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INSURANCE ACT

Ministry of Law and Justice

Act nº 4 of 1938


  • Part I
  • Part II
  • Part IIA. Insurance Association of India, Councils of the Association and Committees Thereof
  • Part IIB. Tariff Advisory Committee and Control of Tariff Rates
  • Part IIC. Solvency Margin, Advance Payment of Premium and Restrictions on the Opening of a New Place of Business
  • Part III
  • Part IIIA. Insurance Co-Operative Societies
  • Part IV
  • Part IVA. Re-Insurance
  • Part V
  • Schedules
  • Amending Acts
  • Act nº 4 of 1938

Preamble

THE INSURANCE ACT, 19381

[Act, No. 4 of 1938]

[26th February, 1938]

PREAMBLE

An Act to consolidate and amend the law relating to the business of insurance.

WHEREAS it is expedient to consolidate and amend the law relating to the business of insurance; it is hereby enacted as follows: --

1. The Act has been extended to--

Goa, Daman and Diu with modifications by Reg. 12 of 1962, section 3 and Schedule; and came into force in Pondicherry on 1-10-1963, vide Reg. 7 of 1963, section 3 and Schedule I; and brought into force in Dadra and Nagar Haveli (w.e.f. 1-7-1965) by Reg. 6 of 1963, section 2 and Schedule I; the whole of the Union Territory of Lakshadweep (w.e.f. 1-10-1967) vide Reg. 8 of 1965, section 3 and Schedule; and brought into force in the State of Sikkim (w.e.f. 1-7-1975) vide S.O. 274 (e), dated 24-6-1975.


Part I

Section 1. Short title, extent and commencement

( 1 ) This Act may be called the Insurance Act, 1938 .

1[( 2 ) It extends to the whole of India2[ * * * ].]

( 3 ) It shall come into force on such date3as the Central Government may, by notification in the Official Gazette, appoint in this behalf.

1. Substituted by Act 47 of 1950, section 2, for sub-section (2) (w.e.f. 1-6-1950).

2. The words "except the State of Jammu and Kashmir" omitted by Act 62 of 1956, section 2 and Schedule (w.e.f. 1-11-1956).

3. Came into force on 1-7-1939, vide Notification No. 589-I(4)/38, dated 1st April, 1939, published in the Gazette of India, 1939, Pt. I, p. 631.


Section 2. Definitions

In this Act, unless there is anything repugnant in the subject or context,--

(1) "actuary" means an actuary possessing such 1 [qualifications as may be specified by the regulations made by the Authority];

2 [(1A) "Authority" means the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999;]

3 [(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;]

4 [(3) "approved securities" means--

(i) Government securities and other securities charged on the revenue of the Central Government or of the Government of a 5 [* * *] State or guaranteed fully as regards principal and interest by the Central Government or the Government of any 5 [* * *] 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 5 [* * *] 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 BState and specified as approved securities for the purposes of this Act by the Central Government by notification in the Official Gazette; and

6 [***]

7 [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;]

8 [(4) "auditor" means a person qualified under the Chartered Accountants Act, 1949 (38 of 1949) to act as an auditor of companies;]

9 [(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)10 ;]

(5) "certified" in relation to any copy or translation of a document required to be furnished by or on behalf of 11 [an insurer or a provident society as defined in Part III] means certified by a principal officer of 12 [such insurer or provident society] to be a true copy or a correct translation, as the case may be;

9 [(5A) "chief agent" means a person who, not being a salaried employee of an insurer, inconsideration of any commission--

(i) performs any administrative and organising functions for the insurer, and

(ii) procures life insurance business for the insurer by employing or causing to be employed insurance agents on behalf of the insurer;

13 [(5B) "Controller of Insurance" means the officer appointed by the Central Government under section2B 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;]

(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;

9 [(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;]

14 [(7) "Government security" means a Government security as defined in the Public Debt Act,1944 (18 of 1944);]

2 [(7A) "Indian insurance company" means any insurer being a company-

(a) which is formed and registered under the Companies Act, 1956 (1 of 1956);

(b) in which the aggregate holdings of equity shares by a foreign company, either by itself or through its subsidiary companies or its nominees, do not exceed twenty-six per cent paid-up equity capital of such Indian insurance company;

(c) whose sole purpose is to carry on life insurance business or general insurance business or re-insusrance busines

Explanation.-- For the purposes of this clause, 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);]

(8) "insurance company" means any insurer being a company, association or partnership which may be wound up under 15 [the Companies Act, 1956 (1 of 1956)], or to which the Indian Partnership Act, 1932 (9 of 1932), applies;

16 [(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, 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, (excluding the deposits required to be made under section 7), of rupees one hundred crores;

(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 in India;]

(9) "insurer" means--

(a) any individual or unincorporated body of individuals or body corporate incorporated under the law of any country 17 [other than India, 18 [***]] carrying on insurance business [not being a person specified in sub-clause (c) of this clause] which--

(i) carries on that business in 19 [India], or

(ii) has his or its principal place of business or is domiciled in 19 [India], 20 [or

(iii) with the object of obtaining insurance business, employs are presentative, or maintains a place of business, in 19 [India];]

(b) any body corporate [not being a person specified in sub-clause (c) of this clause] carrying on the business of insurance, which is a body corporate incorporated under any law for the time being in force in 19 [India]; or stands to any such body corporate in the relation of a subsidiary company within the meaning of the Indian Companies Act, 1913 (7 of 1913)21, as defined by sub-section (2) of section 2 of that Act, and

(c) any person who in 19 [India] has a standing contract with underwriters who are members of the Society of Lloyd's whereby such person is authorized within the terms of such contract to issue protection notes, cover notes, or other documents granting insurance cover to others on behalf of the underwriters,

22 [but does not include a principal agent, chief agent, special agent, or an insurance agent] or a provident society 23 [as defined in Part III];

(10) "insurance agent" means an insurance agent licensed under section 42 24 [* * *] who receives or agrees to receive payment by way of commission or other remuneration in consideration of his soliciting or procuring insurance business 9 [including business relating to the continuance, renewal or revival of policies of insurance];

9 [(10A) "investment company" means a company whose principal business is the acquisition of shares, stocks, debentures or other securities;]

16 [(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 Authority Act, 1999 (41 of 1999);]

25 [(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 annuities 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;]

(12) "manager" and "office" have the meanings assigned to those expressions in clauses (9) and (11) respectively of section 2 of the Indian Companies Act, 1913 (7 of 1913)26 ;

(13) "managing agent" means a person, firm or company entitled to the management of the whole affairs of a company by virtue of an agreement with the company, and under the control and direction of the directors except to the extent, if any, otherwise provided for in the agreement, and includes any person, firm or company occupying such position by whatever name called.

Explanation.--If a person occupying the position of managing agent calls himself manager or managing director, he shall nevertheless be regarded as managing agent for the purposes of section 32 of this Act;

9 [(13A) "marine insurance business" means the business of effecting contracts of insurance upon vessels of any description, including cargoes, freights and other interest 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);]

27 [(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 28 [this Act]; and

29 [* * *]

30 [(15) "principal agent" means a person who, not being a salaried employee of an insurer, in consideration of any commission,--

(i) performs any administrative and organising functions for the insurer, and

(ii) procures general insurance business whether wholly or in part by employing or causing to be employed insurance agents on behalf of the insurer;]

(16) "private company" and "public company" have the meanings respectively assigned to them in clauses (13) and (13A) of section 2 of the Indian Companies Act, 1913 (7 of 1913);26

(17) "special agent" means a person who, not being a salaried employee of an insurer, in consideration of any commission, procures life insurance business for the insurer whether wholly or in part by employing or causing to be employed insurance agents on behalf of the insurer, but does not include a chief agent.

1. Substituted by Act 42 of 2002, section 2, for "qualification as may be prescribed" (w.e.f. 23-9-2002).

2. Inserted by Act 41 of 1999, section 30 and Schedule I (w.e.f. 19-4-2000).

3. Substituted by Act 6 of 1946, section 2, for clause (2) (w.e.f. 20-3-1946).

4. Substituted by Act 47 of 1950, section 3, for clause (3) (w.e.f. 1-6-1950).

5. The words "Part A" omitted by the Adaptation of Laws (No. 3) Order, 1956.

6. Sub-clause (v) omitted by Act 42 of 2002, section 2 (w.e.f. 23-9-2002).

7. Added by the Adaptation of Laws (No. 3) Order, 1956.

8. Substituted by Act 47 of 1950, section 3, clause (4) (w.e.f. 1-6-1950).

9. Inserted by Act 47 of 1950, section 3 (w.e.f. 1-6-1950).

10. Now renamed as Banking Regulation Act, 1949 (10 of 1949).

11. Substituted by Act 13 of 1941, section 2, for "an insurer" (w.e.f. 8-4-1941).

12. Substituted by Act 13 of 1941, section 2, for "the insurer" (w.e.f. 8-4-1941).

13. Clause (5B) inserted by Act 47 of 1950, Section 3 (w.e.f. 1-6-1950) and Substituted by Act 41 of 1999, section 30 and Schedule I (w.e.f. 19-4-2000).

14. Substituted by Act 47 of 1950, section 3, for clause (7) (w.e.f. 1-6-1950).

15. Substituted by the Companies (Second Amendment) Act, 2002, section 133 and Schedule, for "the Indian Companies Act, 1913 (7 of 1913)".

16. Inserted by Act 42 of 2002, section 2 (w.e.f. 23-9-2002).

17. Substituted by the A.O. 1950, for "or State outside the Provinces of India".

18. The words "or of any Part BState" omitted by Act 47 of 1950, Section 3 (w.e.f. 1-6-1950).

19. Substituted by Act 62 of 1956, Section 2 and Schedule, for "the States" (w.e.f. 1-11-1956).

20. Insert by Act 11 of 1939, section 2.

21. The relevant provisions of the Companies Act, 1956 (1 of 1956) to be referred to.

22. Substituted by Act 47 of 1950, section 3, for "but does not include an insurance agent licensed under section 42" (w.e.f. 1-6-1950).

23. Substituted by Act 13 of 1941, section 2, for "to which the provisions of Part III apply" (w.e.f. 8-4-1941).

24. The words "being an individual" omitted by Act 35 of 1957, Section 2 (w.e.f. 1-9-1957).

25. Substituted by Act 47 of 1950, section 3, for clause (11) (w.e.f. 1-6-1950).

26. See now the Companies Act, 1956 (1 of 1956).

27. Inserted by the Companies (Second Amendment) Act, 2002, section 133 and Schedule.

28. Substituted by Act 41 of 1999, section 30 and Schedule I, for "section 114" (w.e.f. 19-4-2000).

29. Clause (14A) inserted by the A.O. 1950 and omitted by Act 62 of 1956, section 2 and Schedule (w.e.f. 1-11-1956).

30. Substituted by Act 47 of 1950, section 3, for clause (15) (w.e.f. 1-6-1950).


Section 2A. Interpretation of certain words and expressions

1[ 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.]

1. Section 2A inserted by Act 47 of 1950, section 5 (w.e.f. 1-6-1950), rep. by the Adaptation of Laws (No. 3) Order, 1956 and again inserted by Act 41 of 1999, section 30 and Schedule I (w.e.f. 19-4-2000).


Section 2B. Appointment of Controller of Insurance

1 [2B. Appointment of Controller of Insurance

2 [(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 qualification.]

1. Inserted by Act 47 of 1950, section 5 (w.e.f. 1-6-1950).

2. Substituted by Act 41 of 1999, section 30 and Schedule I, for sub-section (1) (w.e.f. 19-4-2000).


Part II

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

1 [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, begin to carry on any class of insurance business in 2 [India] and no insurer carrying on any class of insurance business in 2 [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 2 [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 years at any one time:

3 [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.]

5 [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.].

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

4 [(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.]

1. Inserted by Act 47 of 1950, section 6 (w.e.f. 1-6-1950).

2. Substituted by Act 62 of 1956, section 2 and Schedule, for "the States" (w.e.f. 1-11-1956).

3. Inserted by Act 41 of 1999, section 30 and Schedule I (w.e.f. 19-4-2000).

4. Inserted by Act 42 of 2002, section 3 and Schedule I (w.e.f. 23-9-2002).

5. Inserted by the Special Economic Zones Act, 2005, section 57 and Third Schedule, Pt. I.


Section 2CA. Power of Central Government to apply provisions of this Act to Special Economic Zones.

1[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; 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 only with such exceptions, modifications and adaptations as may be specified in the notification.].

1. Inserted by the Special Economic Zones Act, 2005, section 57 and Third Schedule, Pt. I.


Section 2D. Insurers to be subject to this Act while liabilities remain unsatisfied

1 [2D. Insurers to be subject to this Act while liabilitiesremain unsatisfied

Every insurershall be subject to all the provisions of this Act in relation to any class ofinsurance business so long as his liabilities in 2 [India] inrespect of business of that class remain unsatisfied or not otherwise providedfor.

1.Sections 2A and 2B inserted by Act 11 of 1939, section 2A, and renumbered assections 2D and 2E respectively by Act 47 of 1950, section 3 (w.e.f. 1-9-1950).

2.Substituted by Act 62 of 1956, section 2 and Schedule, for "theStates" (w.e.f. 1-11-1956).


Section 2E. This Act not to apply to certain insurers, ceasing to enter into new contracts before commencement of Act

The provisions of this Act shall not apply to an insurer as defined in paragraph (i) or (iii) of sub-clause (a) of clause (9) of section 2 in relation to any class of his insurance business where such insurer has ceased, before the commencement of this Act, to enter into any new contracts of that class of business.]

Section 3. Registration

(1) No 1 [person] shall, after the commencement of this Act, begin to carry on any class of insurance business in 2 [India] and no insurer carrying on any class of insurance business in 2 [India] shall, after the expiry of three months from the commencement of this Act, continue to carry on any such business, unless he has obtained from the 3 [Authority] a certificate of registration 4 [for the particular class of insurance business]:

5 [Provided that in case an insurer who was carrying on any class of insurance business in 2 [India] at the commencement of this Act, failure to obtain a certificate of registration in accordance with the requirements of this sub-clause shall not operate to invalidate any contract of insurance entered into by him if before 6 [such date7 as may be fixed in this behalf by the Central Government by notification in the Official Gazette] he has obtained that certificate]:

8 [Provided further that a person or insurer, as the case may be, carrying on any class of insurance business in India, on or before the commencement of the Insurance Regulatory and Development Authority Act, 1999, for which no registration certificate was necessary prior to such commencement, may continue to do so for a period of three months from such commencement or, if he had made an application for such registration within the said period of three months, till the disposal of such application:

Provided also that any certificate of registration, obtained immediately before the commencement of the Insurance Regulatory and Development Authority Act, 1999, shall be deemed to have been obtained from the Authority in accordance with the provisions of this Act.]

(2) 9 [Every application for registration shall be made in such manner as may be determined by the regulations made by the Authority and shall be accompanied by--]

(a) a certified copy of the memorandum and articles of association, where the applicant is a company and incorporated under the Indian Companies Act, 1913 (7 of 1913), 10 [or under the Indian Companies Act, 1882 (6 of 1982), or under the Indian Companies Act, 1866 (10 of 1866); or under any Act repealed thereby,] or, in the case of any other insurer specified in sub-clause (a), (ii) or sub-clause (b), of clause (9) of section 2, certified copy of the deed of partnership or of the deed of constitution of the company, as the case may be, or in the case of an insurer having his principal place of business or domicile outside 2 [India], the document specified in clause (a) of section 63;

(b) the name, address and the occupation, if any, of the directors where the insurer is a company incorporated under the Indian Companies Act, 1913 (7 of 1913), or under the Indian Companies Act, 1882 (6 of 1882) or under the Indian Companies Act, 1866 (10 of 1866),] or under any Act repealed thereby, and in the case of an insurer specified in sub-clause (a) (ii) of clause (9) of section 2 of the names and addresses of the proprietors and of the manager in 2 [India], and in any other case the full address of the principal office of the insurer in 2 [India], and the names of the directors and the manager at such office and the name and address of some one or more persons resident in 2 [India] authorised to accept any notice required to be served on the insurer;

(c) a statement of the class or classes of insurance business done or to be done, and a statement that the amount required to be deposited by section 7 or section 98 before application for registration is made has been deposited together with a certificate from the Reserve Bank of India showing the amount deposited;

(d) where the provisions of section 6 or section 97 apply, a declaration verified by an affidavit made by the principal officer of the insurer authorised in that behalf that the provisions of those sections as to 11 [paid-up equity capital or working capital] have been complied with;

(e) in the case of an insurer having his principal place of business or domicile outside 12 [India], a statement verified by an affidavit made by the principal officer of the insurer setting forth the requirements (if any) not applicable to nationals of the country in which such insurer is constituted, incorporated or domiciled which are imposed by the laws or practice of that country upon Indian nationals as a condition of carrying on insurance business in that country;

(f) a certified copy of the published prospectus, if any, and of the standard policy forms of the insurer and statements of the assured rates, advantages, terms and conditions to be offered in connection with insurance policies together with a certificate in connection with life insurance business by an actuary that such rates, advantages, terms and conditions are workable and sound:

Provided that in the case of marine accident and miscellaneous insurance business other than workmen's compensation and motor car insurance the above requirements regarding prospectus, forms and statements shall be complied with only in so far as the prospectus, forms and statements may be available; 13 [***]

14 [(g) the receipt showing payment of fee as may be determined by the regulations which shall not exceed fifty thousands rupees for each class of business as may be specified by the regulations made by the Authority;]

(h) such other documents as may be specified by the regulations made by the Authority.]

15 [(2A) If, on receipt of an application for registration and after making such inquiry as he deems fit, the 16 [Authority] is satisfied that--

(a) the financial condition and the general character of management of the applicant are sound;

(b) the volume of business likely to be available to, and the capital structure and earning prospects of, the applicant will be adequate;

(c) the interests of the general public will be served if the certificate of registration is granted to the applicant in respect of the class or classes of insurance business specified in the application; and

(d) the applicant has complied with the provisions of sections 2C, 5, 31A and 32 and has fulfilled all the requirements of this section applicable to him,

the 16 [Authority] may register the applicant as an insurer and grant him a certificate of registration.

8 [(2AA) The Authority shall give preference to register the applicant and grant him a certificate of registration if such applicant agrees, in the form and manner as may be specified by the regulations made by the Authority, to carry on the life insurance business or general insurance business for providing health cover to individuals or group of individuals.]

(2B) Where the 16 [Authority] refuses registration, 17 [it] shall record the reasons for such decision and shall furnish a copy thereof to the applicant.

(2C) Any person aggrieved by the decision of the 16 [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.

(2D) The decision of the Central Government on such appeal shall be final and shall not be questioned before any court.]

(3) 18 [Notwithstanding anything contained in sub-section (2A), in the case of any insurer having his principal place of business or domicile outside India] the 3 [Authority], shall withhold registration or shall cancel a registration already made, if 17 [it] is satisfied that in the country in which 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.

19 [(4) The 3 [Authority] shall cancel the registration of an insurer either wholly or in so far as it relates to a particular class of insurance business, as the case may be,--

(a) if the insurer fails to comply with the provisions of section 7 or section 98 as to deposits, or

20 [(aa) if the" insurer fails, at any time, to comply with the provisions of section 64VA as to the excess of the value of his assets over the amount of his liabilities, or]

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

(c) if the business or a class of the business of the insurer has been transferred to any person or has been transferred to or amalgamated with the business of any other insurer, or

(d) if the whole of the deposit made in respect of 21 [***] insurance business has been returned to the insurer under section 9,] 22 [or

(e) if, in the case of an insurer specified in sub-clause (c) of clause (9) of section 2, the standing contract referred to in that sub-clause is cancelled or is suspended and continues to be suspended for a period of six months,] 21 [or

(ee) if the Central Government so directs under sub-section (4) of section 33,] and the 3 [Authority] 23 [may cancel the registration of an insurer--

24 [(f) if the insurer makes default in complying with, or acts in contravention of, any requirement of this Act or 25 [of any rule or any regulation or order made or, any direction issued thereunder, or]

(g) if the 3 [Authority] has reason to believe that any claim upon the insurer arising in India under any policy of insurance remains unpaid for three months after final judgment in regular course of law, or

26 [(h) if the insurer carries on any business other than insurance business or any prescribed business, 8 [or]

8 [(i) if the insurer makes a default in complying with any direction issued or order made, as the case may be, by the Authority under the Insurance Regulatory and Development Authority Act, 1999, or

(j) if the insurer makes a default in complying with, or acts in contravention of, any requirement of the Companies Act, 1956 (1 of 1956) or the Life Insurance Corporation Act, 1956 (31 of 1956) or the General Insurance Business (Nationalisation) Act, 1972 (57 of 1972) or the Foreign Exchange Regulation Act, 1973 (46 of 1973).]

(5) When the 3 [Authority] withholds or cancels any registration under sub-section (3) or 27 [clause (a), 20 [clause (aa)] clause (e), 20 [clause (ee),] clause (f), clause (g) or clause (h) of sub-section (4)], 17 [it] shall give notice in writing to the insurer of 28 [its] decision, and the decision shall take effect on such date as 17 [it] may specify in that behalf in the notice, such date not being less than one month nor more than two months from the date of the receipt of the notice in the ordinary course of transmission.

5 [(5A) When the 3 [Authority] cancels any registration under clause (b), clause (c) or clause (d) of sub-section (4) the cancellation shall take effect on the date on which notice of the order of cancellation is served on the insurer.]

5 [(5B) When a registration is cancelled the insurer shall not, after the cancellation has taken effect, enter into any new contracts of insurance, but all rights and liabilities in respect of contracts of insurance entered into by him before such cancellation takes effect shall, subject to the provisions of sub-section (5D), continue as if the cancellation had not taken place.]

5 [(5C) Where a registration is cancelled under 27 [clause (a), 20 [clause (aa),] clause (e), clause (f), clause (g) or 30 [clause (h) or clause (i) or clause (j)] of sub-section (4),] the 3 [Authority] may at 28 [its] discretion revive the registration, if the insurer within six months from the date on which the cancellation took effect makes the deposits required by section 7 or section 98, 20 [or complies with the provisions of section 64VA as to the excess of the value of his assets over the amount of his liabilities] 22 [or has his standing contract restored or has had an application under sub-section (4) of section 3A accepted], 30 [or satisfies the 3 [Authority] that no claim upon him such as is referred to in clause (g) of sub-section (4) remains unpaid 31 [or that he has complied with 32 [any requirement of this Act or the Insurance Regulatory and Development Authority Act, 1999, or of any rule or any regulation, or any order made thereunder or any direction issued under those Acts,] or that he has ceased to carry on any business other than insurance business or any prescribed business],] as the case may be, and complies with any directions which may be given to him by the 3 [Authority].]

5 [(5D) Where 27 [the registration of an insurance company is cancelled under sub-section (4), the 3 [Authority] may,] after the expiry of six months from the date on which the cancellation took effect, apply to the Court for an order to wind up the insurance company, or to wind up the affairs of the company in respect of a class of insurance business, unless the registration of the insurance company has been revived under sub-section (5C) or an application for winding up the company has been already presented to the Court. The Court may proceed as if an application under this sub-section were an application under sub-section (2) of section 53, or sub-section (1) of section 58, as the case may be.]

8 [(5E) The Authority may, by order, suspend or cancel any registration in such manner as may be determined by the regulations made by it:

Provided that no order under this sub-section shall be made unless the person concerned has been given a reasonable opportunity of being heard.]

33 [***]

34 [(7) The Authority may, on payment of such fee, not exceeding five thousand rupees, as may be determined by the regulations, issue a duplicate certificate of registration to replace a certificate lost, destroyed or mutilated, or in any other case where the Authority is of opinion that the issue of duplicate certificate is necessary.]

1. Substituted by Act 20 of 1940, section 3, for "insurer" (w.e.f. 10-4-1940).

2. Substituted by Act 62 of 1956, section 2 and Schedule for "the States" (w.e.f. 1-11-1956).

3. Substituted by Act 47 of 1950, section 4, for "Superintendent of Insurance" (w.e.f. 1-6-1950) and again substituted by Act 41 of 1999, section 30 and Schedule I, for "Controller" (w.e.f. 19-4-2000).

4. Inserted by Act 6 of 1946, section 3 (w.e.f. 20-3-1946).

5. Inserted by Act 20 of 1940, section 3 (with retrospective effect).

6. Substituted by Act 13 of 1941, section 3, for "the expiry of one month from the commencement of the Insurance (Amendment) Act, 1940" (w.e.f. 8-4-1941).

7. 1st August, 1942: for all insurers in the States excepting those in Baroda and Mysore; see Notification No. 530-1 (12)/42, dated 11th July, 1942, published in the Gazette of India, 1942, Part I, p. 1163.

8. Inserted by Act 41 of 1999, section 30 and Schedule I (w.e.f. 19-4-2000).

9. Substituted by Act 41 of 1999, section 30 and Schedule I, for "Every application for registration shall be accompanied by--" (w.e.f. 19-4-2000).

10. Inserted by Act 41 of 1939, section 2.

11. Substituted by Act 41 of 1999, section 30 and Schedule I, for "working capital" (w.e.f. 19-4-2000).

12. Substituted by Act. 20 of 1940, section 3, for "British India" (w.e.f. 10-4-1940).

13. The word "and" omitted by Act 41 of 1999, Section 30 and Schedule I (w.e.f. 19-4-2000).

14. Substituted by Act 41 of 1999, section 30 and Schedule I, for clause (g) (w.e.f. 19-4-2000).

15. Inserted by Act 32 of 1965, section 2 (w.e.f. 29-9-1965).

16. Substituted by Act 41 of 1999, section 30 and Schedule I, for "Controller" (w.e.f. 19-4-2000).

17. Substituted by Act 41 of 1999, section 30 and Schedule I, for "he" (w.e.f. 19-4-2000).

18. Substituted by Act 32 of 1965, section 2, for certain words (w.e.f. 29-9-1965).

19. Substituted by Act 20 of 1940, section 3, for sub-section (4) (with retrospective effect).

20. Inserted by Act 62 of 1968, section 2 (w.e.f. 1-6-1969).

21. The words "a class of" omitted by Act 62 of 1968, section 2 (w.e.f. 1-6-1969).

22. Inserted by Act 13 of 1941 section 3 (w.e.f. 8-4-1941).

23. Substituted by Act 6 of 1946, section 3, for "may cancel the registration of an insurer if the insurer has failed to have the registration renewed" (w.e.f. 20-3-1946).

24. Substituted by Act 47 of 1950, section 7, for clause (f) (w.e.f. 1-9-1950).

25. Substituted by Act 41 of 1999, section 30 and Schedule I, for "of any rule or order made thereunder, or" (w.e.f. 19-4-2000).

26. Substituted by Act 47 of 1950, section 7, for clause (h) (w.e.f. 1-9-1950).

27. Substituted by Act 6 of 1946, section 3, for certain words (w.e.f. 20-3-1946).

28. Substituted by Act 41 of 1999, section 30 and Schedule I, for "his" (w.e.f. 19-4-2000).

29. Substituted by Act 41 of 1999, section 30 and Schedule I, for "clause (h)" (w.e.f. 19-4-2000).

30. Inserted by Act 6 of 1946, section 3 (w.e.f. 20-3-1946) and substituted by Act 41 of 1999, section 30 and Schedule I.

31. Substituted by Act 47 of 1950, section 7, for "or that he has complied with the order under section 3B" (w.e.f. 1-9-1950).

32. Substituted by Act 41 of 1999, section 30 and Schedule I, for "any requirement of this Act or of any rule or order made thereunder" (w.e.f. 1-9-1950).

33. Sub-section (6) omitted by Act 32 of 1965, section 2 (w.e.f. 29-9-1965).

34. Sub-section (7) Inserted by Act 6 of 1946, Section 3 (w.e.f. 20-3-1946) and Substituted by Act 41 of 1999, section 30 and Schedule I.


Section 3A. Renewal of registration

1 [3A. Renewal of registration

(1) 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 2 [the 31st day of March, after the commencement of the Insurance Regulatory and Development Authority Act, 1999].

(2) An application for the renewal of a registration for any year shall be made by the insurer to the 3 [Authority] before the 31st day of December of the preceding year, and shall be accompanied as provided in sub-section (3) by evidence of payment of the 4 [fee as determined by the regulations made by the Authority] 5 [which may vary according to the total gross premium written direct in India, during the year preceding the year in which the application is required to be made under this section, by the insurer in the class of insurance business to which the registration relates but shall not--

6 [(i) exceed one-fourth of one per cent. of such premium income or rupees five crores, whichever is less.]

7 [(ii) be less, in any case, than fifty thousand rupees for each class of insurance business:]

Provided that in the case of an insurer carrying on solely re-insurance business, the provisions of this sub-section shall apply with the modification that instead of the total gross premium written direct in India, the total premiums in respect of facultative re-insurance accepted by him in India shall be taken into account.]

(3) The 4 [fee as determined by the regulations made by the Authority] for the renewal of a registration for any year shall be paid into the Reserve Bank of India, or where there is no office of that Bank, into the Imperial Bank of India8 acting as the agent of that Bank, or into any Government treasury, and the receipt shall be sent along with the application for renewal of the registration.

(4) If an insurer fails to apply for renewal of registration before the date specified in sub-section (2) the 9 [Authority] may, so long as an application to the Court under sub-section (5D) of section 3 has not been made, accept an application for renewal of the registration on receipt from the insurer of the fee payable with the application and such penalty, not exceeding the 4 [fee as determined by the regulations made by the Authority, and] payable by him, as the 9 [Authority] may require:

Provided that an appeal shall lie to the Central Government from an order passed by the 9 [Authority] imposing a penalty on the insurer.

(5) The 9 [Authority] shall, on fulfilment by the insurer of the requirements of this section, renew the registration and grant him a certificate of renewal of registration.]

1. Inserted by Act 13 of 1941, section 4 (w.e.f. 8-4-1941).

2. Substituted by Act 41 of 1999, section 30 and Schedule I, for "the 31st day of December 1941".

3. Substituted by Act 47 of 1950, section 4, for "Superintendent of Insurance" (w.e.f. 1-6-1950) and again substituted by Act 41 of 1999, section 30 and Schedule, I for "Controller" (w.e.f. 19-4-2000).

4. Substituted by Act 41 of 1999, section 30 and Schedule I, for "prescribed fee" (w.e.f. 19-4-2000).

5. Substituted by Act 62 of 1968, section 3, for certain words (w.e.f. 1-6-1969).

6. Substituted by Act 41 of 1999, section 30 and Schedule I, for clause (i) (w.e.f. 19-4-2000).

7. Substituted by Act 41 of 1999, section 30 and Schedule I, for clause (ii) (w.e.f. 19-4-2000).

8. Now State Bank of India.

9. Substituted by Act 47 of 1950, section 4, for "Superintendent of Insurance" (w.e.f. 1-6-1950) and again substituted by Act 41of 1999, section 30 and Schedule I for "Controller" (w.e.f. 19-4-2000).


Section 3B. Certification of soundness of terms of life insurance business

1 [3B. Certification of soundness of terms of life insurance business

If, when considering an application for registration under section 3 or at any other time, it appears to the 2 [Authority] that the assured rates, advantages, terms and conditions offered or to be offered in connection with life insurance business are in any respect not workable or sound, 3 [it] may require that a statement thereof shall be submitted to an actuary appointed by the insurer for the purpose and approved by the 2 [Authority], and may by order in writing further require the insurer to make within such time as may be specified in the order such modifications in the said rates, advantages, terms or conditions, as the case may be, as the said actuary may report to be necessary to enable him to certify that the said rates, advantages, terms and conditions are workable and sound.]

1. Inserted by Act 6 of 1946, section 4 (w.e.f. 20-3-1946).

2. Substituted by Act 47 of 1950, section 4, for "Superintendent of Insurance" (w.e.f. 1-6-1950) and again substituted by Act 41 of 1999, section 30 and Schedule, I for "Controller" (w.e.f. 19-4-2000).

3. Substituted by Act 41 of 1999, section 30 and Schedule I, for "he" (w.e.f. 19-4-2000).


Section 4. Minimum limits for annuities and other benefits secured by policies of life insurance

(1) 1 [No insurer, notbeing a Co-operative Life Insurance Society to which Part IV of 2 [this Act]applies, shall pay] or undertake to pay on any policy of life insurance issuedafter the 3 [commencement of the Insurance (Amendment)Act, 1946 (6 of 1946),] an annuityof 4 [less than one hundred rupees or a gross sum of less thanone thousand rupees] exclusive of any profit or bonus provided that this shallnot prevent an insurer from converting any policy into a paid-up policy of anyvalue or payment of surrender value of any amount.

5 [(2) Nothing contained in this section shall apply to any policyof the description known as a group policy, where the number of persons coveredby the policy is not less than fifty or such smaller number as may be approved by the 6 [Authority] and a standard form of the policy has beencertified in writing by the 6 [Authority] to be a policy ofsuch description 7 [or to any policy undertaking topay a gross sum of more than five hundred rupees or an annuity of more thanfifty rupees, issued--

(a) by an insurer to any person in his permanentemploy in respect of the life of that person, or

(b)under any scheme, approved by the 6 [Authority]and complying with such conditions, if any, as he may think fit to impose, whereby premiums due from personsemployed under any employer are collected by or under the supervision of theemployer,

or to any policyissued by a Mutual Insurance Company towhich Part IV applies and which the 6 [Authority] mayby order in writing exempt from the provisions of this section, for so long asthe company complies with such conditions, if any, as may be prescribed].]

1.Substituted by Act 10 of 1948, section 2, for certain words (w.e.f.8-3-1948).

2.Substituted by Act 47 of 1950, section 8, for "the Insurance Act,1938" (w.e.f. 1-6-1950).

3.Substituted by Act 6 of 1946, section 5, for "commencement of thisAct" (w.e.f. 20-3-1946).

4.Substituted by Act 6 of 1946, section 5, for "fifty rupees or less or agross sum of rupees five hundred or less" (w.e.f. 20-3-1946).

5.Substituted by Act 13 of 1941, section 5, for sub-section (2) (w.e.f. 8-4-1941).

6.Substituted by Act 47 of 1950, section 4, for "Superintendent ofInsurance" (w.e.f. 1-6-1950) and again substituted by Act 41 of 1999,section 30 and Schedule I, for "Controller" (w.e.f. 19-4-2000).

7.Added by Act 6 of 1946, section 6 (w.e.f. 20-3-1946).