Section 2 of The Insurance Act

Here we will see Section 2 of The Insurance Act.

Definitions.— In this Act, unless there is anything repugnant in the subject or context,—

(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);

(2) “policy–holder” includes a person to whom the whole of the interest of the policy–holder in the policy is assigned once and for all, but does not include an assignee thereof whose interest in the policy is defeasible or is for the time being subject to any condition ;

(3) “approved securities” means—

(i) Government securities and other securities charged on the revenues of the Central Government or of the Government of a State or guaranteed fully as regards principal and interest by the Central Government, or the Government of any State ;

(ii) debentures or other securities for money issued under the authority of any Central Act or Act of a State Legislature by or on behalf of a port trust or municipal corporation or city improvement trust in any presidency–town ;

(iii) shares of a corporation established by law and guaranteed fully by the Central Government or the Government of a State as to the repayment of the principal and the payment of dividend ;

(iv) securities issued or guaranteed fully as regards principal and interest by the Government of any Part B State and specified as approved securities for the purposes of this Act by the Central Government by notification in the Official Gazette ; and

***** Sub–clause (v) omitted by Act 42 of 2002, s. 2 (w.e.f. 23–9–2002).

Provided that securities or debentures specified in item (v) shall be recognished as approved securities only for such purposes and for such period and subject to such conditions as may be prescribed ;

Explanation. — In sub–clauses (i) and (iii), “Government of a State” in relation to any period before the 1st November, 1956, means the Government of a Part A State.

(4) “auditor” means a person qualified under the Chartered Accountants Act, 1949 (38 of 1949), to act as an auditor of companies;

(4A) “banking company”and “company” shall have the meanings respectively assigned to them in clauses (c) and (d) of sub–section (1) of section 5 of the Banking Companies Act, 1949 (10 of 1949);

(5) “certified” in relation to any copy or translation of a document required to be furnished by or on behalf of 7[an insurer or a provident society as defined in Part III] means certified by a principal officer of 8[such insurer or provident society] to be a true copy or a correct translation, as the case may be;

***** Clause (5A) omitted by Act 5 of 2015, s. 3 (w.e.f. 26–12–2014).

(5B) “Controller of Insurance” means the officer appointed by the Central Government under section 2B to exercise all the powers, discharge the functions and perform the duties of the Authority under this Act or the Life Insurance Corporation Act, 1956 (31 of 1956) or the General Insurance Business (Nationalisation) Act, 1972(57 of 1972) or the Insurance Regulatory and Development Authority Act,1999 (41 of 1999);

(6) “Court” means the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction;

(6A) “fire insurance business” means the business of effecting, otherwise than incidentally to some other class of insurance business, contracts of insurance against loss by or incidental to fire or other occurrence customarily included among the risks insured against in fire insurance policies;

(6B) “general insurance business” means fire, marine or miscellaneous insurance business, whether carried on singly or in combination with one or more of them;

(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;

(7) “Government security” means a Government security as defined in the Public Debt Act, 1944 (18 of 1944);

(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) Act, 2015 (5 of 2015);

(b) in which the aggregate holdings 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;

***** Clause (8) omitted by s. 3, ibid.(w.e.f. 26–12–2014).

(8A) “insurance co–operative society” means any insurer being a co–operative society, —

(a) which is registered on or after the commencement of the Insurance (Amendment) Act, 2002 (42 of 2002), as a co–operative society under the Co–operative Societies Act, 1912 (2 of 1912) or under any other law for the time being in force in any State relating to Co–operative Societies or under the Multi–State Co–operative Societies Act, 1984 (51 of 1984);

(b) having a minimum paid–up capital of rupees one hundred crore in case of life insurance business, general insurance business and health insurance business;

(c) in which no body corporate, whether incorporated or not, formed or registered outside India, either by itself or through its subsidiaries or nominees, at any time, holds more than twenty–six per cent of the capital of such Co–operative Society;

(d) whose sole purpose is to carry on life insurance business or general insurance business or health insurance business in India;

(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 orincorporated 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;

(10) “insurance agent” means an insurance agent who receives or agrees to receive payment by way of commission or other remuneration in consideration ofhis soliciting or procuring insurance business including business relating to the continuance, renewal or revival of policies of insurance;

(10A) “investment company” means a company whose principal business is the acquisition of shares, stocks, debentures or other securities ;

(10B) “intermediary or insurance intermediary” shall have the meaning assigned to it in clause (f) of sub–section (1) of section 2 of the Insurance Regulatory and Development AuthorityAct, 1999 (41 of 1999);

(11) “life insurance business”means the business of effecting contracts of insurance upon human life, including any contract whereby the payment of money is assured on death (except death by accident only) or the happening of any contingency dependent on human life, and any contract which is subject to payment of premiums for a term dependent on human life and shall be deemed to include—

(a) the granting of disability and double or triple indemnity accident benefits, if so provided in the contract of insurance,

(b) the granting of annuities upon human life ; and

(c)the granting of superannuation allowances and benefit payable out of any fund applicable solely to the relief and maintenance of persons engaged or who have been engaged in any particular profession, trade or employment or of the dependents of such persons ;

Explanation.— For the removal of doubts, it is hereby declared that “life insurance business” shall include any unit linked insurance policy or scrips or any such instrument or unit, by whatever name called, which provides a component of investment and a component of insurance issued by an insurer referred to in clause (9) of this section.

***** Clause (12) omitted by Act 5 of 2015, s. 3 (w.e.f. 26–12–2014).4.

***** Clause (13) omitted by s. 3, ibid.(w.e.f. 26–12–2014).

(13A) “marine insurance business” means the business of effecting contracts of insurance upon vessels of any description, including cargoes, freights and other interests which may be legally insured, in or in relation to such vessels, cargoes and freights, goods, wares, merchandise and property of whatever description insured for any transit by land or water, or both, and whether or not including warehouse risks or similar risks in addition,or as incidental to such transit, and includes any other risks customarily included among the risks insured against in marine insurance policies ;

(13B) “miscellaneous insurance business” means the business of effecting contracts of insurance which is not principally or wholly of any kind or kinds included in clauses (6A), (11) and (13A);

(13BA) “National Company Law Tribunal” means the National Company Law Tribunal constituted under section 10FB of the Companies Act, 1956 (1 of 1956);

(13BB) “the National Company Law Appellate Tribunal” means the National Company Law Appellate Tribunal constituted under sub–section (1) of section 10FR of the Companies Act, 1956 (1 of 1956);

(14) “prescribed” means prescribed by rules made under this Act; and

****** Clause (14A) omitted by Act62 of 1956, s. 2 and the Schedule (w.e.f. 1–11–1956).9.

****** Clause (15) omitted by Act 5 of 2015, s. 3 (w.e.f. 26–12–2014).

(16) “private company”and “public company” have the meanings respectively assigned to them in clause (68) and clause (72) of section 2 of the Companies Act, 2013 (18 of 2013);

(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);

***** Clause (17) omitted by s. 3, ibid.(w.e.f. 26–12–2014).

2A. Interpretation of certain words and expressions. —Words and expressions used and not defined in this Act but defined in the Life Insurance Corporation Act, 1956 (31 of 1956), the General Insurance Business (Nationalisation) Act, 1972 (57 of 1972) and the Insurance Regulatory and Development Authority Act, 1999 shall have the meanings respectively assigned to them in those Acts.

2B. Appointment of Controller of Insurance. —

(1) If at any time, the Authority is superseded under sub–section (1) of section 19 of the Insurance Regulatory and Development Authority Act, 1999, the Central Government may, by notification in the Official Gazette, appoint a person to be the Controller of Insurance till such time the Authority is reconstituted under sub–section (3) of section 19 of that Act.

(2) In making any appointment under this section, the Central Government shall have due regard to the following considerations, namely, whether the person to be appointed has had experience in industrial, commercial or insurance matters and whether such person has actuarial qualifications.

2C. Prohibition of transaction of insurance business by certain persons.—

(1) Save as hereinafter provided, no person shall, after the commencement of the Insurance (Amendment) Act, 1950 (47 of 1950), begin to carry on any class of insurance business in India and no insurer carrying on any class of insurance business in India shall after the expiry of one year from such commencement, continue to carry on any such business unless he is—

(a) a public company, or

(b) a society registered under the Co–operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State relating to co–operative societies, or

(c) a body corporate incorporated under the law of any country outside India not being of the nature of a private company :

Provided that the Central Government may, by notification in the Official Gazette, exempt from the operation of this section to such extent for such period and subject to such conditions as it may specify, any person or insurer for the purpose of carrying on the business of granting superannuation allowances and annuities of the nature specified in sub–clause (c) of clause (11) of section 2 or for the purpose of carrying on any general insurance business :

Provided further that in the case of an insurer carrying on any general insurance business no such notification shall be issued having effect for more than three year at any one time.

Provided also that no insurer other than an Indian insurance company shall begin to carry on any class of insurance business in India under this Act on or after the commencement of the Insurance Regulatory and Development Authority Act,1999(41 of 1999).

Provided also an insurer, being an Indian Insurance Company, insurance co–operative society or, a body corporate referred to in clause (c) of this sub–section carrying on the business of insurance, may carry on any business of insurance in any Special Economic Zone as defined in clause (za) of section 2 of the Special Economic Zones Act, 2005(28 of 2005).

(2) Every notification issued under sub–section (1) shall be laid before Parliament as soon as may be after it is issued.

(3) Notwithstanding anything contained in sub–section (1), an insurance co–operative society may carry on any class of insurance business in India under this Act on or after the commencement of the Insurance (Amendment) Act, 2002(42 of 2002).

2CA. Power of Central Government to apply provisions of this Act to Special Economic Zones.— The Central Government may, by notification, direct that any of the provisions of this Act,—

(a) shall not apply to insurer, being an Indian Insurance Company, insurance co–operative society or a body corporate referred to in clause (c) of sub–section (1) of section 2C, carrying on the business of insurance, in any Special Economic Zone as defined in clause (za) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005); or

(b) shall apply to any insurer, being an Indian Insurance Company, insurance co–operative society or a body corporate referred to in clause (c) of sub–section (1) of section 2C, carrying on the business of insurance, in any Special Economic Zone as defined in clause (za) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005) only with such exceptions, modifications and adaptations as may be specified in the notification.

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.

2D. Insurers to be subject to this Act while liabilities remainun satisfied.— Every insurer shall be subject to all the provisions of this Act in relation to any class of insurance business so long as his liabilities in India in respect of business of that class remain unsatisfied or not otherwise provided for.

2E. This Act not to apply to certain insurers, ceasing to enter into new contracts before commencement of Act.— Omitted by the Insurance Laws (Amendment) Act, 2015 (5 of2015), s.5(w.e.f. 26–12–2014).