Sections 3A, 27B, 28B, 33, etc. 166 HOP. Provisions applicable to State Governments, etc. 166 HOG. Constitution of Consultative Committee 166 HOH. Appeals ^ 167 111. Service of notices ^ ^ Declaration of interim bonuses , 167 112. 167 113. Acquisition of surrender values by policy 167 114. Power of Central Government to make rules 169 114A. Power of Authority to make regulations 170 115. Alteration of forms 173 116. Power to exempt from certain requirements 173 n6A. Summary of returns to be published 173 117. Saving of provisions of Indian Companies Act, 1913 174 118. Exemptions 174 119. Inspection and supply of copies of published prospectus, etc. 175 120. Determination of market value of securities deposited under this A(^ 175 121. [Repented] 175 122. [Repealed] 175 123. [Repealed] 175 THE FIRST SCHEDULE.—{Omitted] 175 THE SECOND SCHEDULE.—[Omitted] 175
\
Rules

—[Omilted] Regulations for preparing statements of business in force and requirements applicable to such statements Terms deemed to be included in every contract between an insurer carrying on general insurance business and a principal agent —Rule as to the valuation of the liabilities of an insurer in insolvency or liquidation . -Principles of compensation
THE INSURANCE RULES, 1939
PRELIMINARY
Short title
Definitions
ACTUARIES
Qualifications of actuaries [Omitted]
DEPOSITS WITH THE BANK Eleposits with the Bank , Changes in deposits Maturing of deposits Interest and dividends on deposits Withdrawals, etc., of deposits Information as regards deposits SECURITIES AND INVESTMENTS
Pakistan securities
Assets deemed to be approved investments Returns of investments and changes in investments Charging Assets PROSPECTUSES, TABLES AND PROPOSAL FORMS
Prospectuses and tables Proposal Forms COMMITTEE OF THE INSURANCE COUNCILS
List of insurers
Constituencies of insurers
Duties of Dissolved Executive Committees Joint Meetings of Executive Committees ELECTION OF DIRECTORS BY POLICY-HOLDERS Qualifications of elected directors of insurance companies
Election of directors under section 48 Period of office of directors and filling of vacancies . •
LICENCES AND CERTIFICATES
Licence fee for insurance agents and collection thereof
Issue of licences to insurance agents Bona fide insurance agents for the purposes of section 41 Fee for principal, chief and special agents

Issue of certificates to principal, chief and special agents Issue of duplicate licenses and certificates Description of stamp
Allowance for unused stamps
Cancellation of licences or certificates
SHARES, OWNERSHIP AND DISPOSAL
Declaration as to the nature of ownership of shares
Declaration as to beneficial interest in shares
Form for declaration Disposal of shares by Administrator-General
LIMITATION OF EXPENSES OF MANAGEMENT
Statement of tlie bases of premiums Limitation of expenses of management in life-insurance business . Limitation of expenses of management in general insurance business
Head Office expenses Principal Office expenses Calculation of proper share of managerial expenses
CONTRAVENTION OF LIMITATION OF EXPENSES
AND TARIFF REGULATION
Action against Extravagant Life Insurers Action against Extravagant General Insurers
PROVIDENT SOCIETIES
Transaction of bond investment business
Rules of Provident Societies
Forms of accounts and statements
Actuarial reports Signatures of returns furnished by provident societies
Notices under section 92(6) Seciurity from liquidator
FEES I
Fees imder the Act and the manner of collection Fees payable on referring disputed claims to Controller Fees payable to the Councils
MISCELLANEOUS Additional particulars to be given by actuary
Form of declaration under section 16(2)(d) Returns in respect of dividing insurance business
Activities of insiurers
Statement of emoluments Payment where nominee is a minor Surrunary of balance-sheet and revenue account
REINSURANCE ADVISORY COMMITTEE
Term of office
Resignation and filling of casual vacancies

36. Secretary 207 37. Procedure for the conduct of business, etc, of the Committee 207 38. Allowances payable to members of the Advisory Committee 207
39. Minimum information to be maintained and the checks and other verifications to be adopted 208
40. Search and seizure 211
TARIFF ADVISORY COMMITTEE
41. Constitution 212
42. [Omitted] 213 43. Election of Members 213 44. [Omitted] ' 213 45. [Omitted] 213
46. [Omitted] 214 47. [Omitted] 214 48. [Omitted] 214 49. [Omitted] 214 50. [Omitted] 214 51. [Omitted] 214 51A. [Omitted] 214 52. [Omitted] 214 "53. The fees payable to the Tariff Advisory Committee 216 53A. Fund of the Tariff Advisory Committee and custody of its moneys . . 216 53B. Accounts, audit and annual report of the Tariff Advisory Committee . . 216 54. Apportionment of Provident Fund . . 216
LICENSING OF SURVEYOR AND LOSS ASSESSORS 55. Licence fee for surveyor or loss assessors and collection thereof . . . 217 56. Issue of licences to surveyor or loss assessors . . . 217 56A. Additional technical qualifications for surveyors and loss assessors. . . 217
SUFFICIENCY OF ASSETS 57. Marmer of bringing up the excess of the value of assets over the amoimt of the liabilities to the relevant amount . . . 218 58. Advance payment of premiums . . . 219
59. Relaxation . . . 219
CONSULTATIVE COMMITTEE
60. Term of office . . . 222
61. Resignation and filling of casual vacancies . . . 222
62. Secretary , . . 222
63. Procedure for the conduct of business of the Committee . . . 222
64. Allowances payable to members of the Consultative Committee . . . 222
65. Fees of members . , . . 223
SCHEDULE 1 . . . 223
SCHEDULE 2 [Omitted] . . , . 307
THE REDRESSAL OF PUBLIC GRIEVANCES RULES, 1998
1. Short title . . . 308
2. Application . . . 308
3- 308
4. Definitions 308 5. Governing body of Insurance Council 309
6. Ombudsman 309
7. Term of office 309
8. Removal from office 309
9. Remuneration, etc. of Ombudsman , 309 10. Territorial jurisdiction of Ombudsman 310
11. Staff 310
12. Power of Ombudsman 310 13. Manner in which complaint is to be made 311 14. Ombudsman to act fairly and equitably 311. 15. Recommendations madd by the Ombudsman 311
16. Award 312 17. Consequences of non-acceptance of award '512 18. Power to make ex-gratia payment 312
Miscellaneous Provisions
19. Advisory Committee 312 20. Armual Report 312
21. Recommendation of the Insurance Council . . . 312
THE GENERAL INSURANCE BUSINESS (NATIONALISATION) ACT, 1972
Introduction 313
CHAPTER I
PRELIMINARY
Sections
1. Short title , 315 2. Declaration as to the policy of the State 315
3. Definitions 315
CHAPTER I!
transfer to PUBLIC OWNERSHIP OF general insurance business
4. Transfer of shares of Indian insurance companies 316 5. Transfer of undertakings of other existing insurers 317
6. Effect of transfer of undertakings 317
7. Transfer of service of existing employees in certain cases 318 8. Provident, superannuation, welfare and other funds 319
CHAPTER III
GENERAL INSURANCE CORPORATION OF INDIA .
9. Formation of General Insurance Corporation of India . • 319 10. Transfer to Corporation of shares vested in Central Government . . • . 320 lOA. Transfer to Central Government of shares vested in Corporation . . 320
CHAPTER IV
AMOUNTS TO BE PAID FOR ACQUISITIONS 11. Amounts to be paid for transfer and vesting of shares or undertakings . . 320
12. Disbursement of amounts by Corporation . . 320

Mode of payment Amount payable to shareholders may be paid to named persons
instead in certain cases
Payment into court in case of rival claims
CHAPTER V
SCHEME FOR REORGANISATION OF GENERAL
INSURANCE BUSINESS
Schemes for mergers of companies, etc. Laying of schemes and notifications before Parliament
CHAPTER VA
TERMS AND CONDITIONS OF SERVICE OF OFHCERS AND OTHER EMPLOYEES
Power of Central Goverrunent to regulate the terms and conditions of service of officers and other employees
CHAPTER VI FUNCTIONS OF CORPORATION AND ACQUIRING COMPANIES AND THEIR MANAGEMENT
Functions of Corporation
Functions of acquiring companies Balance of profit how to be utilised Interim provisiorrs for management of Indian insurance comparues. Power of Central Government to transfer employees
Power of Central Government to issue directions
CHAPTER VII
MISCELLANEOUS Acquiring comparues to have the exclusive privilege of

carrying on general insurance business 326 24A. Exclusive privilege of Corporation and acquiring companies to cease 327 25. Properties in India not to be insured with foreign insurers except with permission of Central Government .i 327 26. Acquiring companies and income-tax 327
27. Power to reduce amounts of insurance in certain cases 327 28. Right of acquiring company to seek relief in respect of certain transactions 327 29. Duty to deliver possession of property and documents relating thereto . 328 30. Penalty for withliolding property, etc. 328 31. Officers and employees of Corporation or of acquiring companies to be public servants 329 32. Indemnity 329 33. Dissolution of Corporation and acquiring companies 329 34. Reference to existing insurer in other laws 329 35. Application of Insxuance Act 329
35A. [Omitted] 329
36. Exemptions . ' . 329
37. Vacancies, etc., not to invalidate proceedings •. 330 38. Protection of action taken in good faith 330
39. Power to make rules 330
40. [Repealed] 331 THE SCHEDULE.—[Amount to be paid for acquisitions—See Section 11] 331