The Insurance Act, 1938

The Insurance Act Content

PART I

PRELIMINARY

SECTIONS
1. Short title, extent and commencement.
2. Definitions.
2A. Interpretation of certain words and expressions.
2B. Appointment of Controller of Insurance.

PART II

PROVISIONS APPLICABLE TO INSURERS
2C. Prohibition of transaction of insurance business by certain persons.
2CA. Power of Central Government to apply provisions of this Act to Special Economic Zones.
2CB. Properties in India not to be insured with foreign insurers except with the permission of Authority
2D. Insurers to be subject to this Act while liabilities remain unsatisfied.
2E. [Omitted.]
3. Registration.
3A. Payment of annual fee by insurer
3B. Certification of soundness of terms of life insurance business.
4. Minimum limits for annuities and other benefits secured by policies of life insurance.
5. Restriction on name of insurer.
6. Requirements as to capital.
6A. Requirements as to capital structure and voting rights and maintenance of registers beneficial owners of shares.
6AA. [Omitted.]
6B. Provision for securing compliance with requirements relating to capital structure.
6C. [Omitted.]
7. [Omitted.]
8. [Omitted.]
* Subject to verification and confirmation by the administrative ministry.
9. [Omitted.]
10. Separation of accounts and funds.
11. Accounts and balance-sheet.
12. Audit.
13. Actuarial report and abstract.
14. Record of policies and claims.
15. Submission of returns.
16. [Omitted.]
17. [Omitted.]
17A. [Omitted.]
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. [Omitted.]
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. Provisions regarding investments of assets of insurer carrying general insurance business.
27C. Investment by insurer in certain cases.
27D. Manner and conditions of investment.
27E. Prohibition for investment of funds outside India.
28. Statement and return of investment of assets.
29. Prohibition of loans.
30. Liability of directors, etc., for loss due to contravention of section 27, 27A, 27B, 27C,
27D or section 29
31. Assets of insurer how to be kept.
31A. Provisions relating to managers, etc.
31B. Power to restrict payment of excessive remuneration.
32. [Omitted.]
32A. Prohibition of common officers and requirement as to whole-time officers.
32B. Insurance business in rural and social sectors.
32C. Obligations of insurer in respect of rural or unorganised sector and backward classes.
32D. Obligation of insurer in respect of insurance business in third party risks of motor vehicles.

INVESTIGATION
33. Power of investigation and inspection by Authority.

APPOINTMENT OF STAFF
33. Power of investigation.

POWER TO ISSUE DIRECTIONS
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 Controller.
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.
34E. 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.
36. Sanction of amalgamation and transfer by Controller.
37. Statements required after amalgamation and transfer.
37A. Power of Authority to prepare Scheme of Amalgamation

ASSGNMENT OR TRANSFER OF POLICIES AND NOMINATIONS
38. Assignment and transfer of insurance policies.
39. Nomination by policy-holder.

COMMISSION AND REBATES AND LICENSING OF AGENTS
40. Prohibition of payment by way of commission or otherwise for procuring business.
40A. [Omitted.]
40B. Limitation of expenses of management in life insurance business.
40C. Limitation of expenses of management in general insurance business.
41. Prohibition of rebates.
42. Appointment of insurance agents.
42A. Prohibition of insurance business through principal agent, special agent and multilevel marketing.
42D. Issue of registration to intermediary or insurance intermediary.
42E. Commission, brokerage or fee payable to intermediary or insurance intermediary.
43. Register of insurance agents.
44. [Omitted.]
44A. Power to call for information.

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.
47. Payment of money into Court.
47A. [Omitted.]
48. [Omitted.]
48A. Insurance agent or intermediary or insurance intermediary not to be director in insurance company.
48B. Further provision regarding directors.
48C. [Omitted.]
49. Restriction On dividends and bonuses.
50. Notice of options available to the assured on the lapsing of a policy.
51. Supply of copies of proposals and medical reports.
52. Prohibition of business of dividing principle.

MANAGEMENT BY ADMINISTRATOR
52A. When Administrator for management of insurance business may be appointed.
52B. Powers and duties of the Administrator.
52BB. Powers of Administrator respecting property liable to attachment under section 106.
52C. Cancellation of contracts and agreements.
52D. Termination of appointment of Administrator.
52E. Finality of decision appointing Administrator.
52F. Penalty for withholding documents or property from Administrator.
52G. Protection of action taken under sections 52A to 52D.

ACQUISITION OF THE UNDERTAKINGS OF INSURERS IN CERTAIN CASES
52H. [Omitted.]
52-I. [Omitted.]
52J. [Omitted.]
52K. [Omitted.]
52L. [Omitted.]
52M. [Omitted.]
52N. [Omitted.]

WINDING UP
53. Winding up by the Court.
53A. Unpaid-up share capital.
54. Voluntary 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. Schemes for partial winding up of insurance companies.
59. [Omitted.]
60. Notice of policy values.
61. Power of Court 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 IIA

INSURANCE ASSOCIATION OF INDIA, COUNCILS OF THE ASSOCIATIONA AND COMMITTEES THEREOF
64A. [Omitted.]
64B. [Omitted.]
64C. Councils of Life Insurance and General Insurance.
64D. Authorisation to represent in Councils.
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-I. [Omitted.]
64J. Functions of Executive Committee of Life Insurance Council.
64K. Executive Committee of Life Insurance Council may advise in controlling expenses.
64L. Functions of Executive Committee of General Insurance Council.
64M. Executive Committee of General Insurance Council may advise in controlling expenses.
64N. Power of the Executive Committees to act together in certain cases.
64-O. [Omitted.]
64P. [Omitted.]
64Q. [Omitted.]
64R. General power of Life Insurance Council and General Insurance Council.
64S. [Omitted.]
64T. [Omitted.]

PART IIB

TARIFF ADVISORY COMMITTEE AND CONTROL OF TARIFF RATES
64U. Establishment of Tariff Advisory Committee.
64UA. Composition of the Advisory Committee.
64UB. 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 require information, 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 of remove difficulties.
64ULA. Transitional provisions.
64UM. Licensing of surveyors and loss assessors.

PART IIC

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.

[Omitted.]
65. [Omitted.]
65A. [Omitted.]
66. [Omitted.]
67. [Omitted.]
68. [Omitted.]
69. [Omitted.]
70. [Omitted.]
70A. [Omitted.]
70B. [Omitted.]
71. [Omitted.]
72. [Omitted.]
73. [Omitted.]
73A. [Omitted.]
74. [Omitted.]
75. [Omitted.]
76. [Omitted.]
77. [Omitted.]
78. [Omitted.]
79. [Omitted.]
80. [Omitted.]
81. [Omitted.]
82. [Omitted.]
83. [Omitted.]
84. [Omitted.]
85. [Omitted.]
86. [Omitted.]
87. [Omitted.]
87A. [Omitted.]
88. [Omitted.]
89. [Omitted.]
90. [Omitted.]
90A. [Omitted.]
91. [Omitted.]
92. [Omitted.]
93. [Omitted.]
94. [Omitted.]

[Omitted.]
95. [Omitted.]
96. [Omitted.]
97. [Omitted.]
98. [Omitted.]
98A. [Omitted.]
99. [Omitted.]
100. [Omitted.]
101. [Omitted.]

PART IVA

RE-INSURANCE
101A. Re-insurance with Indian re-insurers.
101B. Advisory Committee.
101C. Examination of re-insurance treaties.

PART V

MISCELLANEOUS
102. Penalty for default in complying with, or act in contravention of this Act.
103. Penalty for carrying on insurance business in contravention of sections 3.
104. Penalty for contravention of sections 27, 27A, 27B, 27D and 27E.
105. Wrongfully obtaining or withholding property.
105A. Offences by companies.
105B. Penalty for failure to comply with sections 32B, 32C and 32D.
105C. Power to adjudicate.
105D. Factors to be taken into account by the adjudicating officer.
106. Power of Court to order restoration of property of insurer or compensation in certain cases.
106A. Notice to and hearing of Authority.
107. [Omitted.]
107A. Chairman, etc., to be public servants.
108. Power of Court to grant relief.
109. Cognizance of offences.
110. Appeal to Securities Appellate Tribunal.
110A. Delegation of powers and duties of Chairperson of the Authority.
110B. Signature of documents.
110C. Power to call for information.
110D. Certain claims for compensation barred.
110E. [Omitted.]
110F. Provisions applicable to state Governments, etc.
110G. [Omitted.]
110H. [Omitted.]
110HA. Penalty to be recoverable as arrear of land revenue.
111. Service of notices.
112. Declaration of interium bonuses.
113. Acquisition of surrender value by policy.
114. Power of Central Government to make rules.
114A. Power of Authority to make regulations.
115. Alteration of forms.
116. Power to exempt from certain requirements.
116A. Summary of returns to be published.
117. Saving of provisions of Indian Companies Act, 1913.
118. Exemptions.
119. Inspection and supply of copies of published prospectus, etc.
120. Determination of market value of securities deposited under this Act.
121. [Repealed.]
122. [Repealed.]
123. [Repealed.]
THE FIRST SCHEDULE.—[Omitted.]
THE SECOND SCHEDULE.—[Omitted.]
THE THIRD SCHEDULE.— [Omitted.]
THE FOURTH SCHEDULE.— [Omitted.]
THE FIFTH SCHEDULE.— [Omitted.]
THE SIXTH SCHEDULE.—
PART A. — TERMS DEEMED TO BE INCLUDED IN EVERY CONTRACT BETWEEN AN INSURER CARRYING ON GENERAL INSURANCE BUSINESS AND A PRINCIPAL AGENT.
PART B. —TERMS DEEMED TO BE INCLUDED IN EVERY CONTRACT BETWEEN AN INSURER CARRYING ON LIFE INSURANCE BUSINESS AND A CHIEF AGENT.
PART C. —TERMS DEEMED TO BE INCLUDED INEVERY CONTRACT BETWEEN AN INSURER CARRYING ON LIFE INSURANCE BUSINESS AND A SPECIAL AGENT OR BETWEEN A CHIEF AGENT AND A SPECIAL AGENT.

THE SEVENTH SCHEDULE. —RULE AS TO THE VALUATION OF THE LIABILITIES OF AN INSURER IN INSOLVENCY OR LIQUIDATION.
THE EIGHTH SCHEDULE. —PRINCIPLES OF COMPENSATION