Ppt Insurance ordinance 2014 (3)

KEY AMENDMENTS
 Increase of the cap on foreign investment in insurance
companies from 26% to 49%.
 Removing restrictions on divestment by Indian promoters of
insurance companies
 Foreign re-insurers are allowed to open branches for re-
insurance business in India.
 'Health insurance' has been recognised as an exclusive field
of insurance business and carved out from the umbrella of
general insurance
2

…Contd
 Removal of Requirement to Maintain Deposits with RBI
 General insurers are required to underwrite certain
minimum percentage of its insurance business in third
party risks of motor vehicles
 Life insurance policies will become unchallengeable
after the expiry of three years from the date of the
policy.
 Caps on the level of management expenses and
commission are to be determined by the IRDA rather
than specifying the same in the Act. 3

…Contd
 Insurance agents have been included in the definition
of 'insurance intermediaries‘
 Qualifications have been prescribed for a person to be
able to act as surveyor or loss assessor in respect of
general insurance business
 Securities Appellate Tribunal will be the body to hear
appeals against the orders of IRDA.
 Increasing the penalties for defaults to be up to Rs. 25
crores and imprisonment till 10 years in certain cases
4

Indian Insurance Company - Section 2 (7A)
OLD NEW
“Indian insurance company” means
any insurer being a company
in which aggregate holdings of equity
shares by a foreign company,
either by itself or
through its subsidiary companies or
 its nominees,
do not exceed 26% of paid-up equity
capital of such Indian insurance company;
The expression “foreign company” shall
have the meaning assigned to it under
clause (23A) of section 2 of the Income-tax
Act, 1961(43 of 1961);]
“Indian insurance company” means
any insurer being a company limited by
shares
In which aggregate holding of equity
shares by foreign investors, including
portfolio investors, do not exceed 49% of
paid up equity capital of such Indian
insurance company
Which is “Indian owned and controlled”
in a manner as may be prescribed
Control shall include
The right to appoint majority of directors
or
To control management or policy
decisions
5

Insurer– Section 2(9)
OLD NEW
"Insurer" means-
any individual or unincorporated body of
individuals or body corporate
incorporated under the law of any
country other than India, carrying on
insurance business not being a person
specified in sub-clause (c) of this clause
which--
(i) carries on that business in India, or
(ii) has his or its principal place of
business or is domiciled in India, or
(iii) with the object of obtaining
insurance business, employs a
representative, or maintains a place of
business, in India;
but does not include a principal agent'
chief agent, special agent' or an
insurance agent or a provident society as
defined in Part III;
“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
reinsurance business through a
branch established in India
6

Registration – Section 3 (2C)
OLD NEW
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 Central
Government.
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
7

Registration – Section 3 (3)
OLD NEW
 in the case of any insurer having
his principal place of business or
domicile outside India, the
Authority,
 shall withhold registration or
 shall cancel a registration already
made,
 if he is satisfied that in the
country in which such insurer has
his principal place of business or
domicile Indian nationals
 are debarred by the law or
practice of the country relating
to, or
 applied to insurance from
carrying on the business of
insurance, or
 that any requirement imposed on
such insurer under the provisions
of section 62 is not satisfied.
 In case of an insurer having
Joint Venture with a person
having principal place of
business domiciled outside
India or
 any 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 business8

Registration – Section 3A
OLD NEW
An insurer who has been granted
a certificate of registration under
section 3
shall have the registration
renewed annually for each year
after that ending on the [31st day
of March, after the
commencement of the Insurance
Regulatory and Development
Authority Act, 1999.
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
Any failure to deposit annual fee
shall render the certificate of
registration liable to be
cancelled.
9

Minimum Limits for annuities and other benefits secured
by policies of life insurance – Section 4
OLD NEW
 No insurer, not being a
Co operative Life Insurance‑
Society to which Part IV of this
Act applies,
 shall pay or undertake to pay on
any policy of life insurance issued
after the commencement of the
Insurance (Amendment) Act,
1946 (6 of 1946),
 an annuity of less than Rs. 100/-
or
 a gross sum of less Rs. 1,000/-,
exclusive of 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.
 The insurer shall pay or
undertake to pay on any policy
of life insurance, or 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 10

Requirements as to maintenance of registers –
Section 6A (4) (b)
OLD NEW
 A public company as
aforesaid which carries on
life insurance business-
 shall not register any transfer
of its shares-
 where, after the transfer, the
total paid up holding of the‑
transferee in the shares of the
company is likely to exceed
five per cent. of its paid up‑
capital or where the
transferee is a banking or an
investment company, is likely
to exceed two and a half per
cent of such paid up capital,‑
unless the previous 2
[approval
of the Authority] has been
obtained to the transfer;
 A public company as aforesaid
which carries on life insurance
business-
 shall not register any transfer
of its shares-
 where, after the transfer, the
total paid up holding of the‑
transferee in the shares of the
company is likely to exceed
five per cent. of its paid up‑
capital unless previous
approval of the Authority has
been obtained to the transfer
11

Investment of assets – Section 27 (2)
OLD NEW (a) the amount of any deposit made under section 7 or section 98 by the
insurer in respect of his life insurance business shall be deemed to be
assets invested or kept invested Government securities;
 (b) the securities of, or guaranteed as to principal and interest by,
the Government of the United Kingdom shall be regarded as approved
securities other than Government securities for a period of four years
from the commencement of the Insurance (Amendment) Act, 1950 (47 of
1950), in the manner and to the extent hereinafter specified, namely:—
 (i) during the first year, to the extent of twenty-five per cent in
value of the sum referred to in sub-section (1);
 (ii) during the second year, to the extent of eighteen and three fourths
per cent in value of the said sum;
 (iii) during the third year, to the extent of twelve and a half per cent in
value of the said sum; and
 (iv) during the fourth year, to the extent of six and a quarter per cent in
value of the said sum:

 Provided that, if the Authority so directs in any case, the securities
specified in clause (b) shall be regarded as approved securities other than
Government securities for a longer period than four years, but not
exceeding six years in all and the manner in which and the extent to
which the securities shall be so regarded shall be as specified in the
direction;

 (c) any prescribed assets 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 sub section (1) of section 27A.‑
 In case of an insurer carrying general
insurance business,
 20% of the assets in Govt. Securities,
 a further sum equal to not less than 10%
of assets in Govt. Securities or other
approved securities and the balance in
any other investment in accordance
with the regulations of the Authority
 Explanation – In this section the term
“assets” means all the assets of the
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 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 insurer to apply the
provisions of this Section.
12

Prohibition of loans – Section 29 (3) (a)
OLD NEW
(3) Subject to the provisions of
sub section (1), no insurer‑
carrying on life insurance
business shall grant—
(a) any loans or temporary
advances
either on hypothecation of
property or
on personal security or
otherwise,
except such loans as are specified
in sub section (1) of Section 27A;‑
 (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 are specified
by the regulations including loans
sanctioned as part of their salary
package to the fulltime employees
of the insurer as per the scheme
duly approved by its BODs 13

Power of investigation and inspection by Authority –
33 (9)
OLD NEW
No order made under this
section
other than an order made under
Clause (b) of sub section (6)‑
shall be capable of being called
in question in any Court.
Any insurer or intermediary or
insurance intermediary
aggrieved by any order made
under this section
may prefer an appeal to
Securities Appellate Tribunal
14

Power of Authority to remove managerial persons
from office – 34B (4)
old new
 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 punishable with
fine which may extend to Rs.
250/- for each day during
which such contravention
continues.
 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 Rs. 1,00,000/- each day
during which such
contravention continues or
 Rs. 1 crore whichever is less
15

Power of Controller to appoint additional directors –
34C (1)
OLD NEW
If the Authority is of opinion that
in the public interest or
in the interests of an insurer or
his policy holders‑
it is necessary so to do, he may,
from time to time, by order in
writing,
appoint, 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:
 If the Authority is of opinion
that
 in the public interest or
 in the interests of an insurer or
his policy holders‑
 it is necessary so to do, he
may, from time to time, by
order in writing,
 appoint, in consultation with
the Central Government 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: 16

Prohibition of Rebates – Section 41 (2)
OLD NEW
Any person making default in
complying with the provisions of
this section
shall be punishable with fine
which may extend to Rs. 500/-
Any person making default in
complying with the provisions of
this section
which may extend to Rs. 10 Lacs
17

Licensing of Insurance agents – Section 42(1)
OLD NEW
The Authority or an officer
authorised by him in this behalf
shall,
in the manner determined by the
regulations made by it and
on payment of the fee which
shall not be determined by the
regulations,
which shall not be more than Rs.
250/-, issue to any person
making any application in the
manner determined by the
regulations, a licence to act as an
insurance agent for the purpose
of soliciting or procuring
insurance business
An insurer shall appoint any
person to act as insurance agent
for the purpose of soliciting or
procuring insurance business
18

Licensing of insurance agents – 42 (7)
OLD
NEW
Any person who acts as an
insurance agent without holding
a licence issued under this
section to act as such shall
be punishable with fine which
may extend to Rs. 500/-,
and any insurer or any person
acting on behalf of an insurer,
who appoints as an insurance
agent any person not licensed to
act as such or transacts any
insurance business in India
through any such person shall
be punishable with fine which
may extend to Rs. 1,000/-
insurance agent in contravention
to the provisions of this Act,
shall be liable to a penalty which
may extend to Rs. 10,000/-
and any insurer or any person
acting on behalf of n 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 extend to Rs. 1 crore
rupees 19

Licensing of insurance agents – 42 (8)
OLD NEW
Where the person contravening
sub section (7) 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
which may extend to Rs. 5,000/-
The insurer shall be responsible
for all the acts and omission of
its agents including violation of
code of conduct specified under
clause (h) of subsection (3) and
liable to a penalty which may
extend to Rs. 1 crore
20

Issue of licence to intermediary or insurance intermediary –
42D (8)
OLD NEW
intermediary or an insurance
intermediary
without holding a licence issued
under this section to act as such,
shall be punishable with fine,
and
any insurer or any person who
appoints as an intermediary or
an insurance intermediary or any
person not licensed to act as
such or transacts any insurance
business in India through any
such person,
shall be punishable with fine.
intermediary
without being registered under
this section to act as such,
shall be liable to a penalty which
may extend to Rs. 10 lacs and
any person who appoints as an
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 which21

Issue of licence to intermediary or insurance intermediary –
42D (9)
OLD NEW
sub-section (8) is a company or a
firm, then,
against the company or firm,
shall be punishable with fine.
sub-section (8) is a company or a
firm, then,
against the company or firm,
shall be liable to penalty which
may extend to Rs. 10 lacs
22

Policy not to be called in question on ground of
mis statement - 45‑
OLD NEW
 no policy of life insurance effected after
the coming into force of this Act shall,
 after the expiry of 2 years from the date
on which it was effected be called in
question by an insurer on the ground that
statement made in the proposal or in any
report of a medical officer, or referee, or
friend of the insured, or in any other
document leading to the issue of the
policy, was inaccurate or false,
 unless the insurer shows that such
statement was on a material matter or
suppressed facts which it was material to
disclose and that it was fraudulently made
by the policy holder and that the‑
policy holder knew at the time of making‑
it that the statement was false or that it
suppressed facts which it was material to
disclose:
no policy of life insurance
shall be called in question on any
ground whatsoever after the
expiry of 3 years from the date of
the policy, i.e from the date of
issuance of the policy or the date
of commencement of the risk or
the date of revival of the policy
or the date of rider to the policy
whichever is later
23

Penalty for withholding documents of property from
Administrator – 52F
OLD NEW
If any director or officer of the
insurer or any other person
fails to deliver to the Administrator
any books of account, registers, or
any other documents in his custody
relating to the business of the
insurer the management of which
has vested in the Administrator, or
retains any property of such insurer,
he
shall be punishable with
imprisonment which may extend
to 6 months, or with fine which
may extend to Rs. 1,000/-, or with
both.
If any director or officer of the
insurer or any other person
fails to deliver to the
Administrator any books of
account, registers, or any other
documents in his custody
relating to the business of the
insurer the management of
which has vested in the
Administrator, or retains any
property of such insurer, he
shall be liable to penalty of Rs.
10,000/- each day during which
failure continues or Rs. 10 lacs
whichever is less 24

PART IIA
OLD NEW
Insurance Association of India,
Councils of the Association and
Committees thereof
Life Insurance Council and
General Insurance Council and
Committees thereof
25

Executive Committees of the Life Insurance Council
– 64F (1)
OLD NEW
 2 officials nominated by the Authority, one as
the Chairman and the other as a member;
 8 representatives of members of the Insurance
Association of India carrying on life insurance
business elected in their individual capacity by
the said members in such manner, from such
groups of members and from such areas as may
be specified by the Authority.
 1 official not connected with any insurance
business, nominated by the Authority and
 5 persons connected with life insurance
business, nominated by the Authority for the
purpose of representing such groups of
insurers carrying on life insurance business or
such areas as have not been able to secure
adequate representation on the Executive
Committee of the Life Insurance Council or
for any other purpose.
 4 representatives of Life Insurance
Council elected in their individual
capacity by the members in such
manner as maybe laid down in the
bye-laws of the Council
 an eminent person not connected
with any insurance business,
nominated by the Authority
 3 persons to represent insurance
agents, intermediaries and
policyholders respectively as maybe
 1 representative each from self-help
group and Insurance Co-operative
Societies
26

Executive Committees of the General Insurance
Council – 64F (2)
OLD NEW
 2 officials nominated by the Authority, one as the
Chairman and the other as a member;
 8 representatives of members of the Insurance
Association of India carrying on general insurance
business elected in their individual capacity by the
said members in such manner, from such groups of
members and from such areas as may be specified
by the Authority
 1 non official‑ not connected with any insurance
business, nominated by the Authority and
 5 persons connected with general insurance
business, nominated by the Authority for the
purpose of representing such groups of insurers
carrying on general insurance business or such areas
as have not been able to secure adequate
representation on the Executive Committee of the
General Insurance Council or for any other purpose.
4 representatives of General
Insurance Council elected in their
individual capacity by the members
in such manner as maybe laid down
in the bye-laws of the Council
an eminent person not connected
with any insurance business,
4 persons to represent insurance
agents, third party administrators,
surveyors and loss assessors and
policyholders respectively as maybe
27

Penalty for default in complying with or act in contravention of,
this Act. - 102
OLD NEW
If any person, who is required under
this Act, or rules or regulations
made there under,-
 to furnish any document,
statement, account, return or
report to the Authority fails to
furnish the same; or
 to comply with the directions, fails
to comply with such directions;
 to maintain solvency margin, fails
to maintain such solvency margin;
 to comply with the directions on
the insurance treaties, fails to
comply with such directions on
the insurance treaties,
he shall be liable to a penalty not
exceeding Rs. 5,00,000/- for each
such failure and punishable with
fine.
If any person, who is required under
this Act, or rules or regulations
made there under,-
 to furnish any document,
report to the Authority fails to
furnish the same; or
 to comply with the directions, fails
to comply with such directions;
 to maintain solvency margin, fails
to maintain such solvency margin;
 to comply with the directions on
the insurance treaties, fails to
comply with such directions on
the insurance treaties,
he shall be liable to a penalty of Rs.
1 Lac for each day during which
failure continues or
Rs. 1 crore whichever is less
28

Penalty for carrying on insurance business in contravention
of sections 3, 7 and 98 - 103
OLD NEW
If a person makes a statement, or
furnishes any document,
report which is false and which
he either knows or believes to be
false or does not believe to be
true,-
exceeding Rs. 5,00,000/- for
each such failure; and
 he shall be punishable with
imprisonment which may
extend to 3 years or with fine for
each such failure.
If a person carries on business of
insurance without obtaining a
certificate of registration
he shall be liable to a fine not
exceeding Rs. 25 crores and
with imprisonment which may
extend to 10 years
29

Penalty for false statement in document - 104
OLD NEW
If a person fails to comply with
the provisions of section 27 or
section 27A or section 27B or
section 27C or section 27D,
each such failure.
If a person fails to comply with
the provisions of section 27 or
section 27A or section 27B or
section 27C or section 27D and
section 27E,
exceeding Rs. 25 crores
30

Wrongfully obtaining or withholding property. - 105
OLD NEW
If any director, managing
director, manager, or other
officer or employees of an
insurer wrongfully obtains
possession of any property or
wrongfully applies to any
purpose of the Act,
each such failure.
If any director, managing
director, manager, or other
officer or employees of an
insurer wrongfully obtains
possession of any property or
wrongfully applies to any
purpose of the Act,
exceeding Rs. 1 crore.
31

Penalty for failure to comply with section 32B – 105B
OLD NEW
If an insurer fails to comply with
the provisions of section 32B,
each such failure and
shall be punishable with
imprisonment which may extend
to 3 years or with fine for each
such failure
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 Rs. 25 crores
32

Appeals – 110 (1)
OLD NEW
An appeal shall lie to the Court
having jurisdiction from any of the
following orders, namely:
an order under Section 3 cancelling
the registration of an insurer;
an order under Section 5 directing
the insurer to change his name;
an order under Section 42 cancelling
the licence issued to an agent;
an order under Section 75 refusing
to register an amendment of rules;
an order under Section 87 or Section
87A;
an order made in the course of the
winding up or insolvency of an
insurer or a provident society.
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
(b)By an order made by the
Authority by way of adjudication
under this Act,
may prefer an appeal to the SAT
having jurisdiction in the matter
33

Appeals – 110 (2)
OLD NEW
The Court having jurisdiction
for the purposes of sub section‑
(1)
shall be the principal Court of
civil jurisdiction within whose
local limits the principal place
of business of the insurer
concerned is situate.
Every appeal made under sub-
section (1) shall be filed within
the period of 45 days from the
date on which a copy of order
made by the Authority is
received by him and it shall be in
such form and be accompanied
by such fees as maybe prescribed
Provided that the SAT may
entertain an appeal after the
expiry of the said 45 days if it is
satisfied that there was sufficient
cause for not filing it within that
period.
34

Appeals – 110 (3), (4) and (5)
OLD NEW
An appeal shall lie from any
order made under
stub section (1) to the‑
authority authorised to hear
appeals from the decisions of
the Court making the same
and the decision on such
appeal shall be final.
On receiopt of an appeal under sub-
section (1), the SAT may after giving
parties to the appeal, an opportunity
of being heard, pass such orders
thereon as it thinks fit, confirming,
modifying, or setting aside the order
appealed against.
(4) the SAT shall make available
copy of order made by it to the
Authority and party
(5) The appeal filed before SAT
under sub-section (1) shall be dealt
with by it as expeditiously as
possible and endeavour shall be
made by it to dispose off the appeal
finally within 6 months from the
date of receipt of appeal. 35

Power of Authority to make regulations – 114A(2)
OLD NEW
(h) the form and manner in
which the statement referred to in
sub-section(4) of section 13 shall
be appended;
(i) the time, the manner and
other conditions of investment of
assets held by an insurer under
sub-sections (1), (1A) and (2) of
section 27D;
(h)The fee for procuring a copy
of return or any part thereof
under sub-section (1) of Section
20
(i) investment of assets and
further provisions regarding
investments by insurers in certain
cases under sections 27, 27A, 27B,
27C and time, manner and other
conditions of investment of
assets under section 27D
36

Power of Authority to make regulations – 114A(2)
OLD NEW
(x) The matters relating to
licensing of surveyors and loss
assessors, their duties,
responsibilities and other
professional requirements under
section 64UM;
(y) Such other asset or assets
as may be specified under clause
(h) of sub-section (1) of section
64V for the purposes of
ascertaining sufficiency of assets
under section 64VA;
(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 64UM
(y) the manner or exclusion of
certain assets under sub-section
(1), the manner of valuation of
liabilities under sub-section (2)
and the time for furnishing
statement under sub-section (3)
of section 64V 37

INSURANCE REGULATORY
OLD NEW
Insurance Regulatory and
Development Authority
Insurance Regulatory and
Development Authority of
India
38

INSERTION OF NEW SECTIONS
Section 2 clause 6(C)
Section 2 Clause 16(A)
Section 2 Clause 16(B)
Section 2 Clause 16(C)
Section 2CB
Section 3 Clause 4
Section 6
Definition of Health Insurance
Definition of regulations
Definition of re-insurance
Definition of Securities Appellate Tribunal
Properties in India not to be insured with foreign
insurers except with the permission of Authority
(i) If the insurer fails to pay the annual fee required
u/s 3A
(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,
contravenes the provisions of law as may be
applicable to the insurer
A paid up equity capital of Rs. 100crore, incase of a
person carrying on exclusively the business of
health insurance
No insurer as defined in subclause (d) of Clause (9) of
Section 2, shall be registered unless he has net
owned funds of not less than Rs. 5,000 crores39

…Contd (Insertion of New Sections)
Section 10 (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 and distinct from other
assets of the insurer and
such funds shall not be applied
directly or indirectly save as
expressly permitted under this Act
or regulations made thereunder
40

…Contd (Insertion of New Sections)
Section 14 (1)(c)
Section 14 (2)
A record of policies and claims
in accordance with clause (a)
and (b) may be maintained in
any such form, including
electronic mode, as may be
specified by the regulations
made under this Act
Every insurer shall, in respect of
all business transacted by him,
endeavor 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 41

…Contd (Insertion of new sections)
 Section 27C
 Section 27D
 An insurer may invest not more than
5% in aggregate of his controlled fund
or assets as referred to in Section 27(2)
in the companies belonging to the
promoters, subject to such conditions as
maybe specified by the regulations
 (1) Without prejudice to anything
contained in this section, the Authority
may, in the interest of policyholders,
specify by the regulations, time,
manner, and other conditions of
investment of assets to be held by an
insurer
 (2) The Authority may give specific
directions for the time, manner, and
other conditions subject to which the
funds of policyholders shall be invested
in infrastructure and social sector as 42

…Contd (Insertion of new sections)
Section 32D Every insurer carrying on general
insurance business shall, after the
commencement of Insurance Laws
(Amendment) Ordinance, 2014,
underwrite such minimum
percentage of insurance business in
third party risks of motor vehicles as
maybe 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
43

…Contd (Insertion of new Sections)
 Section 37A – 4A  Every policyholder 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 company of which he
was originally a policyholder 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. 44

Section 37A – 4B
Section 37A – 4C
The compensation so assessed shall
be paid to the shareholder or
member by the insurance company
resulting from such amalgamation
Any member or shareholder
aggrieved by the assessment of
compensation made by the
Authority under subsection (4A)
may within thirty days from the
publication of such assessment
prefer an appeal to Securities
Appellate Tribunal
45

Section 38 (2)
Section 38 (3)
 An insurer may, accept 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 policyholder or
in public interest or is for the
purpose of trading of insurance
policy
 The insurer shall, before refusing to
act upon endorsement, record in
writing the reasons for such refusal
and communicate the same to the
policyholder not later than 30 days
from the date of the policyholder
giving notice of such transfer or 46

Section 39(7) Subject to 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 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 policy,
having regard to the nature of his title
to the policy, could not have
conferred any such beneficial title on
the nominee.
47

Section 39(8) Subject as aforesaid, where the nominee, or
if there are more nominees than one, a
nominee or nominees, to whom subsection
(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 secured
by the policy as represents
the share of the nominee or nominees so
dying shall be payable to the heirs or legal
representatives of the nominee or
nominees or the holder of a succession
certificate,
and they shall be beneficially entitled to
48

Section 39(9) Nothing in subsections (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
The provisions of subsection (7) and (8)
shall apply to all policies of life insurance
maturing for payment after the
commencement of Insurance Laws
(Amendment) Ordinance, 2014
Where a policyholder 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 policy49

Section 40 (3) Prohibition of payment by way of
commission or otherwise for
procuring business
Without prejudice to the provisions
of Section 102 in respect of a
contravention of any of the provisions
of preceding subsections or the
regulations framed in this regard, by
an insurer, or insurance agent or
intermediary or insurance
intermediary who contravenes the
said provisions
shall be liable to penalty which may
extend to Rs. 1 Lac. 50

…Contd (Insertion of new clause)
Section 42 (2)
42 (3) (g)
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 the 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
That he has not passed such
examination as maybe specified by the
regulations
51

Section 42A (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 multilevel marketing scheme
The Authority may, through an officer
authorized in this behalf, make a complaint
to the appropriate police authorities
relating to the entity or persons involved in
the multilevel marketing scheme
Explanation – For the purpose of this section
“multilevel marketing scheme” means any
scheme or programme or arrangement or
plan for the purpose of soliciting or
procuring insurance business through
persons not authorized for the said purpose
with or without consideration and includes
enrollment of persons into a multilevel chain
for the said purpose either directly or
indirectly 52

Section 43 (2) Record of insurance agents
Record prepared by the insurer under
subsection (1), shall be maintained as
long as the insurer agent is in service
and for a period of 5 years after the
cessation of appointment
53

Section 45 (3) Nothwithstanding anything
contained in subsection (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
54

Section 45 (4) A policy of life insurance shall be called
in question at anytime within 3 years
from the date of issuance of the policy
or
the date of commencement of the risk
or
the date of revival of the policy or
the date of 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 which55

Section 48A Provided further that the Authority
may permit an agent or intermediary
or insurance intermediary
to be on Board of an insurance
company subject to such conditions
or restrictions as it may impose to
protect the interests of policy-holders
or to avoid conflict of interest
56

…Contd (Insertion of new Section)
Section 64VA 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 50% of the amount of
minimum capital as stated under section
6 and arrived at in the manner specified
in the regulations
57

…Contd (Insertion of New sections)
Section 110HA
Section 114(2)(aaa)
Any penalty imposed by the
Authority under this Act shall be
recoverable as an arrear of land
revenue
The manner of ownership and
control of Indian Insurance
Company under sub-clause (b) of
Clause 7A of Section 2
58

Section 114(la)
Section 114(lb)
The manner of inquiry under sub-
section (l) of section 105C
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
59

Section 114A(2)(da)
Section 114(2)(daa)
Section 114A(2)(db)
Such minimum annuity and other
benefits to be secured by the
insurer under section 4
Determination of preliminary
expenses that may be excluded for
calculation of the stipulated paid-
up equity capital for the insurers
Such equity capital and such forms
of capital including hybrid capital
required under subsection (1) of
section 6A
60

Section 114A(2)(ea)
Section 114A(2)(ga)
Section 114A(2)(gb)
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
Maintenance of records of policies
and claims under clause (c) of sub-
section (1) of section 14
Manner and form of issuance of
policies in electronic form under
sub-section (2) of section 14
61

Section 114A(2)(ja)
Section 114A(2)(jb)
Section 114A(2)(jc)
The form in which balance sheets in
respect of insurance business of each
of the insurers concerned and the
manner in which actuarial reports
and abstracts in respect of life
insurance business are to be prepared
under clauses (b) and (c) of sub-
section (3) of section 35
The manner of assessment of
compensation under the proviso to
sub-section (4A) of section 37A
The fee to be charged by the insurer
62

Section 114A(2)(jd)
Section 114A(2)(je)
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
The manner and form of expenses of
management under sections 40B and
40C
63

Section 114A(2)
(zab)
Section 114A(2)
(zac)
Section 114A(2)
(zba)
The form, time, manner including
authentication of the return giving
details of solvency margin under sub-
section (9) of section 64VA
The manner of opening and closing
places of business under section 64VC
The norms for surrender value of life
insurance policy under sub-section (1)
of section 113
64

Section 10B of
General Insurance
Business
(Nationalisation)
Act, 1972
The General Insurance Corporation
and the insurance companies
specified in section 10A may, raise
their capital for increasing their
business in rural and social sectors, to
meet solvency margin and such
purposes, as the Central Government
may empower in this behalf.
Provided that the shareholding of
Central Government shall not be less
than 51% at any time
65

OMITTED SECTIONS
Section 2 Clause 5A
Section 2 Clause 8
Section 2 Clause 12
Section 2 Clause 13
Section 2 Clause 15
Section 2 Clause 17
Section 3 sub sec 2D
Definition of Chief Agent
Definition of Insurance Company
Definition of “Manager” and
“officer”
Definition of “Managing Agent”
Definition of “principal agent”
Definition of “special agent”
The decision of the Central
Government on such appeal shall
be final and shall not be
questioned before any Court
66

…Contd (Omitted Sections) – Section 6A
Sub section 3
Sub section 6
No public company which carries on life insurance business shall issue any shares other
than ordinary shares of nature specified in sub section (I)
If the total paid up holding of any person in the shares of a company referred to in‑
sub section 2.5% of its paid--up capital where that person is a banking company or an‑
investment company, or 5% of its paid up capital in any other case, he shall not be‑
entitled to any vote as a shareholder of the company in respect of such excess holding of
shares.
Where the total paid up holding of any person in the shares of a company referred to‑
sub section (1) on the date of the commencement of the Insurance (Amendment) Act,‑
1950 (47 of 1950), exceeds five per cent of its paid up capital where that person is a‑
banking company or an investment company, or ten per cent of its paid up capital in any‑
other case, he shall dispose of the excess holding of shares within three years from such
commencement or such further period not exceeding two years as may be allowed to him
by the Central Government.
If, after the expiry of three years or of such further period as may be allowed to any
person under sub section (7), the total paid up holding of any such person has not been‑
reduced to the limits specified in that sub-section, any shares in excess of the limits
specified in that sub section shall vest in the Administrator General of the State in which‑ ‑
the registered office of the company concerned is situate and the Administrator General‑
shall take such steps as may be necessary for taking charge of any property which has so
vested in him and shall dispose of the said shares and the proceeds thereof in such
manner as may be prescribed
Subject to the other provisions contained in this section, but notwithstanding anything
contained in the Indian Companies Act, 1913 (7 of 1913), or in the memorandum or articles
of association of any such company as is referred to in sub section (1), no such company‑
shall refuse to register the transfer of any shares where the transfer is for the purpose of
securing compliance with the provisions of sub sections (7) and (8).‑
The Central Government may, subject to such restrictions as it may think fit to impose,
exempt from the operation of sub sections (6), (7) and (8) any insurance company, in any‑
case where the total paid up holding of such insurance company in the shares of any‑
other insurance company exceeds the limits specified in the said sub sections, if the other‑
insurance company is or is to be made a subsidiary company of the insurance company.67

…Contd (Omitted Sections)
Section 6A subsection 7,
Section 6A subsection 10
 (7) Where the total paid up holding of any person in the shares of a‑
company referred to sub section (1) on the date of the commencement of‑
the Insurance (Amendment) Act, 1950 (47 of 1950), exceeds five per cent of
its paid up capital where that person is a banking company or an‑
investment company, or ten per cent of its paid up capital in any other‑
case, he shall dispose of the excess holding of shares within three years
from such commencement or such further period not exceeding two years
as may be allowed to him by the Central Government.
 (8) If, after the expiry of three years or of such further period as may be
allowed to any person under sub section (7), the total paid up holding of‑
any such person has not been reduced to the limits specified in that sub-
section, any shares in excess of the limits specified in that sub section shall‑
vest in the Administrator General of the State in which the registered‑
office of the company concerned is situate and the Administrator General‑
shall take such steps as may be necessary for taking charge of any property
which has so vested in him and shall dispose of the said shares and the
proceeds thereof in such manner as may be prescribed.
 (9) Subject to the other provisions contained in this section, but
notwithstanding anything contained in the Indian Companies Act, 1913 (7
of 1913), or in the memorandum or articles of association of any such
company as is referred to in sub section (1), no such company shall refuse‑
to register the transfer of any shares where the transfer is for the purpose
of securing compliance with the provisions of sub sections (7) and (8).‑
 (10) The Central Government may, subject to such restrictions as it may
think fit to impose, exempt from the operation of sub sections (6), (7) and‑
(8) any insurance company, in any case where the total paid up holding of‑
such insurance company in the shares of any other insurance company
exceeds the limits specified in the said sub sections, if the other insurance‑
company is or is to be made a subsidiary company of the insurance
company.
68

…Cont (Omitted Sections)
Section 6AA
Section 6B
Subsection 4
Section 6C
Section 7
Manner of divesting excess
shareholding by promoter in
certain cases
The provisions of this section shall,
on and from the commencement of
the Insurance (Amendment) Act,
1968, also apply to insurers carrying
on general insurance business.
Conversion of company limited by
shares into company limited by
guarantee
Deposits
69

…Contd (Omitted Sections) Section 8
 Section 9
 Section 16
 Section 17
 Section 17A
 Section 31A clause
iii to the proviso
 Reservation of deposits
 Refund of deposit
 Returns by insurers established outside
India
 Exemption from certain provisions of
the Indian Companies Act, 1913
 This Act not to apply to preparation of
account, etc., for periods prior to this
Act coming into force
 the payment of commission, with the
approval of the Central Government
and for such period as it may
determine, to a person not being an
officer of an insurer who was, on the 1st
November, 1944, employing on behalf
of an insurer, chief agents or special
agents and continues so to do in
respect of insurance business procured
by or through him; 70

…Contd (Omitted Sections) Section 32
 Section 32 A
subsection 2 and 3
 Limitation on employment of managing agents and on the
remuneration payable to them
 (2) Where an insurer specified in sub clause (b) of Clause‑
(9) of Section 2 has a life insurance fund of more than
twenty five lakhs of rupees or insurance funds totaling‑
more than fifty lakhs of rupees, the manager, managing
director or either officer of the insurer shall be a whole
time employee of the insurer:
 Provided that the Authority may, for such period as it
thinks fit, permit the employment of any specified person
as a part time manager, managing director or other officer‑
of such insurer.
 (3) Nothing in this section, shall prevent—
 (a) the manager, managing director or other officer of a
insurer being the manager, managing director or other
officer of a subsidiary company of the insurer with the
previous approval of the Authority;
 (b) the manager, managing director or other officer of an
insurer, exclusively carrying on life insurance business
being the manager, managing director or other officer of
an insurer not carrying on life insurance business;
 (c) any officer of a branch of one insurer carrying on
general insurance business from being any officer of
a branch in the same town of another insurer
carrying on general insurance business;
 (d) an officer in the employment of an insurer for giving
professional advice;
 Explanation: In this section the expression "officer" does
not include a director.
71

Section 34G
Section 40A
Section 44
Section 47A
Section 48
Section 52H
Power of Authority to order
closure of foreign branches
Limitation of expenditure on
commission
Prohibition of cessation of
payments of commission
Claims on small life insurance
policies
Directors of insurers being
companies
Power of Central Government to
acquire undertakings of insurers in
certain cases 72

 Section 52I
 Section 52J
 Section 52K
 Section 52L
 Section 52M
 Section 52N
 Section 53
subsection 2
clause b
subclause i
 Power of Central Government to
make scheme
 Compensation to be given to the
acquired insurer
 Constitution of the Tribunal
 Tribunal to have powers of Civil
Court
 Procedure of the Tribunal
 Special provisions for the
dissolution of acquired insurers
 that the company has failed to
deposit or to keep deposited with
the Reserve Bank of India the
amounts required by Section 7 or
Section 98 73

…contd (Omitted Sections)
Section 59
Section 64A
Section 64B
Section 64I
Section 64S
Section 64T
Section 64U
Return of deposits
Incorporation of the Insurance
Association of India
Entry of names of members in
the register
Power of Executive Committee
of Life Insurance Council to
hold examinations for
Insurance agents
Power of Central Government
to remove difficulties
Power to exempt
Establishment of Tariff
Advisory Committee 74

Section 64UA
UB
UC
UD
UE
UF
Composition of the Advisory
Committee
Power to make rules in respect
of matters in this part
Power of the Advisory
Committee to regulate rates,
advantages, etc
Transitional provisions
Committee to require
Information, etc
Assets and liabilities of the
General Insurance Council to
vest in the Advisory Committee
75

Section 64UG
UH
UI
UJ
UK
UL
Contracts, etc., to be effective
by or against the Advisory
Committee
Employees, etc., to continue.—
Duty of person having custody
or control of property to deliver
such property to the Advisory
Committee
Committee to constitute
Regional Committees
Levy of fees by the Advisory
Committee.
Power to remove difficulties
76

 PART III and
IIIA of
Insurance Act
 Part IV
 Section 106A
subsection 2
clause a, b, f
 Provident Societies
 Mutual Insurance Companies and
Co operative Life Insurance‑
Societies
 an order for the attachment in
execution of a decree of any
deposit made under Section 7 or
Section 98;
 an order under Section 9 or
Section 59 for the return of any
such deposit;
 an order under Section 89
reducing the amount of the
insurance contracts of a provident
society. 77

Section 107
Section 107A
Section 110E
Section 110G
110H
Previous sanction of
Advocate General for institution‑
of proceedings
Chairman, etc. to be public
servant
Sections 3A, 27B, 28B, 33, etc. to
apply to general insurance
business of the Life Insurance
Corporation of India
Constitution of Consultative
Committee
Appeals
78

 Section 114 (2)
(aa)
 Section 114 (2) (c)
 such other percentage of paid-up
equity capital in excess of
twenty- six percent of the
paid-up equity capital and the
period within which such
excess paid-up equity capital
shall be divested under sub-section
(1) of section 6AA.
 the procedure to be followed by the
Reserve Bank of India in dealing
with deposits made in pursuance of
this Act, including the receipt of
custody of, withdrawal of, and
payment of interest on securities
lodged as such deposits, and their
inspection and verification by the
Authority
79

Section 114 (2) (f)
Section 114A(e)
Section 114A(k)
the matters to be prescribed for
the purposes of section 48;
the manner and procedure for
divesting excess share capital
under sub-section 2 section 6AA
the manner for making an
application, the manner and the
fee for issue of a licence to act as
an insurance agent, under sub-
section (1) of section, 42;
80

 Clause l
 Clause n
 Clause p
 Clause w
 the fee and the additional fee to be
determined for renewal of licence of
insurance agent under sub-section
(3) of section 42;
 the passing of examination to act as
an insurance agent under clause (f)
of sub-section (4) of section 42
 the fee not exceeding rupees fifty for
issue of duplicate licence under sub-
section (6) of section 42;
 The matters relating to relating to
licensing of surveyors and loss
assessors, their duties,
responsibilities and other
professional requirements under
section 64UM;
81

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