Contents ths insurance act, 1938 Arrangement of Sections




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Submission of retunes
15. (1) The audited accounts and statements referred to in section 11 or sub section (5) of section 13 and the abstract and statement referred to in section 13 shall be printed, and four copies thereof shall be furnished as returns to the Authority within six months from the end of the period to which they refer:
Provided that the said period of six months shall in the case of insurers having their principal place of business or domicile outside India and in the case of insurers constituted, incorporated or domiciled in India but also carrying on business outside India be extended by three months, and provided further that the Central Government may in any case extend the time allowed by this sub section for the furnishing of such returns by a further period not exceeding three months.
(2) Of the four copies so furnished one shall be signed in the case of a company by the chairman and two directors and by the principle officers of the company and, if the company has a managing director or managing agent, by that director or managing agent, in the case of a firm, by two partners of the firm, and, in the case of an insurer being an individual, by the Insurer himself and one shall be signed by the auditor who made the audit or the actuary who made the valuation, as the case may be.
(3) Where the insurer's principal place of business or domicile is outside India, he shall forward to the Authority, along with the documents referred to in section 11, the balance sheet, profit and loss account and revenue account and the valuation reports and valuation statements, if any, which the insurer is required to file with the public authority of the country in which the insurer is constituted, incorporated or domiciled, or, where such documents are not required to be filed, a certified statement showing the total assets and liabilities of the insurer at the close of the period covered by the said documents and his total income and expenditure during that period.
Returns by insurers established outside India.
16. (1) Where, by the law of the country in which an insurer, not being an insurer specified in sub clause (a)(ii) or sub clause (b) of clause (9) of section 2, is constituted, incorporated or domiciled, the insurer is required to prepare and to furnish to a public authority of that country documents of substantially the same nature as the documents required to be furnished as returns in accordance with provisions of section 15, the provisions of sub section (2) of this section shall apply to such insurer in lieu of the provisions of sections 11, 12, 13 and 15.
(2) The insurer shall, within the time specified in sub section (1) of Section 15, furnish to the Authority four certified copies in the English language of every balance sheet, account, abstract, report and statement supplied to the public authority referred to in sub section (1) of this section, and in addition thereto, four certified copies in the English language of each of the following statements, namely:-
(a) a statement audited by an auditor or by a person duly qualified under the law of the insurer’s country showing the assets held by insurer in India as at the date of any balance-sheet so furnished;
(b) for each class or sub class of insurance business for which he is required under sub section (1) of section 10 to keep a separate account of receipts and payments, a revenue account for the period covered by any account so furnished, prepared in accordance with the regulations, and in the form or forms, set forth in the Third Schedule applicable to that class or subclass of insurance business and similarly audited, showing separately with respect to business transacted by the insurer in India the details required to be supplied in a revenue account furnished under this clause of this subsection;
(c) a separate abstract of the valuation report in respect of all business transacted in India in each class or sub class of insurance business to which section 13 refers, prepared in the manner required by that section; and
(d) a declaration in the prescribed form stating that all amounts received by the insurer directly or indirectly whether from his head office or from any other source outside India have been shown in the revenue account except such sums as properly appertain to the capital account.
Exemption from certain provisions of the Indian Companies Act, 1913
17. Where an insurer, being 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 Acts, 1866 (10 of 1866), or under any Act repealed thereby, in any year furnishes his balance sheet and accounts, in accordance with the provisions of section 15, he may at the same time send to the Registrar of Companies copies of such balance sheet and accounts; and where such copies are so sent it shall not be necessary for the Company to file copies of the balance-sheet and accounts with the Registrar as required by sub section (1) of section 134 of the first mentioned Act and such copies so sent shall be chargeable with the same fees and shall be dealt within all respects as if they were filed in accordance with that section.
This Act not to apply to preparation of account, etc., for periods prior to this Act coming into force.
17 A. Nothing in this Act shall apply to the preparation of accounts by an insurer and the audit and submission thereof in respect of any accounting year which has expired prior to the commencement of this Act, and notwithstanding the other provisions of this Act, such accounts shall be prepared, audited and submitted in accordance with the law in force immediately before the commencement of this Act.
Furnishing reports
18. Every insurer shall furnish to the Authority a certified copy of every report on the affairs of the concern which is submitted to the members or policy holders of the insurer immediately after its submission to the members or policy holders, as the case may be.
Abstract of proceedings of general meetings
19. Every insurer, being a company or body incorporated under any law for the time being in force in India, shall furnish to the Authority a certified copy of the minutes of the proceedings of every general meeting, as entered in the Minutes Book of the insurer within thirty days from the holding of the meeting to which it relates.
Custody and inspection of documents and supply of copies
20. (1) Every return furnished to the Authority or certified copy thereof shall be kept by the Authority and shall be open to inspection; and any person may procure a copy of any such return, or of any part thereof, on payment of a fee of six annas for every hundred words or fractional part thereof required to be copied, any five figures being deemed equivalent to one word.
(2) A printed or certified copy of the accounts, statements and abstract furnished in accordance with the provisions of section 15 or section 16 shall, on the application of any shareholder or policy holder made at any time within two years from the date on which the document was so furnished, be supplied to him by the insurer within fourteen days when the insurer is constituted, incorporated or domiciled in India and in any other case within one month of such application.
(3) A copy of the memorandum and articles of association of the insurer, if a company shall on the application of any policy holder, be supplied to him by the Insurer on payment of one rupee.
Powers of Controller regarding returns
21. (1) If it appears to the Authority that any return furnished to him under the provisions of this Act is inaccurate or defective in any respect, he may—
(a) require from the insurer such further information, certified if he so directs by an auditor or actuary, as he may consider necessary to correct or supplement such return;
(b) call upon the insurer to submit for his examination at the principal place of business of the insurer in India any book of account, register or ­other document or to supply any statement which he may specify in a notice served on the insurer for the purpose;
(c) examine any officer of the insurer on oath in relation to the return;
(d) decline to accept any such return unless the inaccuracy has been corrected or the deficiency has been supplied before the expiry of one month from the date on which the requisition asking for correction of the inaccuracy or supply of the deficiency was delivered to the insurer or of such further time as the Authority may specify in the requisition and if he declines to accept any such return, the insurer shall be deemed to have failed to comply with the provisions of section 15 or section 16 or section 28 or section 28A or section 28B or section 64V relating to the furnishing of returns.

(2) The Court may on the application of an insurer and after hearing the Authority cancel any order made by the Authority under clause (`a), (b) or(c) of sub section (1) or may direct the acceptance of any return which the Authority has declined to accept, if the insurer satisfies the Court that action of the Authority was in the circumstances unreasonable:


Provided that no application under this subsection shall be entertained unless it is made before the expiration of four months from the time when the Authority made the order or declined to accept the return.


Powers of Authority to order revaluation
22. (1) If it appears to the Authority that an investigation or valuation to which section 13 refers or an abstract of a valuation report furnished under clause (c) of sub section (2) of section 16 does not properly indicate the condition of the affairs of the insurer by reason of the faulty basis adopted in the valuation, he may, after giving notice to the insurer and giving him an opportunity to be heard, cause an investigation and valuation alas at such date as the Authority may specify to be made at the expense of the insurer by an actuary appointed by the insurer for this purpose and approved by the Authority and the insurer shall place at the disposal of the Actuary so appointed and approved all the material required by the Actuary for the purposes of the investigation and valuation within such period, not being less than three months, as the Authority may specify.
(2) The provisions of subsections (1) and (4) of section 13, and of sub-sections (1) and (2) of section 15 or, as the case may be, of sub-section (2) of section 16, shall apply in relation to an investigation and valuation under this section:
Provided that the abstract and statement prepared as the result of such investigation and valuation shall be furnished by such date as the Authority may specify.
Evidence of documents
23. (1) Every return furnished to the Authority which has been certified by the Authority to be a return so furnished, shall be deemed to be a return so furnished.
(2) Every document, purporting to be certified by the Authority to be a copy of a return so furnished, shall be deemed to be a copy of that return and shall be received in evidence as if it were the original return, unless some variation between it and the original return is proved.
Summary of returns to be published
24. [Repealed by the Insurance (Amendment) Act, 1941 ]
Returns to be published in statutory forms
25. No insurer shall publish in India any return in a form other than that in which it has been furnished to the Authority.
Provided that nothing contained in this section shall prevent an insurer from publishing a true and accurate abstract from such returns for the purposes of publicity.
Alterations in the particulars furnished with application for registration to be reported.
26. Whenever any alteration occurs or is made which affects any of the matters which are required under the provisions of sub­-section (2) of section 3 to accompany an application by an insurer for registration, the insurer shall forthwith furnish to the Authority full particulars of such alteration. All such particulars shall be authenticated in the manner required by that sub section for the authentication of the matters therein referred to, and where the alteration affects the assured rates, advantages, terms and conditions offered in connection with life insurance policies, the actuarial certificate referred to in clause (f) of the said sub section shall accompany the particulars of the alteration.
Investment, Loans and Management
Investment of assets
27. (1) Every insurer shall invest and at all times keep invested assets equivalent to not less than the sum of-
(a) the amount of his liabilities to holders of life insurance policies in India on account of matured claims, and
(b) the amount required to meet the liability on policies of life insurance maturing for payment in               India,
less-

(i) the amount of premiums which have fallen due to the insurer on such policies but have not been paid and the days of grace for payment of which have not expired, and


(ii) any amount due to the insurer for loans granted on and within the surrender values of policies of life insurance maturing for payment in India issued by him or by an insurer whose business he has acquired and in respect of which he has assumed liability,
in the manner following, namely, twenty five per cent of the said sum in Government securities, a further sum equal to not less than twenty five per cent of the said sum in Government securities or other approved securities and the balance in any of the approved investments specified in sub-section (1) of section 27A or, subject to the limitations, conditions and restrictions specified in sub-section (2) of that section, in any over investment.
(2) For the purposes of subsection (1),—
(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.
(3) In computing the assets referred to in subsection (1),—

(a) any investment made with reference to any currency other than the Indian rupee which is in excess of the amount required to meet the liabilities of the insurer in India with reference to that currency, to the extent of such excess; and

(b) any investment made in the purchase of any immoveable property outside India or on the security of any such property,
shall not be taken into account:
Provided that nothing contained in this sub section shall affect the operation of sub-section (2):
Provided further that the Authority may, either generally or in any particular case, direct that any investment, whether made before or after the commencement of the Insurance (Amendment) Act, 1950 (47 of 1950), and whether made in or outside India, shall, subject to such conditions as may be imposed, be taken into account, in such manner as may be specified in computing the assets referred to in sub-section (1) and where any direction has been issued under this proviso copies thereof shall be laid before Parliament as soon as may be after it is issued.
(4) Where an insurer has accepted reassurance in respect of any policies of life insurance issued by another insurer and maturing for payment in India or has ceded reassurance to another insurer in respect of any such policies issued by himself, the sum referred to in subsection (1) shall be increased by the amount of the liability involved in such acceptance and decreased by the amount of the liability involved in such cession.

(5) The Government securities and other approved securities in which assets are under sub-section (1) to be invested and kept invested shall be held by the insurer free of any encumbrance, charge, hypothecation or lien.


(6) The assets required by this section to be held invested by an insurer incorporated or domiciled outside India shall, except to the extent of any part thereof which consists of foreign assets held outside India, be held in India and all such assets shall be held in trust for the discharge of the liabilities of the nature referred to in sub section (1) and shall be vested in trustees resident in India and approved by the Authority, and the instrument of trust under this sub section shall be executed by the insurer with the approval of the Authority and shall define the manner in which alone the subject matter of the trust shall be dealt with.
Explanation.—This sub section shall apply to an insurer incorporated India whose share capital to the extent of one third is owned by, or the members of whose governing body to the extent of one third consists of, members domiciled elsewhere than in India.
Further provisions regarding investments
27A. (1) No insurer shall invest or keep invested any part of his controlled fund otherwise than in any of the following approved investments, namely:
(a) approved securities;
(b) securities of, or guaranteed as to principal and interest by, the Government of the United Kingdom;
(c) debentures or other securities for money issued with the permission of the State Government by any   municipality in a State;
(d) debentures or other securities for money issued by any authority constituted under any housing or   building scheme approved by the Central or a State Government, or by any authority or body   constituted by any Central Act or Act of a State Legislature;
(e) first mortgages on immoveable property situated in India under any housing or building scheme of the insurer approved by the Authority or a State Government;
(f) debentures secured by a first charge on any immoveable property plant or equipment of any company which has paid interest in full for the five years immediately preceding or for at least five out of the six or seven years immediately preceding on such or similar debentures issued by it;
(g) debentures secured by a first charge on any immovable property, plant or equipment of any company              where either the book value or the market value, whichever is less, of such property, plant or              equipment is more than three times the value of such debentures;
(h) first debentures secured by a floating charge on all its assets of any company which has paid              dividends on its ordinary shares for the five years immediately preceding or for at least five out of              the six or seven years immediately preceding;
(i) preference shares of any company which has paid dividends on its ordinary shares for the five               years immediately preceding or for at least five out of the six or seven years immediately preceding;
(j) preference shares of any company on which dividends have been paid for the five years immediately preceding or for at least five out of the six or seven years immediately preceding and which have priority in payment over all the ordinary shares of the company in winding up;
(k) shares of any company which have been guaranteed by another company, such other company having paid dividends on its ordinary shares for the five years immediately preceding or for at least five out of the six or seven years immediately preceding:
        Provided that the total amount of shares of all the companies under guarantee by the guaranteeing company is not in excess of fifty per cent of the paid up amount of preference and ordinary shares of the guaranteeing company;
(l) shares of any company on which dividends of not less than four per cent including bonus have been paid for the seven years immediately preceding or for at least seven out of the eight or nine years immediately preceding;
(m) first mortgages on immovable property situated in India or in any other country where the insurer is carrying on insurance business
Provided that the property mortgaged is not leasehold property with an outstanding term of less than thirty years and the value of the property exceeding by one-third, or if it consists of buildings, exceeds by one-half, the mortgage money;
(n) immovable property situated in India or in any other country where the insurer is carrying on insurance business:
Provided that the property is free of all encumbrances;
(o) loans on life interests, or on policies of life insurance within their surrender values issued by him or by an insurer whose business he has acquired and in respect of which business he has assumed liability;
(p) life interests;
(q) fixed deposits with banks included for the time being in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934) or with co-operative societies registered under the Indian Co-operative Societies Act, 1912 (6 of 1912), or under any other law for the time being in force, the primary object of which is to finance other co-operative societies similarly registered;
(r) debentures of, or shares in co-operative societies registered under the Indian Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force;
(s) such other investments as the Authority may, by notification in the Official Gazette, declare to be approved investments for the purposes of this section.
(2) Notwithstanding anything contained in sub-section (1), an insurer being a company or a co-operative life insurance society as defined in clause (b) of sub-section (1) of section 95, may, subject to the provisions contained in the next succeeding sub-sections, invest or keep invested any part of his controlled fund otherwise than in an approved investment, if-
(i) after such investment, the total amounts of all such investments of the insurer do not exceed fifteen per cent of the sum referred to in sub-section (1) of section 27,

(ii) the investment is made, or, in the case of any investment already made, the continuance of such investment is with the consent of all the directors present at a meeting and eligible to vote, special notice of which has been given to all the directors then in India, and all such investments, including investments in which any director is interested, are reported without delay to the Authority with full details of the investments and the extent of the director’s interest in any such investment.


(3) An insurer shall not out of his controlled fund invest or keep invested in the shares of any one banking company or investment company more than—
(a) two and a quarter per cent of the sum referred to in sub-section (1) of section 27, or

(b) two per cent of the subscribed share capital and debentures of the banking company or investment company concerned,

whichever is less.
(4) An insurer shall not out of the controlled fund invest or keep invested in the shares or debentures of any one company other than a banking company or investment company more than-
(a) two and a quarter per cent of the sum referred to in sub-section (1) of section 27, or

(b) ten per cent. of the subscribed share capital and debentures of the company,


Whichever is less:
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