THE INSURANCE

ACT, 1938

Presented By:
Ashok Mishra
Akshita Singh
 INTRODUCTION

An Act to consolidate and amend the law relating to

the business of insurance.
Passed in the year 1938 & implemented from 1st July,
1939.
Extends to the whole of India.
 REGISTRATION

Every insurer is required to obtain a certificate of

registration for the particular class of its insurance
business.
It prescribes the application form , the fees & annual
renewal of registration to be granted by the
controller.
 ACCOUNTS AND RETURNS

An insurer is required:

 To keep a separate account of all receipts & payments

in respect of each class of insurance.
 To prepare a Balance Sheet, a Profit & Loss A/c & a
Revenue A/c for each class of insurance business in the
prescribed forms after the expiry of each calendar year.
 To get accounts audited annually by an auditor to be
furnished as returns, within 6 months from the close of
the calendar year.
 To furnish a certified copy of minutes of the General
Meeting’s proceedings within 30 days .
 To maintain a record of cover notes, policies,
premiums, endorsements, bank guarantees, claims
received and settled, receipts for payments and
surveys.
 To keep register of agents, employees, businesses
procured, cash book ,disbursement book,
investments & assets and reinsurance arrangements
 INVESTMENTS

The rules provide for selection of investments that :

Are approved
Involve no misappropriation of assets
Assets are preserved
Are safe
Marketable
Liquid to convert to cash.
 PROHIBITION OF REBATES

 This prohibits unhealthy inducements of the following

categories:
 Inducements to take, renew or continue an insurance
on life & non-life,
 Rebate on commission payable,
 On premium beyond the prescribed amount mentioned
in the prospectus,
 Any person making default in complying with the
provisions of this section shall be punishable with
fine, which may extend to Rs. 500.
 LICENSING OF AGENTS

 A license is issued to any person to act as an insurance

agent by the controller or an officer authorized on his
behalf after payment of prescribed fees.
 License shall remain in force for only 3 years from the
date of issue.
 A license shall not be issued to a person who is:
 Disqualified as per the rules of this Act,
 A minor,
 Of unsound mind,
 Found guilty of criminal acts.
 License shall be renewed on application to Issuing
authority at least 30 days before date of expiry.
 LICENSING OF SURVEYORS

Shall be issued by the controller of insurance after

submission of application form and payment of
prescribed fee.
Valid for 5 years.
The eligibility requirements and technical qualifications
are specified in the Act.
Application for the renewal shall be made at least 30
days before the expiry of validity period.
 ADVANCE PAYMENT OF PREMIUM

No insurer shall assume any risk unless and until the

premium is received:
in advance, or
is guaranteed to be paid, or
a deposit is made in advance, and
paid in cash or cheque.
 DUTIES & POWERS OF CONTROLLER
OF INSURANCE

Issue, renew, modify, withdraw, suspend or cancel the

certificate of registration.
Specify requisite qualifications, code of conduct &
practical training for insurance intermediaries, agents,
surveyors, etc.
Promoting & regulating professional organizations
connected with the insurance and reinsurance business.
Conducting inspections & investigations including
audit of insurers, intermediaries and other connected
organizations.
Regulating investment of funds.
Protection of interest of the policyholders.
Specifying the form and manner in which books of
accounts shall be maintained.
Adjudication of disputes between insurers and
intermediaries.
Specifying the percentage of life insurance business
& general insurance business to be undertaken by the
insurers in different sectors.
Supervising the functioning of the Tariff Advisory
Committee.
THANK YOU!