Insurance Regulatory and Development Authority Act, 1999 Complete Act - Bare Act

INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY ACT, 1999

29th December, 1999

An Act to provide for the establishment of an Authority to protect the interests of holders of insurance policies to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto and further to amend the Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and the General Insurance Business (Nationalisation) Act, 1972. Be it enacted by Parliament in the Fiftieth Year of the Republic of India as follows:

STATEMENT OF OBJECTS AND REASONS 1. The insurance industry requires a high degree of regulation. The Insurance Act, 1938 provides for the institution of the Controller of Insurance to act as a strong and powerful supervisory and regulatory authority with powers to direct, advise, caution, prohibit, investigate, inspect, prosecute, search, seize, fine, amalgamate, authorise, register and liquidate insurance companies. However, after the nationalisation of the life insurance industry in 1956 and the general insurance industry in 1972, the role of the Controller of Insurance diminished in significance over a period of time. 2. In April, 1993, the Government set up a high-powered Committee headed by Shri R.N. Malhotra, former Governor, Reserve Bank of India, to examine the structure of the insurance industry and recommend changes to make it more efficient and competitive keeping in view the structural changes in other parts of the financial system of the economy. The Committee which submitted its report on 7th January, 1994 felt that the insurance regulatory apparatus should be activated even in the present set-up of nationalised insurance sector and recommended, inter alia, the establishment of a strong and effective Insurance Regulatory Authority (IRA) in the form of a statutory autonomous board on the lines of Securities and Exchange Board of India. 3. The recommendations of the Committee were discussed at different forums including the Consultative Committee of the Parliament attached to the Ministry of Finance, Managements of Life Insurance Corporation, General Insurance Corporation and its subsidiary companies, trade unions, Chambers of Commerce and Consumer interest groups. The recommendations to set up an autonomous Insurance Regulatory Authority found wide support. In view of the general support received, the then Government decided to bring in a legislation to establish an independent regulatory authority for the insurance industry. Since enacting legislation for creating the Insurance Regulatory Authority would take time, the then Government constituted through a Government resolution an Interim Insurance Regulatory Authority pending the enactment of a comprehensive legislation. The Chairman, Insurance Regulatory Authority has been notified as Controller of Insurance under the Insurance Act, 1938. The said Interim Regulatory Authority at present is discharging certain functions and exercising powers of the Controller. 4. In pursuance of the Budget Speech in July, 1996 the then Government introduced on the 20th December, 1996, the Insurance Regulatory Authority Bill, 1996 for establishment of an Authority to protect the interests of holders of insurance policies and to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto. The Bill was referred to the Department related Standing Committee on the Ministry of Finance. The Committee submitted its report on 9th May, 1997. However, the said Bill incorporating therein the recommendations of the said Standing Committee was taken for consideration but could not be passed and Bill was withdrawn by the then Government. 5. In the Budget Speech, 1998 the Finance Minister announced that alongwith the reforms of the Banking Sector, it is necessary to move forward with reforms in insurance which has hitherto been a public sector monopoly. In order to provide better insurance coverage to our citizens and also to augment the flow of long term resources for financing infrastructure, it has been proposed by the Government to open the insurance sector to competition from private Indian companies. The Insurance Regulatory Authority will also be converted into a statutory body. Accordingly, it is now proposed to give a statutory character to the Interim Insurance Regulatory Authority by enacting a legislation in this regard and amend Sec. 30 of the Life Insurance Corporation Act, 1956 and Sec. 24 of General Insurance Business (Nationalisation) Act, 1972 to permit the entry of private Indian companies into the insurance sector and to make certain consequential amendments to the Insurance Act, 1938. 6. The proposed Authority shall be a body corporate having perpetual succession and a common seal with power to acquire, hold and dispose of property and to contract. It will consist of a Chairperson and other members not exceeding nine in number, of whom not more than five shall serve full time, to be appointed by the Central Government from amongst person of ability, integrity and standing who have knowledge or experience of life insurance, general insurance, acturial science, finance, economics, law, accountancy, administration or any other discipline which in the opinion of the Central Government shall be useful to the Authority. The Chairperson and other whole-time Members shall hold office for a term of 5 years or until the age of 65 years in the case of Chairperson and 62 years in the case of other whole-time Members, whichever is earlier and they shall be eligible for re-appointment subject to age consideration. A part-time Member shall hold office for a term not exceeding 5 years. 7. The duties, powers and functions of Authority, inter alia, are :- (a) to issue to the applicant a certificate of registration, to renew, modify, withdraw, suspend or cancel such registration; (b) protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy, and other terms and conditions of contracts of insurance; (c) specifying requisite qualifications and practical training for insurance intermediaries and agents; (d) specifying the code of conduct for surveyors and loss assessors; (e) promoting efficiency in the conduct of insurance business; (f) promoting and regulating professional organisations connected with the insurance and re-insurance business; (g) levying fees and other charges for carrying out the purposes of this Act; (h) calling for information from, undertaking inspection of, conducting enquiries and investigations includings audit of the insurers, insurance intermediaries and other organisations connected with the insurance business; (i) control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under Sec. 64-U of the Insurance Act, 1938; (j) prescribing the form and manner in which books of account shall be maintained and statement of accounts will be rendered by insurers and insurance intermediaries; (k) regulating investment of funds by insurance companies; (l) regulating maintenance of margin of solvency; (m) adjudication of disputes between insurers and intermediaries; (n) exercising such other powers as may be prescribed. 8. The powers and functions mentioned above would enable the Authority to perform the role of an effective watchdog and regulator for the insurance sector in India. To enable the Authority to function in a truly independent manner and discharge its assigned responsibilities effectively, it is proposed to vest the Authority with statutory status. 9. The Bill seeks to achieve the above objects.

- (1) This Act may be called the Insurance Regulatory and Development Authority Act, 1999.

(2) It extends to the whole of India.

(3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint:

Provided that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.

- (1) In this Act, unless the context otherwise requires,-

(a) "appointed day" means the date on which the Authority is established under sub-section (1) of Sec. 3;

(b) "Authority" means the Insurance Regulatory and Development Authority established under sub-section (1) of Sec. 3;

(c) "Chairperson" means the Chairperson of the Authority;

(d) "Fund" means the Insurance Regulatory and Development Authority Fund constituted under sub-section (1) of Sec. 16;

(e) "Interim Insurance Regulatory Authority" means the Insurance Regulatory Authority set up by the Central Government through Resolution No. 17 (2)/94-Ins. V. dated the 23rd January, 1996;

(f) "intermediary or insurance intermediary" includes insurance brokers, re-insurance brokers, insurance consultants, surveyors and loss assessors;

(g) "member" means a whole-time or a part-time member of the Authority and includes the Chairperson;

(h) "notification" means a notification published in the Official Gazette; (i) "prescribed" means prescribed by rules made under this Act; (j) "regulations" means the regulations made by the Authority.

(2) Words and expressions used and not defined in this Act but defined in the Insurance Act, 1938 (4 of 1938) or the Life Insurance Corporation Act, 1956 (31 of 1956) or the General Insurance Business (Nationalisation) Act, 1972 (57 of 1972) shall have the meanings respectively assigned to them in those Acts.

- (1) With effect from such date as the Central Government may, by notification, appoint there shall be established, for the purposes of this Act, an Authority to be called the Insurance Regulatory and Development Authority.

(2) The Authority shall be a body corporate by the name aforesaid having perpetual succession and a common seal with power, subject to the provisions of this Act, to acquire, hold and dispose of property, both movable and immovable, and to contract and shall, by the said name, sue or be sued.

(3) The head office of the Authority shall be at such place as the Central Government may decide from time to time.

(4) The Authority may establish offices at other places in India.

-The Authority shall consist of the following members, namely:- (a) a Chairperson; (b) not more than five whole-time members;

(c) not more than four part-time members, to be appointed by the Central Government from amongst persons of ability, integrity and standing who have knowledge or experience in life insurance, general insurance, acturial science, finance, economics, law, accountancy, administration or any other discipline which would, in the opinion of the Central Government, be useful to the Authority :

Provided that the Central Government shall, while appointing the Chairperson and the whole-time members ensure that at least one person each is a person having knowledge or experience in life insurance, general insurance or acturial science, respectively.

- (1) The Chairperson and every other whole-time member shall hold office for a term of five years from the date on which he enters upon his office and shall be eligible for re-appointment:

Provided that no person shall hold office as such Chairperson after he has attained the age of sixty-five years :

Provided further that no person shall hold office as a whole-time member after he has attained the age of sixty-two years.

(2) A part-time member shall hold office for a term not exceeding five years from the date on which he enters upon his office.

(3) Notwithstanding anything contained in sub-section (1) or sub-section (2), a member may-

(a) relinquish his office by giving in writing to the Central Government notice of not less than three months; or

(b) be removed from his office in accordance with the provisions of Sec.6.

- (1) The Central Government may remove from office any member who-

(c) has been convicted of any offence which, in the opinion of the Central Government, involves moral turpitude; or

(d) has acquired such financial or other interest as is likely to affect prejudicially his functions as a member; or

(e) has so abused his position as to render his continuation in office detrimental to the public interest.

(2) No such member shall be removed under Cl. (d) or Cl. (e) of subsection (1) unless he has been given a reasonable opportunity of being heard in the matter.

- (1) The salary and allowances payable to, and other terms and conditions of service of, the members other than part-time members shall be such as may be prescribed.

(2) The part-time members shall receive such allowances as may be prescribed.

(3) The salary, allowances and other conditions of service of member shall not be varied to his disadvantage after appointment.

-The Chairperson and the whole-time members shall not, for a period of two years from the date on which they cease to hold office as such, except with the previous approval of the Central Government, accept-

(a) any employment either under the Central Government or under any State Government; or

(b) any appointment in any Company in the Insurance sector.

-The Chairperson shall have the powers of general superintendence and direction in respect of all administrative matters of the Authority.

- (1) The Authority shall meet at such times and places, and shall observe such rules and procedures in regard to transaction of business at its meetings (including quorum at such meetings) as may be determined by regulations.

(2) The Chairperson, or if for any reason he is unable to attend a meeting of the Authority, any other member chosen by the members present from amongst themselves at the meeting shall preside at the meeting.

(3) All questions which come up before any meeting of the Authority shall be decided by a majority of votes by the members present and voting, and in the event of an equality of votes, the Chairperson, or in his absence, the person presiding shall have a second or casting vote.

(4) The Authority may make regulations for the transaction of business at its meetings.

-No Act or proceeding of the Authority shall be invalid merely by reason of-

(a) any vacancy in, or any defect in the constitution of, the Authority; or

(b) any defect in the appointment of a person acting as a member of the Authority; or

(c) any irregularity in the procedure of the Authority not affecting the merits of the case.

- (1) The Authority may appoint officers and such other employees as it considers necessary for the efficient discharge of its functions under this Act.

(2) The terms and other conditions of service of officers and other employees of the Authority appointed under sub-section (1) shall be governed by regulations made under this Act.

-On the appointed day,-

(a) all the assets and liabilities of the Interim Insurance Regulatory Authority shall stand transferred to, and vested in, the Authority;

Explanation.-The assets of the Interim Insurance Regulatory Authority shall be deemed to include all rights and powers, and all properties, whether movable or immovable, including, in particular, cash balances, deposits and all other interests and rights in, or arising out of, such properties as may be in the possession of the Interim Insurance Regulatory Authority and all books of account and documents relating to the same; and liabilities shall be deemed to include all debts, liabilities and obligations of whatever kind;

(b) without prejudice to the provisions of Cl. (a), all debts, obligations and liabilities incurred, all contracts entered into and all matters and things engaged to be done by, with or for the Interim Insurance Regulatory Authority immediately before that day, for or in connection with the purpose of the said Regulatory Authority, shall be deemed to have been incurred, entered into or engaged to be done by, with or for, the Authority;

(c) all sums of money due to the Interim Insurance Regulatory Authority immediately before that day shall be deemed to be due to the Authority; and

(d) all suits and other legal proceedings instituted or which could have been instituted by or against the Interim Insurance Regulatory Authority immediately before that day may be continued or may be instituted by or against the Authority.

- (1) Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business.

(2) Without prejudice to the generality of the provisions contained in subsection (1), the powers and functions of the Authority shall include-

(a) issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration;

(b) protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy, and other terms and conditions of contracts of insurance;

(c) specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents;

(d) specifying the code of conduct for surveyors and loss assessors;

(e) promoting efficiency in the conduct of insurance business;

(f) promoting and regulating professional organisations connected with the insurance and re-insurance business;

(g) levying fees and other charges for carrying out the purposes of this Act;

(h) calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organisations connected with the insurance business;

(i) control and regulation of the rates, advantages, terms and conditions that may be offered by insurer in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under Sec. 64-U of the Insurance Act, 1938 (4 of 1938);

(j) specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries;

(k) regulating investment of funds by insurance companies;

(l) regulating maintenance of margin of solvency;

(m) adjudication of disputes between insurers and intermediaries or insurance intermediaries;

(n) supervising the functions of the Tariff Advisory Committee;

(o) specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organisations referred to in Cl. (f);

(p) specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector, and

(q) exercising such other powers as may be prescribed.

-The Central Government may, after due appropriation made by the Parliament by law in this behalf, make to the Authority grants of such sums of money as the Government may think fit for being utilised for the purposes of this Act.

- (1) There shall be constituted a fund to be called "The Insurance Regulatory And Development Authority Fund" and there shall be credited thereto-

(a) all Government grants, fees and charges received by the Authority;

(b) all sums received by the Authority from such other source as may be decided upon by the Central Government;

(c) the percentage of prescribed premium income received from the insurer.

(2) The Fund shall be applied for meeting-

(a) the salaries, allowances and other remuneration of the members, officers and other employees of the Authority;

(b) the other expenses of the Authority in connection with the discharge of its functions and for the purposes of this Act.

- (1) The Authority shall maintain proper accounts and other relevant records and prepare an annual statement of accounts in such form as may be prescribed by the Central Government in consultation with the Comptroller and Auditor-General of India.

(2) The accounts of the Authority shall be audited by the Comptroller and Auditor-General of India at such intervals as may be specified by him and any expenditure incurred in connection with such audit shall be payable by the Authority to the Comptroller and Auditor-General.

(3) The Comptroller and Auditor-General of India and any other person appointed by him in connection with the audit of the accounts of the Authority shall have the same rights, privileges and authority in connection with such audit as the Comptroller and Auditor-General generally has in connection with the audit of the Government accounts and, in particular, shall have the rights to demand the production of books of accounts, connected vouchers and other documents and papers and to inspect any of the offices of the Authority.

(4) The accounts of the Authority as certified by the Comptroller and Auditor- General of India or any other person appointed by him in this behalf together with the audit-report thereon shall be forwarded annually to the Central Government and that Government shall cause the same to be laid before each House of Parliament.

- (1) Without prejudice to the foregoing provisions of this Act, the Authority shall, in exercise of its powers or the performance of its functions under this Act, be bound by such directions on questions of policy other than those relating to technical and administrative matters as the Central Government may give in writing to it from time to time : Provided that the Authority shall, as far as practicable, be given an opportunity to express its views before any direction is given under this sub-section.

(2) The decision of the Central Government, whether a question is one of policy or not, shall be final.

- (1) If at any time the Central Government is of the opinion-

(a) that, on account of circumstances beyond the control of the Authority, it is unable to discharge the functions or perform the duties imposed on it by or under the provisions of this Act; or

(b) that the Authority has persistently defaulted in complying with any direction given by the Central Government under this Act or in the discharge of the functions or performance of the duties imposed on it by or under the provisions of this Act and as a result of such default the financial position of the Authority or the administration of the Authority has suffered; or

(c) that circumstances exist which render it necessary in the public interest so to do, the Central Government may, by notification and for reasons to be specified therein, supersede the Authority for such period, not exceeding six months, as maybe specified in the notification and appoint a person to be the Controller of Insurance under Sec. 2-B of the Insurance Act, 1938 (4 of 1938), if not already done :

Provided that before issuing any such notification, the Central Government shall give a reasonable opportunity to the Authority to make representations against the proposed supersession and shall consider the representations, if any, of the Authority.

(2) Upon the publication of a notification under sub-section (1) superseding the Authority,-

(a) the Chairperson and other members shall, as from the date of supersession, vacate their offices as such;

(b) all the powers, functions and duties which may, by or under the provisions of this Act, be exercised or discharged by or on behalf of the Authority shall, until the Authority is re-constituted under sub-section (3), be exercised and discharged by the Controller of Insurance; and

(c) all properties owned or controlled by the Authority shall, until the Authority is re-constituted under sub-section (3), vest in the Central Government.

(3) On or before the expiration of the period of supersession specified in the notification issued under sub-section (1), the Central Government shall re-constitute the Authority by a fresh appointment of its Chairperson and other members and in such case any person who had vacated his office under Cl. (a) of sub-section (2) shall not be deemed to be disqualified for re-appointment.

(4) The Central Government shall cause a copy of the notification issued under sub-section (1) and a full report of any action taken under this section and the circumstances leading to such action to be laid before each House of Parliament at the earliest.

- (1) The Authority shall furnish to the Central Government at such time and in such form and manner as may be prescribed, or as the Central Government may direct to furnish such returns, statements and other particulars in regard to any proposed or existing programme for the promotion and development of the insurance industry as the Central Government may, from time to time, require.

(2) Without prejudice to the provisions of sub-section (1), the Authority shall, within nine months after the close of each financial year, submit to the Central Government a report giving a true and full account of its activities including the activities for promotion and development of the insurance business during the previous financial year.

(3) Copies of the reports received under sub-section (2) shall be laid, as soon as may be after they are received, before each House of Parliament.

-No suit, prosecution or other legal proceedings shall lie against the Central Government or any officer of the Central Government or any member, officer or other employee of the Authority for anything which is in good faith done or intended to be done under this Act or the rules or regulations made thereunder :

Provided that nothing in this Act shall exempt any person from any suit or other proceedings which might, apart from this Act, be brought against him.

- (1) The Authority may, by general or special order in writing, delegate to the Chairperson or any other member or officer of the Authority subject to such conditions, if any, as may be specified in the order such of its powers and functions under this Act as it may deem necessary.

(2) The Authority may, by a general or special order in writing, also form Committees of the members and delegate to them the powers and functions of the Authority as may be specified by the regulations.

- (1) The Central Government may, by notification, make rules for carrying out the provisions of this Act.

(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely :

(a) the salary and allowances payable to, and other conditions of service of the members other than part-time members under sub-section (1) of Sec. 7;

(b) the allowances to be paid to the part-time members under sub-section (2) of Sec. 7;

(c) such other powers that may be exercised by the Authority under Cl.(q) of sub-section (2) of Sec. 14;

(d) the form of annual statement of accounts to be maintained by the Authority under sub-section (1) of Sec. 17;

(e) the form and the manner in which and the time within which returns and statements and particulars are to be furnished to the Central Government under sub-section (1) of Sec. 20;

(f) the matters under sub-section (5) of Sec. 25 on which the Insurance Advisory Committee shall advise the Authority;

(g) any other matter which is required to be, or may be, prescribed, or in respect of which provision is to be or may be made by rules.

- (1) The Authority may, by notification, establish with effect from such date as it may specify in such notification, a Committee to be known as the Insurance Advisory Committee.

(2) The Insurance Advisory Committee shall consist of not more than twenty- five members excluding ex-officio members to represent the interests of commerce, industry, transport, agriculture, consumer fora, surveyors, agents, intermediaries, organisations engaged in safety and loss prevention, research bodies and employees' association in the insurance sector.

(3) The Chairperson and the members of the Authority shall be the ex-officio Chairperson and ex-officio members of the Insurance Advisory Committee.

(4) The objects of the Insurance Advisory Committee shall be to advise the Authority on matters relating to the making of the regulations under Sec. 26.

(5) Without prejudice to the provisions of sub-section (4), the Insurance Advisory Committee may advise the Authority on such other matters as may be prescribed.

- (1) The Authority may, in consultation with the Insurance Advisory Committee, by notification, make regulations consistent with this Act and the rules made thereunder to carry out the purposes of this Act.

(2) In particular, and without prejudice to the generality of the foregoing power, such regulations may provide for all or any of the following matters, namely:-

(a) the times and places of meetings of the Authority and the procedure to be

followed at such meetings including the quorum necessary for the transaction of business under sub-section (1) of Sec. 10;

(b) the transactions of business at its meetings under sub-section (4) of Sec. 10;

(c) the terms and other conditions of service of officers and other employees of the Authority under sub-section (2) of Sec. 12;

(d) the powers and functions which may be delegated to Committees of the members under sub-section (2) of Sec. 23; and

(e) any other matter which is required to be, or may be, specified by

regulations or in respect of which provision is to be or may be made by regulations.

-Every rule, and every regulation made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation or both Houses agree that the rule or regulation should not be made, the rule or regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation.

-The provisions of this Act shall be in addition to, and not in derogation of, the provisions of any other law for the time being in force.

- (1) If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order published in the Official Gazette, make such provisions not inconsistent with the provisions of this Act as may appear to be necessary for removing the difficulty : Provided that no order shall be made under this section after the expiry of two years from the appointed day.

(2) Every order made under this section shall be laid, as soon as may be, after it is made, before each House of Parliament.

-The Insurance Act, 1938 shall be amended in the manner specified in the First Schedule to this Act.

-The Life Insurance Corporation Act, 1956 shall be amended in the manner specified in the Second Schedule to this Act.

-The General Insurance Business (Nationalisation) Act, 1972 shall be amended in the manner specified in the Third Schedule to this Act.

(4 of 1938) 1. In the Act, except in Cl. (5-B) of Sec. 2 and Sec. 2-B, for "Controller" wherever it occurs, substitute "Authority" and such consequential changes as the rules of grammar may require shall also be made; 2. In Secs. 27, 27-A, 27-B, 31, 32-A, 40-A, 48-B, 64-F, 64-G, 64-1, 64-J, 64-L, 64-R, 64-UC, 64-UM, 113 and 115, for "Central Government" wherever they occur, substitute "Authority". 3. In Sec. 2- (a) after Cl. (1), insert the following :- (1-A) "Authority" means the Insurance Regulatory And Development Authority established under sub-section (1) of Sec. 3 of the Insurance Regulatory And Development Authority Act, 1999; (b) for Cl. (5-B), substitute the following :- (5-B) "Controller of Insurance" means the officer appointed by the Central Government under Sec. 2-B 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; (c) after Cl. (7), insert the following :- (7-A) "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 in such Indian Insurance Company; (c) whose sole purpose is to carry on life insurance business or general insurance business or re-insurance business. Explanation.-For the purposes of this clause, the expression "foreign Company" shall have the meaning assigned to it under Cl. (23-A) of Sec. 2 of the Income-tax Act, 1961 (43 of 1961). (d) in Cl. (4), for "Sec. 114" substitute "this Act". 4. After Sec. 2, insert the following :- "2-A. 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." 5. In Sec. 2-B, for sub-section (1), substitute the following: "(1) If at any time, the Authority is superseded under sub-section (1) of Sec. 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 the Insurance till such time the Authority is re-constituted under sub-section (3) of Sec. 19 of that Act." 6. In Sec. 2-C, in sub-section (1), after the second proviso, insert the following :- "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." 7. In Sec. 3,- (a) in sub-section (1), after the first proviso, insert the following:- "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."; (b) in sub-section (2),- (i) in the opening portion, for "Every application for registration shall be accompanied by-", substitute the following:- "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-"; (ii) in Cl. (d), for "working capital", substitute "paid-up equity capital or working capital"; (iii) in Cl. (f), in the proviso, omit "and" occurring at the end; (iv) for Cl. (g), substitute the following:- "(g) the receipt showing payment of fee as may be determined by the regulations which shall not exceed fifty thousand 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 regulations made by the Authority"; (c) after sub-section (2-A), insert- "(2-AA) 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.". (d) in sub-section (4),- (i) in Cl. (f), for "of any rule or order made thereunder, or", substitute the following:- "of any rule or any regulation or order made or, any direction issued thereunder, or"; (ii) in Cl. (h), insert "or" at the end; (iii) after Cl. (h), insert the following:- "(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), 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)." (e) in sub-section (5-C),- (i) for "Cl. (h)", substitute "Cl. (h) or Cl. (i) or Cl. (j)"; (ii) for "any requirement of this Act or of any rule or order made thereunder, "substitute the following:- "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," (f) after sub-section (5-D), insert the following: "(5-E) 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." (g) for sub-section (7), substitute the following:- "(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,". 8. In Sec. 3-A- (a) in sub-section (1), for "the 31st day of December, 1941", substitute the following:- "the 31st day of March, after the commencement of the Insurance Regulatory and Development Authority Act, 1999"; (b) in sub-section (2), (i) for "prescribed fee", substitute "fee as determined by regulations made by the Authority". (ii) for Cl. (i), substitute the following:- "(i) exceed one-fourth of one per cent of such premium income or rupees five crores, whichever is less,"; (iii) for Cl. (ii), substitute the following:- "(ii) be less, in any case, than fifty thousand rupees for each class of insurance business:"; (c) in sub-section (3), for "prescribed fee", substitute "fee as determined by regulations made by the Authority". (d) in sub-section (4), for "prescribed fee "substitute "fee as determined by the regulations made by the Authority, and". 9. For Sec. 6, substitute the following :- "6. Requirement as to capital.- No insurer carrying on the business of life insurance, general insurance or re-insurance in India on or after the commencement of the Insurance Regulatory and Development Authority Act, 1999, shall be registered unless he has,- (i) a paid-up equity capital of rupees one hundred crores, in case of a person carrying on the business of life insurance or general insurance; or (ii) a paid-up equity capital of rupees two hundred crores, in case of a person carrying on exclusively the business as a insurer : Provided that in determining the paid-up equity capital specified under Cl. (i) or Cl. (ii), the deposit to be made under Sec. 7 and any preliminary expenses incurred in the formation and registration of the company shall be excluded : Provided further that an insurer carrying on business of life insurance, general insurance or re-insurance in India before the commencement of the Insurance Regulatory and Development Authority Act, 1999 and who is required to be registered under this Act, shall have a paid-up equity capital in accordance with Cl. (i) and Cl. (ii), as the case may be, within six months of the commencement of that Act." 10. In Sec. 6-A,- (a) in sub-section (4), in Cl. (b),- (I) in sub-clause (i), omit "and" occurring at the end; (II) in sub-clause (ii), for "sanction of the Central Government has been obtained to the transfer", substitute "approval of the Authority has been obtained to the transfer", (III) after sub-clause (ii), insert the following :- (iii) where, the nominal value of the shares intended to be transferred by any individual, firm, group, constituents of a group, or body corporate under the same management, jointly or severally exceeds one per cent of paid-up equity capital of the insurer, unless the previous approval of the Authority has been obtained for the transfer. Explanation.-For the purposes of this sub-clause, the expressions "group" and "same management", shall have the same meanings respectively assigned to them in the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969); (b) in sub-section (11),- (i) for "Explanation 1", substitute "Explanation"; (ii) omit Explanation 2. 11. After Sec. 6-A, insert the following:- "6-AA. Manner of divesting excess share holding by promoter in certain cases.-(1) No promoter shall at any time hold more than twenty six per cent or such other percentage as may be prescribed, of the paid-up equity capital in an Indian Insurance Company : Provided that in a case where an Indian Insurance Company begins the business of life insurance, general insurance or re-insurance in which the promoters hold more than twenty-six per cent of the paid-up equity capital or such other excess percentage as may be prescribed, the promoters shall divest in a phased manner in share capital in excess of the twenty-six per cent of the paid-up equity capital or such excess paid-up equity capital as may be prescribed, after a period of ten years from the date of the commencement of the said business by such Indian Insurance Company or within such period as may be prescribed by the Central Government. Explanation.-For the removal of doubts, it is hereby declared that nothing contained in proviso shall apply to the promoters being foreign company, referred to in sub-clause (b) of Cl. (7-A) of Sec. 2. (2) The manner and procedure for divesting the excess share capital under sub-section (1) shall be specified by the regulations made by the Authority." 12. Section 7,- (a) in sub-section (1),- (i) omit "not being an insurer specified in sub-clause (c) of Cl. (9) of Sec.2"; (ii) for Cls. (a) and (b), substitute the following:- "(a) in the case of life insurance business, a sum equivalent to one per cent of his total gross premium written in India in any financial year commencing after the 31st day of March, 2000, not exceeding rupees ten crores; (b) in the case of general insurance business, a sum equivalent to three per cent of his total gross premium written in India, in any financial year commencing after the 31st day of March, 2000, not exceeding rupees ten crores; (c) in the case of re-insurance business, a sum of rupees twenty crores;"; (b) omit sub-sections (1-A), (1-B), (1-C), (1-D) and (1-E). 13.In Sec.11,- (a) in sub-section (1), for "calender year", substitute "financial year"; (b) after sub-section(l), insert the following: "(1-A) Notwithstanding anything contained in sub-section (1), every insurer, on or after the commencement of the Insurance Regulatory and Development Authority Act, 1999, in respect of insurance business transacted by him and in respect of his shareholders' funds, shall, at the expiration of each financial year prepare with reference to that year, a balance sheet, a profit and loss account, a separate account of receipts and payments, a revenue account in accordance with the regulations made by the Authority. (1-B) Every insurer shall keep separate accounts relating to funds of share holders and policy holders." 14. In Sec. 13,- (a) in sub-section (1),- (i) for "once at least in every three years"; substitute "every year"; (ii) in the first proviso, for "not more than four years", substitute "not later than two years"; (iii) after the second proviso, insert the following:- "Provided also that for an insurer carrying on life insurance business in India immediately before the commencement of the Insurance Regulatory and Development Authority Act, 1999, the last date, as at which the first investigation after such commencement should be caused by an actuary, shall be the 31st day of March, 2001"; (iv) after third proviso, insert the following:- "Provided also that every insurer on or after the commencement of the Insurance Regulatory and Development Authority Act, 1999 shall cause an abstract of the report of the actuary to be made in the manner specified by regulations made by the Authority."; (b) in sub-section (4), after the proviso, insert the following :- "Provided further that the statement referred to in sub-section (4) shall be appended in the form and in the manner specified by the regulations made by the Authority." 15. After Sec. 27-B,-Insert the following:- "27-C. Prohibition/or investment of funds outside India.-No insurer shall directly or indirectly invest outside India, the funds of the policy holders. 27-D. Manner and conditions of investment.-(1) Without prejudice to anything contained in Sec. 27, 27-A and 27-B, the Authority may, in the interests of the policy holders, specify by the regulations made by the Authority, the time, manner and other conditions of investment of assets to be held by an insurer for the purposes of this Act. (2) The Authority may give specific directions for the time, manner and other conditions subject to which the funds of policy holders shall be invested in the infrastructure and social sector as may be specified by regulations made by the Authority and such regulations shall apply uniformly to all the insurers carrying on the business of life insurance, general insurance, or re-insurance in India on or after the commencement of the Insurance Regulatory and Development Authority Act, 1999. (3) The Authority may, after taking into account the nature of business and to protect the interests of the policy holders, issue to an insurer the directions relating to the time, manner, and other conditions of investment of assets to be held by him : Provided that no direction under this sub-section shall be issued unless the insurer concerned has been given a reasonable opportunity of being heard. 16. In Sec. 28-A, in sub-section (1), for "31st day of December", substitute "31st day of March,". 17. In Sec. 28-B, in sub-section (1), for "31st day of December,", substitute "31st day of March,". 18. In Sec. 31-B- (a) in sub-section (1), for "Central Government" at both the places where they occur, substitute "Authority"; (b) in sub-section (2), for "a statement in the prescribed form", substitute "a statement, in the form specified by the regulations made by the Authority,"; (c) after sub-section (3), insert the following: "(4) Every direction under this section shall be issued by an order made by the Authority; Provided that no order under this section shall be made unless the person concerned has been given an opportunity of being heard." 19. After Sec. 32-A, insert the following :- "32-B. Insurance business in rural or social sector.-Every insurer shall, after the commencement of the Insurance Regulatory and Development Authority Act, 1999, undertake such percentages of life insurance business and general insurance business in the rural or social sector, as may be specified, in the Official Gazette by the Authority, in this behalf. "32-C. Obligations of insurer in respect of rural or unorganised sector and backward classes.-Every insurer shall, after the commencement of the Insurance Regulatory and Development Authority Act, 1999 discharge the obligations specified under Sec. 32-B to provide life insurance or general insurance policies to the persons residing in the rural sector, workers in the unorganized or informal sector or for economically vulnerable or backward classes of the society and other categories of persons as may be specified by regulations made by the Authority and such insurance policies shall include insurance for crops.". 20. For Sec. 33, substitute the following :- 'Investigation 33. Power of investigation and inspection by Authority.-(1) The Authority may, at any time, by order in writing, direct any person (hereafter in this section referred to as "Investigating Authority") specified in the order to investigate the affairs of any insurer and to report to the Authority on any investigation made by such Investigating Authority: Provided that the Investigating Authority may, wherever necessary, employ any auditor or actuary or both for the purpose of assisting him in any investigation under this section. (2) Notwithstanding anything to the contrary contained in Sec. 235 of the Companies Act, 1956 (1 of 1956), the Investigating Authority may, at any time, and shall, on being directed so to do by the Authority, cause an inspection to be made by one or more of his officers of any insurer and his books and account; and the Investigating Authority shall supply to the insurer a copy of this report on such inspection. (3) It shall be the duty of every manager, managing director or other officer of the insurer to produce before the Investigating Authority directed to make the investigation under sub-section (1), or inspection under sub-section (2), all such books of account, registers and other documents in his custody or power and to furnish him with any statement and information relating to the affairs of the insurer as the said Investigating Authority may require of him within such time as the said Investigating Authority may specify. (4) Any Investigating Authority, directed to make an investigation under sub-section (1), or inspection under sub-section (2), may examine on oath, any manager, managing director or other officer of the insurer in relation to his business and may administer oaths accordingly. (5) The Investigating Authority shall, if he has been directed by the Authority to cause an inspection to be made, and may, in any other case, report to the Authority on any inspection made under this section. (6) On receipt of any report under sub-section(l) or sub-section (5), the Authority may, after giving such opportunity to the insurer to make a representation in connection with the report as, in the opinion of the Authority, seems reasonable, by order in writing,- (a) require the insurer, to take such action in respect of any matter arising out of the report as the Authority may think fit; or (b) cancel the registration of the insurer; or (c) direct any person to apply to the Court for the winding-up of the insurer, if a company, whether the registration of the insurer has been cancelled under Cl. (b) or not (7) The Authority may, after giving reasonable notice to the insurer, publish the report submitted by the Investigating Authority under sub-section (5) or such portion thereof as may appear to it to be necessary. (8) The Authority may by the regulations made by it specify the minimum information to be maintained by insurers in their books, the manner in which such information shall be maintained, the checks and other verifications to be adopted by insurers in that connection and all other matters incidental thereto as are, in its opinion, necessary to enable the Investigating Authority to discharge satisfactorily his functions under this section. Explanation.-For the purposes of this section, the expression "insurer" shall include in the case of an insurer incorporated in India- (a) all its subsidiaries formed for the purpose of carrying on the business of insurance exclusively outside India; and (b) all its branches whether situated in India or outside India. (9) No order made under this section other than an order made under Cl. (b) of sub-section (6) shall be capable of being called in question in any Court. (10) All expenses of, and incidental to, any investigation made under this section shall be defrayed by the insurer, shall have priority over that debts due from the insurer and shall be recoverable as an arrear of land revenue. 21. In Sec. 33-A, omit "Central Government or the". 22. In Sec. 34-H,- (a) in sub-section (1),- (i) for "Controller", substitute, "Chairperson of the Authority"; (ii) for "an Assistant Controller of Insurance", substitute "an officer authorised by the Authority"; (b) in sub-sections (5) and (7), for "Controller" wherever it occurs, substitute "the Chairperson of the Authority". 23. In Sec.35,- (a) in sub-section (1), for "sanctioned by the Controller", substitute "approved by the Authority"; (b) in sub-section (3),- (i) in the first paragraph, for "to sanction any such scheme", substitute "to approve any such scheme"; (ii) in the second paragraph, for "the amalgamation or transfer if sanctioned", substitute "the amalgamation or transfer if approved". 24. In Sec.36,- (a) in sub-section (1), for "may sanction the arrangement", substitute "may approve the arrangement"; (b) in sub-section (2),- (i) for "the insurers concerned in the amalgamation, the Controller may sanction", substitute "the insurers concerned in the amalgamation, the Authority may approve"; (ii) for "contracts as sanctioned by the Controller", substitute "contracts as approved by the Authority". 25. In Sec. 37, in Cl. (c), for "scheme sanctioned", substitute "scheme approved". 26. In Sec. 40-A, in sub-section (3), for the portion beginning with the words "an amount exceeding" and ending with the words "ten per cent of the premium payable on the policy", substitute "an amount not exceeding fifteen per cent of the premium payable on the policy where the policy relates to fire or marine insurance or miscellaneous insurance." 27. Section 42,- (a) for sub-section (1), substitute the following,- "(1) The Authority or an officer authorised by it in this behalf shall, in the manner determined by the regulations made by it and on payment of the fee determined by the regulations, which shall not be more than two hundred and fifty rupees, issue to any person making an application in the manner determined by the regulations, a licence to act as an insurance agent for the purpose of soliciting or procuring insurance business : Provided that,- (i) in the case of an individual, he does not suffer from any of the disqualifications mentioned in sub-section (4); and (ii) in the case of a company or firm, any of its directors or partners does not suffer from any of the said disqualifications : Provided further that any licence issued immediately before the commencement of the Insurance Regulatory and Development Authority Act, 1999 shall be deemed to have been issued in accordance with the regulations which provide for such licence"; (b) for sub-section (3) substitute the following :- "(3) A licence issued under this section, after the date of the commencement of the Insurance Regulatory and Development Authority Act, 1999, shall remain in force for a period of three years only from the date of issue, but shall, if the applicant, being an individual does not, or being a company or firm any of its directors or partners does not, suffer from any of the disqualifications mentioned in Cls. (b), (c), (d), (e) and (f) of sub-section (4) and the application for renewal of licence reaches the issuing authority at least thirty , days before the date in which the licence ceases to remain in force, be renewed for a period of three years at any one time on payment of the fee determined by the regulations made by the Authority which shall not be more than rupees two hundred and fifty, and additional fee of an amount determined by the regulations not exceeding rupees one hundred by way of penalty, if the application for renewal of the licence does not reach the issuing authority at least thirty days before the date on which the licence ceases to remain in force"; (c) in sub-section (3-A), for the proviso, substitute the following:- "Provided that the Authority may, if satisfied that undue hardship would be caused otherwise, accept any application in contravention of this sub-section on payment by the applicant of a penalty of seven hundred and fifty rupees"; (d) in sub-section (4), after Cl. (d), insert the following:- "(e) that he does not possess the requisite qualifications and practical training for a period not exceeding twelve months, as may be specified by the regulations made by the Authority in this behalf; (f) that he has not passed such examination as may be specified by the regulations made by the Authority in this behalf: Provided that a person who had been issued a licence under sub-section (1) of this section or sub-section (1) of Sec. 64- UM shall not be required to possess the requisite qualifications, practical training and pass such examination as required by Cls. (e) and (f); (g) that he violates the code of conduct as may be specified by the regulations made by the Authority." (e) for sub-section (6), substitute the following:- "(6) The Authority may issue a duplicate licence to replace a licence lost, destroyed or mutilated, on payment of such fee not exceeding rupees fifty as may be determined by the regulations"; (f) in sub-section (7),- (i) for "fifty rupees", substitute "five hundred rupees"; (ii) for "one hundred rupees", substitute "one thousand rupees"; (g) in sub-section (8), for "fifty rupees", substitute "five hundred rupees". 28. After Sec. 42-A, in sub-section (1),- (a) for "Controller or an officer authorised by him", substitute "Authority or an officer authorised by it"; (b) for "an application to him", substitute "an application to it"; 29. After Sec. 42-C, insert the following :- "42-D. Issue of licence to intermediary or insurance intermediary.-(1) The Authority or an officer authorised by it in this behalf shall, in the manner determined by the regulations made by the Authority and on payment of the fees determined by regulations made by the Authority issue, to any person making an application in the manner determined by regulations, and not suffering from any of the disqualifications herein mentioned, a licence to act as an intermediary or an insurance intermediary under this Act: Provided that- (a) in the case of an individual, he does not suffer from any of the disqualifications mentioned in sub-section (4) of Sec. 42, or (b) in the case of a company or firm, any of its directors or partners does not suffer from any of the said disqualifications. (2) A licence issued under this section shall entitle the holder thereof to act as an intermediary or insurance intermediary. (3) A licence issued under this section, shall remain in force for a period of three years only from the date of issue, but shall, if the applicant, being an individual does not, or being a company or firm any of its directors or partners does not suffer from any of the disqualifications mentioned in Cls. (b), (c), (d), (e) and (f) of sub-section (4) of Sec. 42 and the application for renewal of licence reaches the issuing authority at least thirty days before the date on which the licence ceases to remain in force, be renewed for a period of three years at any one time on payment of the fee, determined by regulations made by the Authority and additional fee for an amount determined by the regulations, not exceeding one hundred rupees by way of penalty, if the application for renewal of the licence does not reach the issuing authority at least thirty days before the date on which the licence ceases to remain in force. (4) No application for the renewal of a licence under this section shall be entertained if the application does not reach the issuing authority before the licence ceases to remain in force : Provided that the Authority may, if satisfied that undue hardship would be caused otherwise, accept any application in contravention of this sub-section on payment by the applicant of a penalty of seven hundred and fifty rupees. (5) The disqualifications above referred to shall be the following- (a) that the person is a minor; (b) that he is found to be of unsound mind by a Court of competent jurisdiction; (c) that he has been found guilty of criminal misappropriation or criminal breach of trust or cheating or forgery or an abetment of or attempt to commit any such offence by a Court of competent jurisdiction: Provided that, where at least five years have elapsed since the completion of the sentence imposed on any person in respect of any such offence, the Authority shall ordinarily declare in respect of such person that his conviction shall cease to operate as a disqualification under this clause; (d) that in the course of any judicial proceedings relating to any policy of insurance of the winding-up of an Insurance Company or in the course of an investigation of the affairs of an insurer it has been found that he had been guilty of or has knowingly participated in or connived at any fraud dishonesty or misrepresentation against an insurer or an insured; (e) that he does not possess the requisite qualifications and practical training for a period not exceeding twelve months, as may be specified by the regulations made by the Authority in this behalf; (f) that he has not passed such examinations as may be specified by the regulations made by the Authority in this behalf; (g) that he violates the code of conduct as may be specified by the regulations made by the Authority. (6) If it be found that an intermediary or an insurance intermediary suffers from any of the foregoing disqualifications, without prejudice to any other penalty to which he may be liable, the Authority shall, and if the intermediary or an insurance intermediary has knowingly contravened any provision of this Act may, cancel the licence issued to the intermediary or an insurance intermediary under this section. (7) The Authority may issue a duplicate licence to replace a licence lost, destroyed or mutilated, on payment of such fee, as may be determined by regulations made by the authority. (8) Any person who acts as an intermediary or an insurance intermediary without holding a licence issued under this section to act as such, shall be punishable with fine, and any insurer or any person, who appoints as an intermediary or an insurance intermediary or any person not licensed to act as such or transacts any insurance business in India through any such person, shall be punishable with fine. (9) Where the person contravening sub-section (8) is a company or a firm, then without. prejudice to any other proceedings which may be taken against the company or firm, every director, manager, secretary or other officer of the company, and every partner of the firm who is knowingly a party to such contravention shall be punishable with fine." 30. Section 64-UA, in sub-section (1), in sub-clause (a), for "Controller of Insurance" substitute "Chairperson of the Authority". 31. In Sec. 64-UB- (a) for sub-section (1), substitute the following:- "(1) The Authority may, by notification in the Official Gazette, make regulations to carry out the purposes of this Part"; (b) in sub-section (2), for "rules", substitute "regulations"; (c) in sub-section (3) for "Central Government" at both the places where it occur, substitute "Authority"; (d) in sub-section (5), for "Controller of Insurance", substitute "Chairperson of the Authority". 32. Section 64-UC, in sub-section (1), in the proviso, for "the Controller may, with the previous approval of the Central Government" substitute "the Authority may". 33. Section 64-UD, after sub-section (1), insert the following:- "Provided that the Chairperson of the Authority shall become the Chairman of the Advisory Committee with effect from the commencement of the Insurance Regulatory and Development Authority Act, 1999 and function as such, and any Chairman of the Tariff Committee holding office immediately before such commencement shall cease to be the Chairman." 34. Section 64-UJ, in sub-section (5), for "Central Government" wherever it occurs, substitute "Authority". 35. Section. 64-UM,- (a) in sub-section (1),- (i) in paragraph (B), after "the Insurance (Amendment) Act, 1968", insert "but before the commencement of the Insurance Regulatory and Development Authority Act, 1999"; (ii) after paragraph (B), insert the following:- "(BA) Every person who intends to act as a surveyor or loss assessor after the expiry of a period of one year from the commencement of the Insurance Regulatory and Development Authority Act, 1999, shall make an application to the Authority within such time, in such manner and on payment of such fee as may be determined by the regulations made by the Authority: Provided that any licence issued immediately before the commencement of the Insurance Regulatory and Development Authority Act, 1999 shall be deemed to have been issued in accordance with the regulations providing for such licence"; (iii) in paragraph (C), for "as may be prescribed", substitute "as may be determined by regulations"; (iv) in paragraph (D), in Cl. (i),- (A) for item (a), substitute the following:- "(a) has been in practice as a surveyor or loss assessor on the date of commencement of the Insurance Regulatory and Development Authority Act, 1999, or"; (B) in item (f), for "prescribed" substitute "specified by regulations made by the Authority"; (b) after sub-section (1), insert - "(1-A) Every surveyor and loss assessor shall comply with the code of conduct in respect of their duties, responsibilities and other professional requirements as may be specified by regulations made by the Authority." 36. Section 64-V,- (a) in sub-section (1),- (i) in Cl. (i), after sub-section (g), insert the following:- "(h) such other asset or assets as may be specified by the regulations made in this behalf"; (ii) in Cl. (ii)-(A) in sub-clause (b), in items (i) and (ii), for "40 per cent", substitute "50 per cent"; (B) after sub-clause (f), insert the following:- "(g) such other liability which may be made in this behalf to be included for the purpose of Cl. (ii)"; (b) for sub-section (2), substitute the following:- "(2) Every insurer shall furnish to the Authority with his returns under Sec. 15 or Sec. 16, as the case may be, a statement certified by an auditor approved by the Authority in respect of general insurance business, or an actuary approved by the Authority in respect of life insurance business, as the case may be, of his assets and liabilities assessed in the manner required by this section as on the 31st day of March of the preceding year. (3) Every insurer shall value his assets and liabilities in the manner required by this section and in accordance with the regulations which may be made by the Authority in this behalf.". 37. Section 64-VA,- (a) in sub-section (1), for "at all times", substitute "at all times before the commencement of the Insurance Regulatory and Development Authority Act, 1999"; (b) after sub-section (1), insert the following.- '(1-A) Every insurer shall, at all times, on or after the commencement of the Insurance Regulatory and Development Authority Act, 1999, maintain an excess of the value of his assets over the amount of his liabilities of not less than the amount arrived at as follows (hereinafter referred to in this section referred to as the "required solvency margin"), namely :- (i) in the case of an insurer carrying on life insurance business, the required solvency margin shall be the higher of the following amounts- (a) fifty crores of rupees (one hundred crores of rupees in case of re-insurers); or (b) the aggregate sums of the results arrived at in items (I) and (II) stated below :- (I) the aggregate of the results arrived at by applying the calculation described in item (A) below (Step-I) and the calculation described in item (B) below (Step II): (A) for Step I- (A.1) there shall be taken, a sum equal to a percentage determined by the regulations not exceeding five per cent of the mathematical reserves for direct business and re-insurance acceptances without any deduction for re-insurance cessions. (A.2) the amount of mathematical reserves at the end of the preceding financial year after the deduction of re-insurance cessions shall be expressed as a percentage of the amount of those mathematical reserves before any such deduction; and (A.3) the sum mentioned in item (A.1) above shall be multiplied- (A.3.1) where the percentage arrived at under item (A.2) above is greater than eighty-five per cent (or in the case of a re-insurer carrying on exclusive re-insurance business, fifty per cent.), by that greater percentage; and (A.3.2) in any other case, by eighty-five per cent (or in the case of a re-insurer carrying on exclusive re-insurance business, by fifty per cent.); (B) for Step II- (B.1) there shall be taken, a sum equal to a percentage determined by the regulations made by the Authority not exceeding one per cent of the sum at risk for the policies on which the sum at risk is not a negative figure, and (B.2) the amount of sum at risk at the end of the preceding financial year for policies on which the sum at risk is not a negative figure after the deduction of re-insurance cession shall be expressed as a percentage of the amount of that sum at risk before any such deduction, and (B.3) the sum arrived at under item (B.1) above shall be multiplied- (B.3.1) where the percentage arrived at under item (B.3.2) above is greater than fifty per cent, by that grater percentage; and (B.3.2) in any other case, by fifty per cent, (II) a percentage determined by the regulations made by the Authority of the value of assets determined in accordance with the provisions of Sec.64V; (ii) in the case of an insurer carrying on general insurance business, the required solvency margin, shall be the highest of the following amounts:- (a) fifty crores of rupees (one hundred crores of rupees in case of re-insurer); or (b) a sum equivalent to twenty per cent of net premium income; or (c) a sum equivalent to thirty per cent of net incurred claims, subject to credit for re-insurance in computing net premiums and net incurred claims being actual but a percentage, determined by the regulations not exceeding fifty per cent: Provided that if in respect of any insurer, the Authority is satisfied that either by reason of an unfavourable claim experience or because of sharp increase in the volume of the business, or for any other reason, compliance with the provisions of this sub-section would cause undue hardship to the insurer, the Authority may direct, for such period and subject to such conditions, such solvency margin not being less than the lower of the amount mentioned in sub-clause (i) or sub-clause (ii) above, as the case may be. Explanation.-For the purposes of this sub-section, the expressions- (i) "mathematical reserves" means the provision made by an insurer to cover liabilities (excluding liabilities which have fallen due and liabilities arising from deposit back arrangement in relation to any policy whereby an amount is deposited by re-insurer with the cedant) arising under or in connection with policies or contracts for life insurance business. Mathematical reserves also include specific provision for adverse deviations of the bases, such as mortality and morbidity rates, interest rates, and expense rates, and any explicit provisions made, in the valuation of liabilities, in accordance with the regulations made by the Authority for this purpose; (ii) "net incurred claims" means the average of the net incurred claims during the specified period of not exceeding three preceding financial years; (iii) "sum at risk" in relation to a life insurance policy, means a sum which is- (a) in any case in which an amount is payable in consequence of death other than a case falling within sub-clause (b) below, the amount payable on death, and (b) in any case in which the benefit under the policy in question consist of the making, in consequence of death, of the payments of annuity, payment of sum by instalments or any other kind of periodic payments, the present value of that benefit, less in either case the mathematical reserves in respect of the relevant policies"; (c) after sub-section (2), insert the following:- "(2-A) If, at any time an insurer does not maintain the required solvency margin in accordance with the provisions of this section, he shall, in accordance with the directions issued by the Authority, submit a financial plan, indicating a plan of action to correct the deficiency to the Authority within a specified period not exceeding three months. (2-B) An insurer who has submitted a plan under sub-section (2-A) to the Authority shall propose modifications to the plan if the Authority considers it inadequate, and shall give effect to any plan accepted by the Authority as adequate. (2-C) An insurer who does not comply with the provisions of sub-section (2-A) shall be deemed to be insolvent and may be wound up by the Court"; (d) after sub-section (6), insert the following:- "(7) Every insurer shall furnish to the Authority his returns under Sec. 15 or Sec. 16, as the case may be, in case of life insurance business a statement certified by an actuary approved by the Authority, and in case of general insurance business a statement certified by an auditor approved by the Authority, of the required solvency margin maintained by the insurer in the manner required by sub-section (1-A)." 38. Section 70, in sub-section (1), for "the Controller, a certificate of registration", substitute "the Authority, before the date of commencement of the Insurance Regulatory and Development Authority Ad, 1999, a certificate of registration"; 39. Section 95, in sub-section (1), for "In this Part-", substitute, "In this Part before the date of commencement of the Insurance Regulatory and Development Authority Act, 1999",- 40. Section 101-A,-- (a) in sub-section (1), for "the Central Government", substitute "the Authority with the previous approval of the Central Government"; (b) in sub-section (2), for "the Central Government", substitute "the Authority". 41. Section 101-B- (a) in sub-section (1), for "the Central Government", substitute "the Authority with the previous approval of the Central Government". (b) in sub-section (2), for "prescribed", substitute "determined by the regulations made by the Authority". 42. For Secs. 102 to 105, substitute the following:- "102. Penalty for default in complying with, or act in contravention of, this Act.-If any person who is required under this Act, or rules or regulations made thereunder,- (a) to furnish any document, statement, account, return or report to the Authority, fails to furnish the same; or (b) to comply with the directions, fails to comply with such directions; (c) to maintain solvency margin, fails to maintain such solvency margin; (d) to comply with the directions on the insurance treaties, fails to comply with such directions on the insurance treaties, he shall be liable to a penalty not exceeding five lakh rupees for each such failure and punishable with fine. 103. Penalty for carrying on insurance business in contravention of Secs. 3,7 and 98.-If a person makes a statement, or furnishes any document, statement, account, return or report which is false and which he either knows or believes to be false or does not believe to be true,- (a) he shall be liable to a penalty not exceeding five lakh rupees for each such failure; and (b) he shall be punishable with imprisonment which may extend to three years or with fine for each such failure. 204. Penalty for false statement in document.-If a person fails to comply with the provisions of Sec. 27 or Sec. 27-A or Sec. 27-B or Sec. 27-C or Sec. 27-D, he shall be liable to a penalty not exceeding five lakh rupees for each such failure. 205. Wrongfully obtaining or withholding property.-If any director, managing director, manager or other officer or employees of an insurer wrongfully obtains possession of any property or wrongfully applies to any purpose of the Act, he shall be liable to a penalty not exceeding two lakh rupees for each such failure. 205-A. Offences by companies.-(1) Where any offence under this Act has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly : Provided that nothing contained in this sub-section shall render any such person liable to any punishment, if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence. (2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.- For the purpose of this section,- (a) "company" means any body corporate, and includes- (i) a firm; and (ii) an association of persons or a body of individuals whether incorporated or not; and (b) "director", in relation to- (i) a firm, means a partner in the firm; (ii) an association of persons or a body of individuals, means any member controlling the affairs thereof. 105-B. Penalty for failure to comply with Sec. 32- B.-If an insurer fails to comply with the provisions of Sec. 32-B, he shall be liable to a penalty not exceeding five lakh rupees of each such failure and shall be punishable with imprisonment which may extend to three years or with fine for each such failure. 105-C. Penalty for failure to comply with Sec. 32- C.-If an insurer fails to comply with the provisions of Sec. 32-C, he shall be liable to a penalty not exceeding twenty-five lakh rupees for each such failure and in the case of subsequent and continuing failure, the registration granted to such insurer under Sec. 3 shall be cancelled by the Authority.". 43. In Secs. 110-A, 110-B, and 110-C for "Controller", wherever it occurs, substitute "Chairperson of the Authority"; 44. Section 110-G, for "Controller" at both the places where it occurs, substitute "Chairperson of the Authority". 45. Section 110-H, in sub-section (1), for "under sections" substitute "under Sec. 27-D" 46. Section 114, in sub-section (2),- (a) after Cl. (a), insert the following:- "(aa) such other percentage of paid-up equity capital in excess of twenty six per cent of the paid-up equity capital and the period within which such excess paid-up equity capital shall be divested under sub-section (1) of Sec.6-AA."; (b) omit Cls.(g) and (ll), 47. After Sec. 114, insert the following:- "114-A. Power of Authority to make regulations.-(1) The Authority may, by notification in the Official Gazette, make regulations consistent with this Act and the rules made thereunder, to carry out the purposes of this Act. (2) In particular, and without prejudice to the generality of the foregoing power, such regulations may provide for all or any of the following matters, namely:- (a) the matters, including fee relating to the registration of insurers under Sec. 3; (b) the manner of the suspension or cancellation of registration under sub-section (5-E) of Sec. 3; (c) such fee, not exceeding five thousand rupees, as may be determined by the the regulations for issue of a duplicate certificate of registration under sub-section (7) of Sec. 3; (d) the matters relating to renewal of registration and fee therefor under Sec.3-A; (e) the manner and procedure for divesting excess share capital under sub-section (2) of Sec. 6-AA; (f) the preparation of balance sheet, profit and loss account and a separate account of receipts and payments and revenue account under sub-section (1-A) of Sec. 11; (g) the manner in which an abstract of the report of the actuary to be specified under the fourth proviso to sub-section (1) of Sec. 13; (h) the form and the manner in which the statement referred to in sub-section (4) of Sec. 13 shall be appended; (i) the time, manner and other conditions of investment of assets held by an insurer under sub-sections (1), (1-A) and (2) of Sec. 27-D; (j) the minimum information to be maintained by insurer in their books, the manner in which such information should be maintained, the checks and other verifications to be adopted by insurers in that connection and all other matters incidental thereto under sub-section (8) of Sec. 33; (k) the manner for making an application, the manner and the fee for issue of a licence to act as an insurance agent under sub-section (1) of Sec. 42; (l) the fee and the additional fee to be determined for renewal of licence of insurance agent under sub-section (3) of Sec. 42; (m) the requisite qualifications and practical training to act as an insurance agent under Cl. (e) of sub-section (4) of Sec. 42; (n) the passing of examination to act as an insurance agent under Cl. (f) of sub-section (4) of Sec. 42; (o) the code of conduct under Cl. (g) of sub-section(4) of Sec. 42; (p) the fee not exceeding rupees fifty for issue of duplicate licence under sub-section (6) of Sec. 42; (q) the manner and the fees for issue of a licence to an intermediary or an insurance intermediary under sub-section (1) of Sec. 42-D; (r) the fee and the additional fee to be determined for renewal of licence of intermediaries or insurance intermediaries under sub- section (3) of Sec. 42-D; (s) the requisite qualifications and practical training of intermediaries or insurance intermediaries under Cl. (e) of sub-section (5) of Sec. 42-D; (t) the examination to be passed to act as an intermediary or insurance intermediary under Cl. (f) of sub-section (5) of Sec. 42-D; (u) the code of conduct under Cl. (g) of sub-section (5) of Sec. 42-D; (v) the fee for issue of duplicate licence under sub-section (7) of Sec. 42-D; (w) such matters as specified under sub-section (2) of Sec. 64-UB relating to the Tariff Advisory Committee; (x) the matters relating to licensing of surveyors and loss assessors, their duties, responsibilities and other professional requirements under Sec. 64-UM; (y) such other asset or assets as may be specified under Cl. (h) of sub-section (1) of Sec. 64-V for the purposes of ascertaining sufficiency of assets under Sec. 64-VA; (z) the valuation of assets and liabilities under sub-section (3) of Sec. 64-V; (za) the matters specified under sub-section (1-A) of Sec. 64-VA relating to sufficiency of assets; (zb) the matters relating to re-insurance under Secs. 101-A and 101-B; (zc) the matters relating to redressal of grievances of policy-holders to protect their interest and to regulate, promote and ensure orderly growth of insurance industry; and (zd) any other matter which is to be, or may be, specified by the regulations made by the Authority or in respect of which provision is to be made or may be made by the regulations. (3) Every regulation made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and, if before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the regulation or both Houses agree that the regulation should not be made, the regulation shall thereafter, have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that regulation". 48. In Sec. 116-A, for "Central Government", at both the places where they occur, substitute "Central Government, before the date of commencement of the Insurance Regulatory and Development Authority Act, 1999"-

(31 of 1956) 1. In the Act, for "Controller" wherever it occurs, substitute "Authority". 2. After Sec. 30, insert the following :- "30-A. Exclusive privilege of Corporation to cease.-Notwithstanding anything contained in this Act, the exclusive privilege of carrying on life insurance business in India by the Corporation shall cease on and from the commencement of the Insurance Regulatory and Development Authority Act, 1999 and the Corporation shall, thereafter, carry on life insurance business in India in accordance with the provisions of the Insurance Act, 1938 (4 of 1938)."-

(57 of 1972) After Sec. 24, insert the following :- "24-A. Exclusive privilege of Corporation and acquiring companies to cease.- Notwithstanding anything contained in this Act, the exclusive privilege of the Corporation and the acquiring companies of carrying on general insurance business in India shall cease on and from the commencement of the Insurance Regulatory and Development Authority Act, 1999 and the Corporation and the acquiring companies shall, thereafter, carry on general insurance business in India in accordance with the provisions of the Insurance Act, 1938" (4 of 1938). NOTES ON CLAUSES Clause 2 defines the various expressions occurring in the Bill. Clause 3 provides for the establishment of the Insurance Regulatory Authority by the Central Government as a body corporate. The head office of the Authority shall be at such place as the Central Government may decide from time to time. Clause 4 provides that the Authority shall consist of a Chairperson, not more than five whole-time members and not more than four part-time members, to be appointed by the Central Government. Clause 5 provides that the Chairperson and other whole-time members shall hold office for a term of five years or until the age of 65 years in the case of Chairperson and 62 years in the case of other whole-time members, whichever is earlier, and a part-time members shall hold office for a term not exceeding five years. Clause 6 provides that the Central Government may, after giving a reasonable opportunity of being heard in the matter, remove from the office the Chairperson and members of the Authority in certain circumstances. Clause 7 provides that the salary, allowances and other terms and conditions of service of the Chairperson and whole-time members and allowances to part-time members will be prescribed by the Central Government and that they shall not be varied to their disadvantage, after appointment. Clause 8 provides that the Chairperson and members shall be ineligible for appointment in Central or State Government or any private company in the insurance sector for a period of two years from the date on which they cease to hold office as such. Clause 9 provides that the Chairperson shall have the powers of general superintendence and directions of all administrative matters of the authority. Clause 10 contains detailed provisions regarding conduct of the meetings of the Authority. Clause 11 provides for certain conditions which will not invalidate the proceedings of the Authority. Clause 12 empowers the Authority to appoint officers and other employees and determine their terms and conditions of service through regulations. Clause 13 provides for transfer of assets, liabilities, etc., of the Interim Insurance Regulatory Authority to the Insurance Regulatory Authority. Clause 14 provides that the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and prescribe its specified powers and functions. Clause 15 provides for grants to the Authority by the Central Government. Clause 16 provides for constitution of the Insurance Regulatory Authority Fund and crediting thereto all Government grants, fees and charges received by the Authority and its appropriation for making payments. Clause 17 provides that the Authority shall maintain its accounts in the form prescribed by the Central Government in consultation with the Comptroller and Auditor-General of India and that the accounts will be audited by Comptoller and Auditor-General of India with the same rights and privileges as in the case of audit of Government accounts. It also provides that the accounts of the Authority as certified by the Comptroller and Auditor-General of India together with the audit report thereon shall be laid before each House of the Parliament every year. Clause 18 provides that the Authority shall be bound by the directions of the Central Government on questions of policy and that the decision of the Central Government, whether a question is one of policy or not, shall be final. Clause 19 provides that the Central Government may, by notification and for reasons specified therein supersede the Authority, for a period not exceeding six months, in certain circumstances and during the period of supersession appoint a person to act as the Controller of Insurance under the Insurance Act, 1938. It also provides for re-constitution of the Authority before the expiry of the period of supersession and that a copy of the notification for supersession and a full report on the action taken shall be laid before each House of Parliament. Clause 20 provides for furnishing of returns, etc. by the Authority to the Central Government. Clause 21 provides that the Chairperson, members, officers and employees of the Authority shall be deemed to be public servants within the meaning of Sec. 21 of the Indian Penal Code. Clause 22 provides for usual provisions relating to the protection of action taken in good faith. Clause 23 provides for delegation of powers of the Authority. Clause 24 confers on the Central Government the power to make rules for carrying out the provisions of the Bill. Clause 25 confers on the authority the power to make regulations consistent with the provisions of the Bill. Clause 26 provides that the rules made by the Central Government and regulations made by the Authority shall be laid before each House of Parliament. Clause 27 provides that the provisions of this Bill shall be in addition to and not in derogation of, the provisions of any other law for the time being in force. Clause 28 seeks to empower the Central Government to remove difficulties which may arise in giving effect to the provisions of the Bill. Clause 29 seeks amendments of certain provisions of the Insurance Act, 1938 in the manner as set out in the First Schedule to the Bill. The amendments to the Insurance Act, 1938 are consequential in nature to empower the Insurance Regulatory Authority to effectively regulate, promote and ensure orderly growth of the insurance industry. The Amendments inter alia provide for the substitution of the word "Controller" by the word "Authority" and substitution of the word "Central Government" by the word "Authority" in certain sections of the Insurance Act, 1938. It also provides for certain definitions including definition of an Indian Insurance Company. The other consequential amendments relate to empowering the authority in respect of registration of insurers, percentage of equity capital to foreign company, investment provisions, regulation of licence to intermediaries or insurance intermediaries and power of the Authority to make regulations. Clause 30 seeks to amend Sec. 30 of the Life Insurance Corporation Act, 1956, in the manner as set out in the Second Schedule. The amendment provides that the exclusive privilege of the Life Insurance Corporation shall cease so as to enable other Indian Insurance Companies to do life insurance business. Clause 31 seeks to amend Sec. 24 of the General Insurance Business (Nationalisation) Act, 1972 in the manner as set out in the Third Schedule. The amendment provides that the exclusive privilege of the General Insurance Corporation and the four subsidiary companies shall cease so as to enable other Indian Insurance Companies to do non-life insurance business.

INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY (ANNUAL REPORT-FURNISHING OR RETURNS, STATEMENTS AND OTHER PARTICULARS) RULES, 2000

S.O. 570(E)."In exercise of the powers conferred by

Sec. 20read with clause (e) of sub-sec. 2 ofSec. 24 of the Insurance Regulatory and Development Authority Act, 1999, (41 of 1999), the Central Government hereby makes the following rules, namely :"

RULE 1. SHORT TITLE AND COMMENCEMENT

" (1) These rules may be called the Insurance Regulatory and Development Authority (Annual Report"furnishing of returns, statements and other particulars) Rules, 2000.

RULE 2. DEFINITIONS

"In these rules, unless the context otherwise requires "

(a) "Act" means theInsurance Regulatory and Development Authority Act, 1999-.

(b) "Appendix" means and Appendix annexed to these rules.

(c) All other words and expressions used in these rules but not defined, and defined in the Act shall have the same meanings respectively assigned to them in the Act.

RULE 3. FORM, MANNER AND THE TIME OF FURNISHING OF RETURNS, STATEMENTS AND OTHER PARTICULARS

" (1) The Authority shall furnish to the Central Government the Annual Report-Returns, Statements and other particulars in regard to any proposed or existing programme for the promotion and the development of the insurance industry giving a true and full account of its activities in the form and manner prescribed in the appendix.

(2) The Annual report-Returns, Statements and other particulars of the previous financial year referred to in sub-rule (1) above shall be submitted by the Authority to the Central Govern- ment within 9 months after the close of each financial year.

APPENDIX 9 APPEND IX

(SeeRule 3-) FORM OF (ANNUAL REPORT"RETURNS, STATEMENTS AND OTHER PARTICULARS) OF INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY PART-1 POLICIES AND PROGRAMMES (a) Review of General Economic Environment. (b) Appraisal of Insurance Market. (c) Number and details of Authorised insurers/re-insurers. (d) Policies and measures to Develop Insurance Market. (e) Research & Development activities undertaken by the insurers. (f) Review of:" (i) Protection of interests of policyholders; (ii) maintenance of solvency margins of insurers; (iii) monitoring of re-insurance (iv) monitoring investments of the insurers (v) health insurance (vi) specified percentage of business to be done in rural sector (vii) pensions (viii) accounts and actuarial standards (ix) directions, orders and regulations given by the Authority (x) powers and functions delegated by the Authority (xi) other policies and programmes having bearing on the working of the insurance market. PART-11 REVIEW OF WORKING AND OPERATIONS OF THE INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY IN RESPECT OF :" (i) Regulation of insurance/re-insurance companies (ii) Intermediaries associated with insurance business (iii) Professional institutes connected with insurance education (iv) Litigations, Appeals and Court pronouncements (v) International cooperation in insurance (vi) Public Complaints (vii) Functioning of the Advisory Committee (viii) Functioning of Ombudsman (ix) Review of performance of various Committees set up from time to time by the IRDA (x) Review of the Advisory functions performed by the Authority from time to time. (xi) Other activities having a bearing on the insurance market. STATUTORY FUNCTIONS OF THE AUTHORITY ENSHRINED IN THE SECTION 14 OF THE INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY ACT,1999 PART-IV ORGANISATIONAL MATTERS OF THE INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY [Noti. No.F. 8(29)2000-Ins. VI. dt. 12.6.2000-Gaz. of India, Exty., Pt. II-Sec. 3(ii) No. 399, dt. 14.6.2000, p. 3.7

INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY (ANNUAL REPORT"FURNISHING OF RETURNS, STATEMENTS AND OTHER PARTICULARS) RULES, 2000

S.O. 570(E)."In exercise of the powers conferred by Sec. 20read with clause (e) of sub-sec. 2 ofSec. 24 of the Insurance Regulatory and Development Authority Act, 1999, (41 of 1999), the Central Government hereby makes the following rules, namely :"

RULE 1. SHORT TITLE AND COMMENCEMENT

" (1) These rules may be called the Insurance Regulatory and Development Authority (Annual Report"furnishing of returns, statements and other particulars) Rules, 2000.

RULE 2. DEFINITIONS

"In these rules, unless the context otherwise requires "

(a) "Act" means theInsurance Regulatory and Development Authority Act, 1999-.

(b) "Appendix" means and Appendix annexed to these rules.

(c) All other words and expressions used in these rules but not defined, and defined in the Act shall have the same meanings respectively assigned to them in the Act.

RULE 3. FORM, MANNER AND THE TIME OF FURNISHING OF RETURNS, STATEMENTS AND OTHER PARTICULARS

" (1) The Authority shall furnish to the Central Government the Annual Report-Returns, Statements and other particulars in regard to any proposed or existing programme for the promotion and the development of the insurance industry giving a true and full account of its activities in the form and manner prescribed in the appendix.

(2) The Annual report-Returns, Statements and other particulars of the previous financial year referred to in sub-rule (1) above shall be submitted by the Authority to the Central Govern- ment within 9 months after the close of each financial year.

APPENDIX 9 APPEND IX

(SeeRule 3-) FORM OF (ANNUAL REPORT"RETURNS, STATEMENTS AND OTHER PARTICULARS) OF INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY PART-1 POLICIES AND PROGRAMMES (a) Review of General Economic Environment. (b) Appraisal of Insurance Market. (c) Number and details of Authorised insurers/re-insurers. (d) Policies and measures to Develop Insurance Market. (e) Research & Development activities undertaken by the insurers. (f) Review of:" (i) Protection of interests of policyholders; (ii) maintenance of solvency margins of insurers; (iii) monitoring of re-insurance (iv) monitoring investments of the insurers (v) health insurance (vi) specified percentage of business to be done in rural sector (vii) pensions (viii) accounts and actuarial standards (ix) directions, orders and regulations given by the Authority (x) powers and functions delegated by the Authority (xi) other policies and programmes having bearing on the working of the insurance market. PART-11 REVIEW OF WORKING AND OPERATIONS OF THE INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY IN RESPECT OF :" (i) Regulation of insurance/re-insurance companies (ii) Intermediaries associated with insurance business (iii) Professional institutes connected with insurance education (iv) Litigations, Appeals and Court pronouncements (v) International cooperation in insurance (vi) Public Complaints (vii) Functioning of the Advisory Committee (viii) Functioning of Ombudsman (ix) Review of performance of various Committees set up from time to time by the IRDA (x) Review of the Advisory functions performed by the Authority from time to time. (xi) Other activities having a bearing on the insurance market. STATUTORY FUNCTIONS OF THE AUTHORITY ENSHRINED IN THE SECTION 14 OF THE INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY ACT,1999 PART-IV ORGANISATIONAL MATTERS OF THE INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY [Noti. No.F. 8(29)2000-Ins. VI. dt. 12.6.2000-Gaz. of India, Exty., Pt. II-Sec. 3(ii) No. 399, dt. 14.6.2000, p. 3.7

INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY (PROTECTION OF POLICYHOLDERS INTERESTS) REGULATIONS, 2002

In exercise of the powers conferred by clause (zc) of sub-sec. (2) of Sec. 114-A of the Insurance Act, 1938 (4 of 1938) read with Seca. 14 & 26 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), the Authority, in consultation with the Insurance Advisory Committee, hereby makes the following regulations, namely;"

REGULATION 1 SHORT TITLE AND COMMENCEMENT.

(1) These regulations may be called theInsurance Regulatory and Development Authority (Protection of Policyholders Interests) Regulations, 2002.

(2) They shall come into force on the date of their publication in the Official Gazette and shall apply to all contracts of insurance effected thereafter, except Regulation 4(1) which shall come into force on 1st October, 2002.

(3) These Regulations are in addition to any other regulations made by the Authority, which may, inter alia, provide for protection of the interest of policyholders.

(4) These Regulations apply to all insurers, insurance agents, insurance intermediaries and policyholders.

REGULATION 2 DEFINITIONS.

(1) In these regulations, unless the context otherwise requires :

(a) "Act" means the Insurance Act, 1938 (4 of 1938);

(b) "Authority" means the Insurance Regulatory and Development Authority established under the provisions of Sec. 3 of the Insurance Regulatory and Development Author- ity Act, 1999(41 of 1999);

(c) "Cover" means an insurance contract whether in the form of a policy or a cover note or a Certificate of Insurance or any other form prevalent in the industry to evidence the existence of an insurance contract;

(d) "Proposal form" means a form to be filled in by the proposer for insurance, for furnishing all material information required by the insurer in respect of a risk, in order to enable the insurer to decide whether to accept or decline, to undertake the risk, and in the event of acceptance of the risk, to determine the rates, terms and conditions of a cover to be granted.

Explanation.""Material" for the purpose of these regulations shall mean and

include all important, essential and relevant information in the context of underwrit- ing the risk to be covered by the insurer.

(e) "Prospectus" means a document issued by the insurer or in its behalf to the prospec- tive buyers of insurance, and should contain such particulars as are mentioned inRule 11 of Insurance Rules, 1939and includes a brochure or leaflet serving the purpose. Such a document should also specify the type and character of riders on the main product indicating the nature of benefits of flowing thereupon;

(f) Words and expressions used and not defined in these regulations, but defined in the Act, or theLife Insurance Corporation Act, 1956(31 of 1956) or theGeneral Insurance Business (Nationalisation) Act, 1972(57 of 1972), or theInsurance Regulatory and Development Authority Act, 1999(41 of 1999) or theInsurance Rules, 1939shall have the meanings respectively assigned to them in those Acts or the Rules.

REGULATION 3 POINT OF SALE.

(1) Notwithstanding anything mentioned inRegulation 2(e)-above, a prospectus of any insurance product shall clearly state the scope of benefits, the extent of insurance cover and in an explicit manner explain the warranties, exceptions and conditions of the insurance cover and, in case of life insurance, whether the product is participating (with-profits) or non-participating (without- profits). The allowable rider or riders on the product shall be clearly spelt out with regard to their scope of benefits, and in no case, the premium relatable to all the riders put together shall exceed 30% of the premium of the main product.

Explanation."The rider or riders attached to life policy shall bear the nature

and character of the main policy, viz. participating or non-participating and accordingly the life insurer shall make provisions, etc., in its books.

(2) An insurer or its agent or other intermediary shall provide all material information in respect of a proposed cover to the prospect to enable the prospect to decide on the best cover that would be in his or her interest.

(3) Where the prospect depends upon the advice of the insurer or his agent or an insurance intermediary, such a person must advise the prospect dispassionately.

(4) Where, for any reason, the proposal and other communicated papers are not filled by the prospect, a certificate may be incorporated at the end of proposal form from the prospect that the contents of the form and documents have been fully explained to him and that he has fully understood the significance of the proposed contract.

(5) In the process of sale, the insurer or its agent or any intermediary shall act according to the code of conduct prescribed by :

(i) the Authority

(ii) the Councils that have been established under Sec. 64-C of the Act, and

(iii) the recognised professional body or association of which the agent or intermediary or insurance intermediary is a member.

REGULATION 4 PROPOSAL FOR INSURANCE.

(1) Except in cases of a marine insurance cover, where current market practices do not insist on a written proposal form, in all cases, a proposal for grant of a cover, either for life business or for general business, must be evidenced by a written document. It is the duty of an insurer to furnish to the insured free of charge, within 30 days of the acceptance of a proposal, a copy of the proposal form.

(2) Forms and documents used in the grant of cover may, depending upon the circumstances of each case, be made available in languages recognised under the Constitution of India.

(3) In filling the form of proposal, the prospect is to be guided by the provisions of Sec. 45 of the Act. Any proposal form seeking information for grant of life cover may prominently state therein the requirements of. Sec. 45 of the Act.

(4) Where a proposal form is not used, the insurer shall record the information obtained orally or in writing, and confirm it within a period of 15 days thereof with the proposer and incorporate the information in its cover note or policy. The onus of proof shall rest with the insurer in respect of any information not so recorded, where the insurer claims that the proposer suppressed any material information or provided misleading or false information on any matter material to the grant of a cover.

(5) Wherever the benefit of nomination is available to the proposer, in terms of the Act or the conditions of policy, the insurer shall draw the attention of the proposer to it and encourage the prospect to avail the facility.

(6) Proposals shall be processed by the insurer with speed and efficiency and all decisions thereof shall be communicated by it in writing within a reasonable period not exceeding 15 days from receipt of proposals by the insurer.

REGULATION 5 GRIEVANCE REDRESSAL PROCEDURE.

Every insurer shall have in place proper procedures and effective mechanism to address complaints and grievances of policyholders efficiently and with speed and the same along with the information in respect of Insurance Ombudsman shall be communicated to the policyholder alongwith the policy document and as may be found necessary.

REGULATION 6 MATTERS TO BE STATED IN LIFE INSURANCE POLICY.

(1) A life insurance policy shall clearly state :

(a) the name of the plan governing the policy, its terms and conditions;

(b) whether it is participating in profits or not;

(c) the basis of participation in profits such as bonus, deferred bonus, simple or compound reversionary bonus;

(d) the benefits payable and the contingencies upon which these are payable and the other terms and conditions of the insurance contract;

(e) the details of the riders attaching to the main policy;

(f) the date of commencement of risk and the date of maturity or date(s) on which the benefits are payable;

(g) the premiums payable, periodicity of payment, grace period allowed for payment of the premium, the date, the last instalment of premium, the implication of discontinu- ing the payment of an instalment(s) of premium and also the provisions of a guaran- teed surrender value.

(h) the age at entry and whether the same has been admitted;

(i) the policy requirements for (a) conversion of the policy into paid up policy, (b) surrender (c) non-forfeiture and (d) revival of lapsed policies;

(j) contingencies excluded from the scope of the cover, both in respect of the main policy and the riders;

(k) the provisions for nomination, assignment, and loans on security of the policy and a statement that the rate of interest payable on such loan amount shall be as pre- scribed by the insurer at the time of taking the loan;

(l) any special clauses or conditions, such as, first pregnancy clause, suicide clause etc,

(m) the address of the insurer to which all communications in respect of the policy shall be sent;

(n) the documents that are normally required to be submitted by a claimant in support of a claim under the policy.

(2) While acting underRegulation 6(1)-in forwarding the policy to the insured, the insurer shall inform by the letter forwarding the policy that he has a period of 15 days from the date of receipt of the policy document to review the terms and conditions of the policy and where the insured disagrees to any of those terms or conditions, he has the option to return the policy stating the reasons for his objection, when he shall be entitled to a refund of the premium paid, subject only to a deduction of proportionate risk premium for the period on cover and the expenses incurred by the insurer on medical examination of the proposer and stamp duty charges.

(3) In respect of a unit linked policy, in addition to the deductions under sub-regulation (2) of this regulation, the insurer shall also be entitled to repurchase the unit at the price of the units on the date of cancellation.

(4) In respect of a cover, where premium charged is dependent on age, the insurer shall ensure that the age is admitted as far as possible before issurance of the policy document. In case where age has not been admitted by the time the policy is issued, the insurer shall make efforts to obtain proof of age and admit the same as soon as possible.

REGULATION 7 MATTERS TO BE STATED IN GENERAL INSURANCE POLICY.

(1) A general insurance policy shall clearly state :

(a) the name(s) and address(es) of the insured and of any bank(s) or any other person having financial interest in the subject matter of insurance;

(b) full description of the property or interest insured;

(c) the location or locations of the property or interest insured under the policy and, where appropriate with respective insured values;

(d) period of Insurance;

(e) sums insured;

(f) perils covered and not covered;

(h) any franchise or deductible applicable;

(i) premium payable and where the premium is provisional subject to adjustment, the basis of adjustment of premium be stated;

(j) policy terms, conditions and warranties;

(k) action to be taken by the insured upon occurrence of a contingency likely to give rise to a claim under the policy;

(l) the obligations of the insured in relation to the subject matter of insurance upon occurrence of an event giving rise to a claim and the rights of the insurer in the circumstances;

(m) any special conditions attaching to the policy;

(n) provision for cancellation of the policy on grounds of mis-representation, fraud, non- disclosure of material facts or non-cooperation of the insured;

(o) the address of the insurer to which all communications in respect of the insurance contract should be sent;

(p) the details of the riders attaching to the main policy;

(q) proforma of any communication the insurer may seek from the policyholders to service the policy.

(2) Every insurer shall inform and keep informed periodically the insured on the require- ments to be fulfilled by the insured regarding lodging of a claim arising in terms of the policy and the procedures to be followed by him to enable the insurer to settle a claim early.

REGULATION 8 CLAIMS PROCEDURE IN RESPECT OF A LIFE INSURANCE POLICY.

(1) A life insurance policy shall state the primary documents which are normally required to be submitted by a claimant in support of a claim.

(2) A life insurance company, upon receiving a claim, shall process the claim without delay. Any queries or requirement of additional documents, to the extent possible, shall be raised all at once and not in a piece-meal manner, within a period of 15 days of the receipt of the claim.

(3) A claim under a life policy shall be paid or be disputed giving all the relevant reasons, within 30 days from the date of receipt of all relevant papers and clarifications required. However, where the circumstances of a claim warrant an investigation in the opinion of the insurance company, it shall initiate and complete such investigation at the earliest. Where in the opinion of the insurance company the circumstances of a claim warrant an investigation, it shall initiate and complete such investigation at the earliest, in any case not later than 6 months from the time of lodging the claim.

(4) Subject to the provisions of Sec. 47 of the Act, where a claim is ready for payment but the payment cannot be made due to any reasons of a proper identification of the payee, the life insurer shall hold the amount for the benefit of the payee and such an amount shall earn interest at the rate applicable to a savings bank account with a scheduled bank (effective from 30 days following the submission of all papers and information).

(5) Where there is a delay on the part of the insurer in processing a claim for a reason other than the one covered by sub-regulation (4), the life insurance company shall pay interest on the claim amount at a rate which is 2% above the bank rate prevalent at the beginning of the financial year in which the claim is reviewed by it.

REGULATION 9 CLAIM PROCEDURE IN RESPECT OF A GENERAL INSURANCE POLICY.

(1) An insured or the claimant shall give notice to the insurer of any loss arising under contract of insurance at the earliest or within such extended time as may be allowed by the insurer. On receipt of such a communication, a general insurer shall respond immediately and give clear indication to the insured on the procedures that he should follow. In cases where a surveyor has to be appointed for assessing a loss/claim, it shall be so done within 72 hours of the receipt of intimation from the insured.

(2) Where the insured is unable to furnish all the particulars required by the surveyor or where the surveyor does not receive the full cooperation of the insured, the insurer or the surveyor as the case may be, shall inform in writing the insured about the delay that may result in the assessment of the claim. The surveyor shall be subjected to the code of conduct laid down by the Authority while assessing the loss, and shall communicate his findings to the insurer within 30 days of his appointment with a copy of the report being furnished to the insured, if he so desires. Where, in special circumstances of the case, either due to its special and complicated nature, the surveyor shall under intimation to the insured, seek an extension from the insurer for submission of his report. In no case shall a surveyor take more than six months from the date of his appointment to furnish his report.

(3) If an insurer, on the receipt of a survey report, finds that it is incomplete in any respect, he shall require the surveyor under intimation to the insured, to furnish an additional report on certain specific issues as may be required by the insurer. Such a request may be made by the insurer within 15 days of the receipt of the original survey report:

Provided that the facility of calling for an additional report by the insurer shall not be resorted to more than once in the case of a claim.

(4) The surveyor on receipt of this communication shall furnish an additional report within three weeks of the date of receipt of communication from the insurer.

(5) On receipt of the survey report or the additional survey report, as the case may be, an insurer shall within a period of 30 days offer a settlement of the claim to the insured. If the insurer, for any reasons to be recorded in writing and communicated to the insured, decides to reject a claim under the policy, it shall do so within a period of 30 days from the receipt of the survey report or the additional survey report, as the case may be.

(6) Upon acceptance of an offer of settlement as stated in sub-regulation (5) by the insured, the payment of the amount due shall be made within 7 days from the date of acceptance of the offer by the insured. In the cases of delay in the payment, the insurer shall be liable to pay interest at a rate which is 2% above the bank rate prevalent at the beginning of the financial year in which the claim is reviewed by it.

REGULATION 10 POLICYHOLDERS SERVICING.

(1) An insurer carrying on life or general business, as the case may be, shall at all times, respond within 10 days of the receipt of any communication from its policyholders in all matters, such as :

(a) recording change of address;

(b) noting a new nomination or change of nomination under a policy;

(c) noting an assignment on the policy;

(d) providing information on the current status of a policy indicating matters, such as accrued bonus, surrender value and entitlement to a loan;

(e) processing papers and disbursal of a loan on security of policy;

(f) issuance of duplicate policy;

(g) issuance of an endorsement under the policy; noting a change of interest or sum assured or perils insured, financial interest of a bank and other interests; and

(h) guidance on the procedure for registering a claim and early settlement thereof.

REGULATION 11 GENERAL.

(1) The requirements of disclosure of "material information" regarding a proposal or policy apply, under these'regulations, both to the insurer and the insured.

(2) The policyholder shall assist the insurer, if the latter so requires, in the prosecution of a proceeding or in the matter of recovery of claims which the insurer has against third parties.

(3) The policyholder shall furnish all information that is sought from him by the insurer and also any other information which the insurer considers as having a bearing on the risk to enable the latter to assess properly the risk sought to be covered by a policy.

(4) Any breaches of the obligations cast on an insurer or insurance agent or insurance intermediary in terms of these regulations may enable the Authority to initiate action against each or all of them, jointly or severally, under the Act and/or the Insurance Regulatory and Development Authority Act, 1999.

INSURANCE SURVEYORS AND LOSS ASSESSORS (LICENCING, PROFESSIONAL REQUIREMENTS AND CODE OF CONDUCT) REGULATIONS, 2000

Insurance Regulatory and Development Authority, Noti. No. F. No. IRDA/Reg./11/2000, dated November 20, 2000, published in the Gazette of India, Extra., Part III/Section 4, dated 24th November, 2000, pp. 34-66, No. 144 [ADVT. No. 3/4/Exty/4/161/2000] In exercise of the powers conferred by Section 42D,Section 64UMandSection 114Aof theInsurance Act, 1938(4 of 1938) andSection 26 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), the Authority, in consultation with the Insurance Advisory Committee, hereby makes the following regulations, namely:-

REGULATION 1 SHORT TITLE, COMMENCEMENT AND APPLICATION

- (1) These regulations may be called the Insurance Surveyors and Loss Assessors (Licencing, Professional Requirements and Code of Conduct) Regulations, 2000.

(2) They shall come into force on the date of their publication in the Official Gazette and shall apply to all licensed insurance surveyors and loss assessors.

REGULATION 2 DEFINITIONS

-In these regulations, unless the context otherwise requires,-

(a) "Act" means theInsurance Act, 1938-(4 of 1938);

(b) "applicant" means any person who applies for the grant of a surveyor's and loss assessor's licence or renewal thereof;

(c) "Authority" means the Insurance Regulatory and Development Authority established under sub-section (1) ofSection 3 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999)-;

(d) "Designated Person" means an officer of the Authority detailed by the Authority to discharge the functions assigned to him under all or any of these regulations;

(e) "Inspecting Authority" means the person(s) appointed by the Authority to inspect and investigate the affairs of any surveyor and loss assessor;

(f) "IRDA Act" means theInsurance Regulatory and Development Authority Act, 1999(41 of 1999)-;

(g) words and expressions used and not defined in these regulations but defined in theInsurance Act, 1938-(4 of 1938) orInsurance Regulatory and Development Authority Act, 1999-(41 of 1999) or theGeneral Insurance Business (Nationalisation) Act, 1972-(57 of 1972), or in any rules or regulations made under those Acts, shall have the meanings respectively assigned to them in those Acts or rules or regulations, as the case may be.

REGULATION 3 APPLICATION FOR, AND MATTERS RELATING TO, GRANT OF LICENCE

- (1) Every person who is an individual and intending to act as a surveyor and loss assessor in respect of general insurance business shall apply to the Authority for grant of licence in FORM-IRDA-1-AF as given in the Schedule to these regulations.

(2) The Authority shall, before granting licence, take into consideration all matters relating to the duties, responsibilities and functions of surveyor and loss assessor and satisfy itself that the applicant is a fit and proper person to be granted a licence. In particular and without prejudice to the foregoing, the Authority shall satisfy itself that the applicant, in addition to submitting the application complete in all respects:- (a) satisfies all the applicable requirements ofSection 64UM-read withSection 42Dof the Act andRule 56A-of theInsurance Rules, 1939-; (b) possesses such additional technical qualifications as may be specified by the Authority from time to time; (c) has furnished evidence of payment of fees for grant of licence, depending upon the categorisation; (a) has undergone a period of practical training, not exceeding 12 months, as contained in Chapter VII of these regulations; and (e) furnishes such additional information as may be required by the Authority from time to time.

(3) The Authority on being satisfied that the applicant is eligible for grant of licence, shall grant the same in FORM-IRDA-2-LF as given in the Schedule to these regulations and send an intimation to the applicant together with an identity card mentioning the particular class or category of general insurance business namely, fire, marine cargo, marine hull, engineering, motor, miscellaneous and loss of profit for which the Authority has granted licence and the licence shall remain valid for a period of five years from the date of issue therefore, unless cancelled earlier.

(4) A surveyor and loss assessor, whose licence has been cancelled or suspended for any reason, may submit an application for issuance of licence, after the expiry of three years from the date of such cancellation or suspension, and, such an application shall be treated as a fresh case, and, accordingly, the applicant shall satisfy all the requirements of sub-regulation (2).

(5) A surveyor and loss assessor shall be subject to categorisation as specified in Chapter V of these regulations.

(6) A licence issued, before the commencement of these regulations, by the Controller of Insurance or his authorised representative shall be deemed to have been issued in accordance with these regulations.

REGULATION 4 CORPORATE SURVEYORS AND LOSS ASSESSORS

- (1) Where the applicant is a company or firm, the Authority shall be satisfied that all the directors or partners, as the case may be, possess one or more of the qualifications specified inSection 64-UM(1)D(i)of the Act and none of such directors or partners, as the case may be, suffers from any of the disqualifications mentioned inSection 42-Dof the Act read withSection 42(4)of the Act.

(2) The applicant referred to in (1) shall apply in FORM-IRDA-3-AF as given in the Schedule to these regulations.

(3) The Authority on being satisfied that the applicant is eligible for grant of licence, shall grant the same in FORM-IRDA-4-LF as given in the Schedule to these regulations, and, all the provisions of Regulation 3 above, shall apply mutatis mutandis to corporate surveyors.

REGULATION 5 FEE STRUCTURE

-On and from May 1, 2001, the fee payable to the Authority by fresh applicants for grant of licence to act as surveyors and loss assessors, categorywise, shall be as stated in the following table :

Sl. No. Category of surveyor Amount payable by Amount payable by Corporate and loss assessor individuals Surveyor and Loss Assessor

Rs. Rs. 1. A Ten thousand Twenty-five thousand 2. B Seven thousand five hundred Twenty thousand 3. C Fivethousand Fifteen thousand

REGULATION 6 APPLICATION TO CONFORM TO THE REQUIREMENTS

-Any incomplete application not conforming to the requirements of these regulations shall be rejected: Provided that before rejecting any such application, the applicant shall be given a reasonable opportunity to make good the application.

REGULATION 7 RENEWAL OF LICENCE

- (1) An insurance surveyor and loss assessor, desiring to renew the licence granted earlier, either under these regulations or prior to the commencement of these regulations, shall apply to the Authority at least thirty days before the expiry of the period of validity thereof, in FORM-IRDA-5-AF (for individuals)/FORM-IRDA-6-AF (for corporate surveyors) as given in the Schedule to these regulations, along with a renewal fee of two hundred rupees: Provided that the Authority may, if it is satisfied that undue hardship would be caused otherwise, accept any application, within six months of its expiry on payment by the applicant of a penalty of seven hundred and fifty rupees: Provided further that a licence not so renewed can be revalidated only as a fresh case.

(2) A licence so renewed shall be valid for five years from the date of renewal, unless cancelled earlier. The renewed licence shall be in FORM-IRDA-7-LF or FORM-IRDA-8-LF, as the case may be.

(3) Every applicant, be it an individual or a company or a firm, while applying for renewal of the licence shall certify to the Authority that he or any of its directors or any of its partners, as the case may be, has- (i) not contravened any of the provisions of the Act or the IRDA Act, or any rules or regulations made under those Acts or any order or direction issued by the Authority; (ii) not made a statement which is false in material particulars with regard to his eligibility for the licence or renewal thereof or in any of the activities transacted by him or them or the matters connected therewith as a Surveyor and Loss Assessor; (iii) neither had his licence cancelled or suspended under the Act, nor had violated the Code of Conduct prescribed under these regulations; (iv) discharged the duties and responsibilities as a professional; (v) not been negligent in the discharge of his obligations; (vi) not been sentenced to a term of imprisonment by any Court of law.

REGULATION 8 PROCEDURE WHERE LICENCE IS NOT TO BE GRANTED OR RENEWED, OR WHERE LICENCE IS TO BE SUSPENDED OR CANCELLED

- (1) Where an applicant does not satisfy the provisions of the Act and these regulations, the Authority may reject the application for grant of licence or renewal thereof and refund to the applicant not more than 60 per cent of the fee received : Provided that no application shall be rejected unless the applicant has been given a reasonable opportunity to make good the application within a time frame as may be deemed appropriate by the Authority, according to the facts and circumstances of each case.

(2) The refusal shall be communicated to the applicant within thirty days of such refusal, stating the grounds of rejection.

(3) Where it is found that a surveyor and loss assessor suffers from any of the disqualifications or has knowingly contravened any provisions of the Act or the IRDA Act, or the rules or regulations made under those Acts or any order or direction or instruction issued by the Authority, the Authority may, after giving such surveyor and loss assessor an opportunity of being heard, cancel his licence, with effect from such date as may be specified by it and the Authority shall notify such cancellation in the Official Gazette.

(4) The Authority may refuse to grant or renew licence, or suspend or cancel a licence already granted, to a surveyor and loss assessor, if he/it: (i) fails to discharge the duties and responsibilities in a satisfactory and professional manner; or (ii) violates the code of conduct prescribed under these regulations; or (iii) makes a statement which is false in material particulars with regard to the eligibility for obtaining licence or has, after the issue or renewal of such licence, acquired any of the disqualifications provided under sub-section (4) of Section 42 of the Act, read with Clause-D of sub-section (1) of Section 64-UM of the Act: Provided that the Authority shall give a reasonable opportunity, to the person concerned, of being heard, before such refusal or suspension or cancellation. The Authority shall notify only cancellations in the Official Gazette: Provided further that the powers conferred on the Authority in this sub-regulation are without prejudice to the powers conferred on it by sub-section (7) of Section 64-UM of the Act.

(5) The refusal or suspension or cancellation of licence referred to in sub-regulation (4) shall take effect from the date of such refusal, suspension or cancellation, as the case may be, and, no such surveyor and loss assessor shall carry out any survey and loss assessment work thereafter, including the jobs on hand. All such pending jobs shall be returned by him/it to the insurer or the insured, as the case may be.

REGULATION 9 SUSPENSION OF THE LICENCE

- (1) A licensed surveyor and loss assessor whose licence is proposed to be suspended by the Authority may be granted an opportunity before suspending the licence: Provided, however, that the Authority may not follow this procedure if the continued employment of the licensed surveyor and loss assessor is considered to be detrimental to the cause of insurance underwriting.

(2) The period of suspension will be indicated in the order of the Authority.

(3) On receipt of the order of suspension, the licensed surveyor and loss assessor may file an appeal with the Authority asking for revocation of suspension. The Authority may designate an officer who will hear the representation of the licensed surveyor and loss assessor and make such orders as are deemed fit. The order made in this regard shall be communicated to the suspended surveyor and loss assessor.

(4) If, on the basis of the order of the designated person, the Authority restores the licence of the surveyor and loss assessor, it will indicate the date from which the restoration will take place.

(5) During the period of suspension, the surveyor and loss assessor shall be prohibited from carrying out any surveys and all work that was handled prior to suspension and has remained incomplete shall be returned to an insurer or the insured as the case may be.

(6) The licence granted by the Authority may be cancelled by the Authority where the surveyor and loss assessor does not represent within a period of 45 days from the date of order of suspension.

(7) Any order of suspension or revocation of the order thereof shall be intimated to the insurers.

REGULATION 10 ISSUE OF DUPLICATE LICENCE/IDENTITY CARD

- (1) A person to whom a licence has been issued or renewed, shall, if such licence and/or Identity Card is/are lost, destroyed or mutilated, make an application in FORM-IRDA-9 given in the Schedule to these regulations to the Authority requesting for issuance of duplicate thereof, along with a fee of Five rupees.

(2) The application referred to in sub-regulation (1) shall contain full particulars of licence/identity card and as to how the loss/destruction or mutilation has occurred, and the application shall be accompanied by mutilated pieces, if any, in possession of the person making the application.

(3) The Authority, on being satisfied, may issue a duplicate licence and/or identity card in FORM-IRDA-10-LF as given in the Schedule to these regulations.

(4) The duplicate so issued shall remain in force for the remainder of the period of validity of the licence and/or identity card, unless cancelled earlier, and the duplicate shall bear an endorsement thereon that it is a duplicate.

REGULATION 11 CONSTITUTION

- (1) The Authority shall constitute a Committee to be called ''Surveyors and Loss Assessors Committee" (hereinafter referred to as "the Committee"), for assisting the Authority on the matters and affairs relating to Insurance Surveyors and Loss Assessors.

(2) The Committee may consist of the following persons:- (i) an Officer of the Authority; (ii) two representatives of the Surveyors and Loss Assessors; (iii) a representative of Insurers; (iv) a representative of the policy holders.

(3) The Committee will be for a period of three years and will be presided over by the officer of the Authority.

REGULATION 12 FUNCTIONS OF THE COMMITTEE

- (1) The Committee shall perform the following functions:- (i) recommending the syllabus for examination and practical training requirements for persons to qualify as surveyors and loss assessors; (ii) recommending to the Authority for its consideration to recognise foreign qualifications and training for the purposes of grant of licence to act as surveyors and loss assessors; (iii) improving and developing the status and standard of the profession of surveyors and loss assessors; (iv) coordinating with educational or other institutions, having as their objects, wholly or partly, similar to those of the profession of surveyors and loss assessors, in such manner as may be conducive for the attainment of common objectives; (v) looking into the matters of professional misconduct, indiscipline, non-adherence to code of conduct by surveyors and loss assessors; and dealing with complaints of insured/insurer in respect of survey work done by surveyors and loss assessors; (vi) discharging any other function, which may be entrusted by the Authority, from time to time.

(2) The Committee may meet as frequently as necessary to conduct its affairs.

(3) The Members of the Committee, other than the officer of Authority will be entitled to such allowances as may be determined by the Authority from time to time.

REGULATION 13 .

(1) A surveyor and loss assessor shall, for a major part of the working time, investigate, manage, quantify, validate and deal with losses (whether insured or not) arising from any contingency, and report thereon, and carry out the work with competence, objectivity and professional integrity by strictly adhering to the code of conduct expected of such surveyor and loss assessor.

(2) The following shall, inter alia, be the duties and responsibilities of a surveyor and loss assessor:- (i) declaring whether he has any interest in the subject-matter in question or whether it pertains to any of his relatives, business partners or through material shareholding; Explanation: For the purpose of this clause 'relatives' shall mean any of the relatives as mentioned inSchedule 1A to the Companies Act, 1956-; (ii) maintaining confidentiality and neutrality without jeopardising the liability of the insurer and claim of the insured; (iii) conducting inspection and re-inspection of the property in question suffering a loss; (iv) examining, inquiring, investigating, verifying and checking upon the causes and the circumstances of the loss in question including extent of loss, nature of ownership and insurable interest; (v) conducting spot and final surveys, as and when necessary and comment upon franchise, excess/under insurance and any other related matter; (vi) estimating, measuring and determining the quantum and description of the subject under loss; (vii) advising the insurer and the insured about loss minimisation, loss control, security and safety measures, wherever appropriate, to avoid further losses; (viii) commenting on the admissibility of the loss as also observance of warranty conditions under the policy contract; (ix) surveying and assessing the loss on behalf of insurer or insured; (x) assessing liability under the contract of insurance; (xi) pointing out discrepancy, if any, in the policy wordings; (xii) satisfying queries of the insured/insurer and of persons connected thereto in respect of the claim/loss; (xiii) recommending applicability of depreciation and the percentage and quantum of depreciation; (xiv) giving reasons for repudiation of claim, in case the claim is not covered by policy terms and conditions; (xv) taking expert opinion, wherever required; (xvi) commenting on salvage and its disposal wherever necessary.

(3) A surveyor or loss assessor shall submit his report to the insurer as expeditiously as possible, but not later than 30 days of his appointment: Provided that in exceptional cases, the aforementioned period can be extended with the consent of the insured and the insurer.

REGULATION 14 .

(1) A surveyor and loss assessor shall be categorised, as mentioned in sub- regulation (3), based on the following criteria: (i) professional qualifications; (ii) training undergone; (iii) experience as a surveyor and loss assessor and any other relevant professional experience; (iv) any other criteria, as may be specified by the Authority from time to time.

(2) The categorisation shall be done and reviewed from time to time on the basis of a point system evolved by the Authority in consultation with the Committee referred to in Chapter III of these regulations.

(3) The categorisation shall consist of allocation of one or more specified departments of insurance business, based on the factors mentioned above and shall include categorisation of the surveyors and loss assessors into three categories, viz.. Category A, Category B and Category C.

(4) Every surveyor and loss assessor, whether a company or firm or an individual, shall be eligible to carry on the work as a surveyor or loss assessor, as per the categorisation specified in the licence.

REGULATION 15 .

Every surveyor and loss assessor shall-

(1) behave ethically and with integrity in the professional pursuits. Integrity implies not merely honesty but fair dealings and truthfulness;

(2) strive for objectivity in professional and business judgment;

(3) act impartially, when acting on instructions from an insurer in relation to a policy holder's claim under a policy issued by that insurer;

(4) conduct himself with courtesy and consideration to all people with whom he comes into contact during the course of his work;

(5) not accept or perform survey works in areas for which he does not hold a licence;

(6) not accept or perform work which he is not competent to undertake, unless he obtains some advice and assistance, as will enable him to carry out the work competently;

(7) carry out his professional work with due diligence, care and skill and with proper regard to technical and professional standards expected of him;

(8) keep himself updated with all developments relevant to his professional practice;

(9) at all times maintain proper record for work done by him and comply with all relevant laws;

(10) assist and encourage his colleagues to obtain professional qualifications, and, in this behalf, provide free articleship and/or practical training for a period of twelve months;

(11) maintain a register of survey work, containing the relevant information, in FORM-IRDA-11 as given in the Schedule to these regulations, and shall keep important records of the survey reports, photographs and other important documents for a period of three years and furnish the same and such other specified returns, as and when called for by the Authority or by any investigating authority or the insurer;

(12) disclose to all parties concerned his appointment, where the acceptance or continuance of such an engagement may materially prejudice, or could be seen to materially affect the interests of any interested party. As soon as a conflict of interest is foreseen, every surveyor and loss assessor shall notify all interested parties immediately and seek instructions for his continuance;

(13) not disclose any information, pertaining to a client or employer or policy holder acquired in the course of his professional work, to any third party, except, where consent has been obtained from the interested party, or where there is a legal right or duty enjoined upon him to disclose;

(14) neither use nor appear to use, any confidential information acquired or received by him in the course of his professional work, to his personal advantage or for the advantage of a third party.

REGULATION 16 .

(1) An applicant seeking a licence to act as a surveyor and loss assessor shall undergo a period of practical training of not less than twelve months with a surveyor and loss assessor as specified below;

(2) The surveyor under whom an applicant will be trained shall belong to Category A or Category B as classified by the Authority while granting a licence;

(3) The trainee shall maintain a record of training received during the period and shall get it certified by the surveyor and loss assessor under whom he has trained and the certificate shall be attached to the application for seeking grant of a licence under Regulation 3;

(4) The licence to be granted to an applicant to act as a surveyor and loss assessor shall be in that particular area for which he has been trained;

(5) If a surveyor and loss assessor already licensed by the Authority seeks to obtain a similar licence for acting as a surveyor in a category other than for which he is licensed, he shall undergo a period of training not less than six months under a surveyor and loss assessor holding either Category A or Category B licence issued by the Authority to act in that particular area.

REGULATION 17 .

The Authority may also prescribe the passing by an applicant of an examination or the successful completion of the training prescribed above for the grant of a licence under Regulation 3. The examination may be conducted either by the Authority itself or by an institution authorised by it in this behalf.

REGULATION 18 .

Register of Licensed Insurance Surveyors and Loss Assessors.-

(1) The Authority shall maintain a register of all licensed insurance surveyors and loss assessor containing the following particulars:- (i) full name, date of birth, domicile, residential and professional address; (ii) the date on which name is entered in the Register; (iii) licence number and period of validity; (iv) professional and other qualifications; (v) areas of survey work licensed to be undertaken; (vi) categorisation of the surveyor and loss assessor; (vii) any other particulars as may be prescribed by the Authority from time to time: Provided that in the case of corporate surveyors, the particulars to be entered in the register, shall be with reference to every director or partner, as the case may be.

(2) The Authority shall, delete the particulars of surveyors and loss assessors, who are no longer alive, or whose licence has been cancelled or suspended.

(3) The Authority shall cause the publication of the relevant particulars entered in the register, as may be considered appropriate by it, at such intervals and in such manner, as may be deemed fit.

REGULATION 19 SUBMISSION OF RETURNS

-Every licensed surveyor and loss assessor shall:-

(a) furnish such of the document, statement, account, return or report, as and when required by the Authority, and comply with such directions, as may be issued by the Authority in this behalf, from time to time; and

(b) submit an annual statement in FORM-IRDA-12 given in the Schedule to these regulations.

REGULATION 20 INSPECTION

- (1) The Authority, may appoint one or more persons as inspecting authority to undertake inspection of survey work, books, records and documents, or to investigate any bona fide complaint received against a surveyor and loss assessor.

(2) The inspecting authority shall, as soon as possible, submit an inspection report to the Authority.

(3) The inspecting authority shall be given all information demanded by it for the purpose of carrying out inspection/investigation work, and shall be extended all possible cooperation, to facilitate the conduct of its work.

(4) The Authority shall, after consideration of the inspection report, communicate the findings of the inspecting authority to the surveyor and loss assessor, and shall also give him a reasonable opportunity of being heard before any action is taken by the Authority on the findings of the inspection report.

REGULATION 21 POWER TO CLARIFY

-In case of any doubt or ambiguity in regard to any of these regulations, the same shall be clarified by the Chairperson of the Authority.

In exercise of the powers conferred by section 26 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), the Authority in consultation with the Insurance Advisory Comittee, hereby makes the following regulatios, namely:-

REGULATION 1 SHORT TITLE AND COMMENCEMENT

- (1) These regulations may bo called the Insurance Regulatory and Development Authority (Insurance Advertisements and Disclosure) Regulations, 2000

(2) They shall come into force on the date of their publication in the Official Gazette.

REGULATION 2 DEFINITIONS

- Unless the context otherwise requires,-

(a) "Authority" means the Insurance Regulatory and Development Authority established under sub-section (1) ofsection 3 of the Insurance Regulatory and Development Authority Act, 1999-(41 of 1999);

(b) "insurance advertisement" means and includes any communication directly or indirectly related to a policy and intended to result in the eventual sale or solicitation of a policy from the members of the public, and shall include all forms of printed and published materials or any material using the print and/or electronic medium for public communication such as:

(i) newspapers, magazines and sales talks; (ii) billboards, hoardings, panels; (iii) radio, television, website, e-mail, portals; (iv) representations by intennediare is; (v) leaflets; (vi) descriptive literature/circulars; (vii) sales aids flyers; (viii) illustrations form letters; (ix) telephone solicitations;

(x) business cards; (xi) videos; (xii) faxes; or

(xiii) any other communication with a prospect or a policyholder that urges him to purchase, renew, increase, retain, or modify a policy of insurance.

Expalantion.- The following mateials shall not be considered to be an

advertisement provided they are not used to induce the purchase, increase, modifications, or retention of a policy of insurance-

(i) materials used by an insurance company within its own organization and not meant for distribution to the public;

(ii) communications with policyholders other than materials urging them to purchase, increase, modify, surrender or retain a policy;

(iii) materials used solely for the training, recruitment, and education of an insurer's

personnel, intermediaries, counsellors, and solicitors, provided they are not used to induce the publice to purchase, increase, modify, or retain a policy of insurance;

(iv) any general accouncement sent by a group policyholder to members of the eligible group that a policy has been written or arranged.

(c) "intermediary or insurance intermediary" includes insurance brokers, reinsurance brokers, insurance consultants, surveyors and loss assessors, or any other person represents or assisting an insurer in one or more of the following:

(i) soliciting, negotiating, procuring, or effectuating an insurance contract or a renewal of an insurance contract;

(ii) disseminating information relating to coverage or rates;

(iii) forwarding an insurance application;

(iv) servicing and delivering an insurance policy or contract; (v) inspecting a risk; (vi) setting a rate; (vii) investigating or assessing a claim or loss; (viii) transacting a matter after the effectuation of a contract; or

(ix) representing or assisting an insurer or other person in any other manner in the transaction of insurance with respect to a subject of insurance resident, located or to be performed in India.

(x) servicing a policy or contract.

(d) "unfair or misleading advertisement" will mean and include any advertisement:

(i) that fails to clearly identify the product as insurance;

(ii) make claims beyond the ability of the policy to deliver or beyond the reasonable expectation of performance

(iii) describes benefits that do not match the policy provisions; uses words of phrases in a way which hides or minimizes the costs of the hazard omits to disclose or discloses insufficiently, important exclussion, limitation and condition of the contract; gives information in a misleading way; illustrates future benefits on assumptions which are not reealistic nor realisable in the light of the insurer's current performance; where the benefits are not guaranteed, does not explicitly say so as prominently as the benefits are stated or says so in a manner or form that it could remain unnoticed; implies a group or other relationship like sponsorship, affiliation or approval, that does not exist; makes unfair or incomplete comparisons with products which are not comparable or disparages competitors.

(e) "prospect" means any party that enters or proposes to enter into an insurance contract directly, or through an insurance intermediary. Words and expressions used and not defined in these regulations but defined in theInsurance Act, 1938-(4 of 1938), or theLife Insurance Corporation Act, 1956-(31 of 1956) or theGeneral Insurance Business (Nationalisation) Act, 1972-(57 of 1972)) orInsurance Regulatory and Development Authority Act, 1999-(41 of 1999), shall have the meanings respectively assinged to them in those Acts or the rules as the case. may be,

REGULATION 3. COMPLIANCE AND CONTROL

- (1) Every insurer or intermediary or insurance agent shall-

(i) have a compliance officer, whose name and official position in the

organisation shall be communicated to the Authority, and lie shall be responsible to oversee the advertising programme;

(ii) establish and maintain a system of control over the content, form, and method of dissemination of all advertisements concerning its policies;

(iii) maintain an advertising register at its corporate office which must include:

(a) a specimen of every advertisement disseminated, or issued or a record of any broadcast or telecast, etc;

(b) a notation attached to each advertisement indicating the. manner, extent of distribution and form number of any policy advertised, and

(iv) maintain a specimen of all advertisements for & minimum period of three years,

(v) file a copy of each advertisement with the Authority as soon as't is first issued, together with information;

(a) an identifying number for the advertisement;

(b) the. form number(s) of the policy(ies) advertised and when the products were approved by the Authority;

(c) a description of the advertisement and how it is used;

(d) the method or media used for dissemination of the advertisement.

(vi) file a certificate of compliance with their annual statement stating that, to the best of its knowledge, advertisements disseminated by the insurer or by its intermediaries during the preceding year have complied with the provisions of these regulations and the advertisement code as stated inregulation 12-.

(2) The advertisement register shall be subject to inspection and review by the Authority for content, context, prominence and position of required disclosures, omissions of required information, etc.,

REGULATION 4. CHANGE IN ADVERTISEMENT

- (1) Any change, in an advertisement would be considered a new advertisement.

(2) All the provisions ofregulation 3-shall apply mutatis mutandis to an advertisement referred to'". sub-regulation (i).

(3) The Authority shall be informed at the time of filing the advertisement the extent of change in the original advertisement.

REGULATION 5. INSURANCE COMPANY ADVERTISEMENTS

- (1) Every insurance company shall be required to prominently disclose in the advertisement and that part of die advertisement that is required to be returned to die company or insurance intermediary or insurance agent by a prospect or an insured the full particulars of the insurance company, and not merely any trade name or monogram or logo.

(2) Where benefits are more than briefly described, the form number of the policy and the type of coverage shall be disclosed fully.

REGULATION 6. ADVERTISEMENTS BY INSURANCE AGENTS

- (1) Every advertisement by an insurance agent that affects an insurer must be approved by the insurer in writing prior to its issue;

(2) It shall be the responsibility of the insurer while granting such approval to ensure that all advertisements that pertain to the company or its products or performance comply with these regulations and are not deceptive or misleading.

Explanation.- An agent shall not be required to obtain written approval of the company prior to issue for-

(i) those advertisements developed by the insurer and provided to the agents; generic advertisements limited to information like the agent's name, logo, address, and phone number; and advertisements that consist only of simple and correct statements describing

the availability of lines of insurance, references to experience, service and qualifications of agents; but making no reference to specific policies, benefits, costs or insurers.

REGULATION 7. ADVERTISEMENT BY INSURANCE INTERMEDIARIES

- Only properly licensed intermediaries may advertise or solicit insurance through advertisements.

REGULATION 8. ADVERTISING ON THE INTERNET

- (1) Every insurer or intermediary's web site or portal shall.

(i) include disclosure statements which outline the site's specific policies vis-a-vis the privacy of personal information for the protection of both their own businesses and the consumers they serve.

(ii) display their registration/licence numbers on their web sites.

(2) For the purposes of these regulations, except where otherwise specifically excluded or restricted, no form or policy otherwise permissible for use shall be deemed invalid or impermissible if such form or policy accurately reflects the intentions of the parties in such form or policy as published electronically or transmitted electronically between parties,

REGULATION 9. IDENTITY OF ADVERTISER

- Every advertisement for insurance shall,

(i) state clearly and unequivocally that insurance is the subject matter of the solicitation; and

(ii) state the full registered name of the insurer/intermediary/insurance agent.

REGULATION 10. ENDORSEMENTS AND OTHER THIRD PARTY INVOLVEMENT

- (1) A third party, group or association shall not:-

(i) distribute information about an insurance, policy, intermediary or insurer on its letterhead,

(ii) allow an insurance intermediary or insurer to distribute information about an insurance policy, insurance or insurance company on its letterhead.

(iii) distribute information about an individual insurance policy, or about an intermediary or insurer in its envelopes, unless-

(a)the third party is providing only a distribution service lor the insurance advertisement and is not itself soliciting the coverage, and

(b) the insurance information is a piece separte from any other information distributed by the third party and clearly indicates its origin.

(iv) recommend that its members purchase specific insurance products.

(v) imply mat a person must become a member of its organization in order to purchase the policy.

(vi) imply that a purchaser of a policy by becoming a member of a limited group of persons shall receive special advantages from the insurer not provided for in the policy. Provided that a third party, group or association may:-

(i) endorse an insurance company or insurance intermediary's product and provide truthful statements, quotes, and testimonials endorsing the insurance products to the insurance company for use in the company's advertisements, so long a.'; me language does not convey directly or indirectly a recommendation that members of the organisation purchase the products;

(ii) provide an insurance company with information about its membership and collect compensation based upon sales for that information.

REGULATION 11. PROCEDURE FOR ACTION IN CASE OF COMPLAINT

- (1) If an advertisement is not in accordance with these regulations the Authority may take action in one or more of the following ways:

(i) issue a letter to the advertiser seeking information within a specific time, not being more than ten days from the date of issue of the letter;

(ii) direct the advertiser to correct or modify the advertisement already issued

in a manner suggested by the Authority with a stipulation that the corrected

or modified advertisement shall receive the same type of publicity as the one sought to be corrected or modified;

(iii) direct the advertiser to discontinue me advertisement forthwith;

(iv) any other action deemed fit by the Authority, keeping in view the circumstances of the case, to ensure that the interests of the public are protected. The advertiser may seek additional time from die Authority to comply with the directions justifying the reasons therefor. The Authority, may, however, refuse to grant extension of time if it feels that the advertiser is seeking time only to delay the matters. Any failure on the part of the

advertiser to comply with the directions of the Authority may entail the Authority to lake such action as deemed necessary including levy of penalty.

REGULATION 12. ADHERENCE TO ADVERTISEMENT CODE

- Every insurer or intermediary shall follow recognised standards of profesional conduct as prescribed by the Advertiseemnt Standards Council of India (ASCI)'and discharge its functions in the interest of the policyholders.

REGULATION 13. STATUTORY WARNING

- (1) Every proposal for an insurance product shall carry the following stipulation, as prescribed insection 41 of the Insurance Act, 1938-(4 of 1938):- "No person shall allow or offer to allow, either directly or indirectly, as an inducement to any person to take out or renew or continue an insurance in respect of any kind of risk relating to lives or property in India, any rebate of the whole or part of the commission pa/able or any rebate of the premium shown on the policy, nor shall any person taking out or renewing or contiuing a policy accept any rebate, except such rebate as may be allowed in accordance with the published prospectuses or tables of the insurer."

(2) If any person fails to comply with sub-regulation (1) above, he shall be liable to payment of a fine which may extend to rupees five hundred.

INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY (MEETINGS) REGULATIONS, 2000

In exercise of the powers conferred by sub-section (4) of section 10 read with clauses (a) and (b) of sub-section 2 of section 26 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), the Authority, in consultation with the Insurance Advisory Committee, hereby makes the following regulations, namely:-

REGULATION 1. SHORT TITLE, EXTENT AND COMMENCEMENT

- (1) These regulations may be called the Insurance Regulatory and Development Authority (Meetings) Regulations, 2000.

(2) They shall come into force on the date of their publication in the Official Gazette.

REGULATION 2. DEFINITIONS

- In these regulations, unless the context othewise requires,

(a) "Act" means theInsurance Regulatory and Development Authority Act, 1999-(41 of 1999).

(b) "Authority" means the Insurance Regulatory and Development Authority established under sub-section (1) ofsection 3 of the Insurance Regulatory and Development Authority Act-.

(c) "chairperson" means the chairperson of the Authority.

(d) "committee" means every committee of the members formed by general or special order in writing by the Authority, pursunt to the provisions of sub-section (2) ofsection 23-of the Act.

(e) "designated officer" means any officer of the Authority charged with the duty and responsibility of issuance of notice, circulation of agenda, recording, circulation and safekeeping of minutes of the meetings of the Authority or any Committee thereof.

(f) "member" means a whole-time or a part time member of the Authority and includes the Chairperson.

(g) "total strength" means the total number of members appointed as members of the Authority from time to time.

(h) words and expressions used in these regulations and not defined but defined in the Act shall have the same meaning respectively assigned to them in the Act.

REGULATION 3. MEETINGS OF THE AUTHORITY FOR TRANSACTION OF BUSINESS AND PROCEDURE TO BE FOLLOWED

:- (1) The Authority may meet for the transaction of business, adjourn and otherwise regulate its meetings, as provided in these regulations,

(2) The Authority shall meet, as often as may be necessary but not less than six times in a year, to transact its business.

(3) The meetings of the Authority shall normally be held at its head office. Whenever circumstances render it expedient to hold a meeting elsewhere, the same may be so held at any other place in India, at the discretion of the chairperson.

(4) The chairperson and in his absence, the seniormost full time member of the Authority shall fix the date, time and place of meeting of the Authority and approve the items of agenda for the meetings.

(5) The notice and agenda for the meeting shall be normally circulated seven days in advance by the designated officer. The notice and agenda may be delivered to the members personally upon acknowledgement or despatched through registered post or transmitted through any other secure and reliable modem means of communication, as may be recognised under any law for the time being in force.

(6) Every meeting of the Authority shall be presided over by the chairperson. If for any reason, the chairperson is unable to attend a meeting of the Authority, any other member chosen by the members present from amongst themselves at the meeting shall preside at the meeting.

(7) All questions which come up before any meeting of the Authority shall be decided by a majority in case of voting by the members present and in the event of any equality of votes, the chairperson, or in his absence, me presiding member shall have a casting vote.

(8) An item not included in the agenda of a meeting may be taken up for consideration, if so approved by the chairperson or the presiding member, as the case may be.

REGULATION 4. QUORUM

- (1) The quorum for transaction of business at a meeting of the Authority shall be a minimum of one-third of the appointed members present.

(2) Where at any time the total strength of the Authority is less than four, the total number of members, being not less than two, shall constitute the quorum during such time.

(3) If at any meeting, a quorum is not present, the chairperson or the presiding member, as the case may be, shall after having for thirty minutes, adjourn the meeting for such hour on some other day as he may think fit and the notice of such adjournment shall be given to all the members and the business which was to have been brought before the original meeting, had there been a quorum, shall be brought before the adjourned meeting. Where at the adjourned meeting also, the required quorum is not present, the members present, shall constitute the quorum.

(4) A member shall attend all the meeting of the Authority, save where leave of absence has been sought and the same has been granted by the Chairperson or the presiding member.

REGULATION 5. EMERGENT MEETING

- (1) Notwithstanding anything contained in the foregoing regulations, the chairperson may, by giving at least forty-eight hours notice, covene an emergent meeting of me Authority at any time or place to consider any item, which in his opinion, requires an urgent decision.

(2) The chairperson shall call an emergent meeting if he receives the requisition in writing, signed by members constituting not less than one-halt' of the tola! strength, stating the purpose tor which they desire the meeting to be called. Upon receipt of the requisition, the chairperson shall by giving at least forty-eight hours notice, convene the requisitional emergent meeting.

REGULATION 6. MINUTES OF THE MEETINGS

- (1) The designated officer shall record, within forty- eight hours of the conclusion of every meeting, the minutes of all proceedings at the meeting of the Authority or committee meeting of the Authority and after obtaining the approval of the chairperson or the presiding member, as the case may be, enter the minutes in books kept for that purpose.

(2) Each page of every such book shall be initialled or signed and the last page of the record of proceedings of each meeting in such books shall be dated and signed by the chairperson or the presiding member, as the case may be.

(3) In no case the minutes of the proceedings of a meeting shall be attached to any such book as a foresaid by pasting or otherwise but may be kept on loose-leaf style and bound regularly,

(4) Notwithstanding anything contained in sub-regulation (3), the inmates may also be kept by way of micro 111ms or any other authentic modern means of safe storing and retrieval of records or printed material produced by a computer, it the same is recognised under any law and subject to the conditions, restrictions or safeguards mentioned such law.

(5) The minustes of each meeting shall contain a lair and correct summary of the decisions arrived at the meeting.

(6) The minutes shall also contain-

(a) the names of the members present at the meeting; and

(b) in the case of each decision taken at the meeting, the names of the members, if any, dissenting from, or not concurring with llie decision taken.

(7) Nothing contained in this regulation shall be deemed to require the inclusion in any such minutes of any matter which is detrimental to the interests of the Anthority. Explanation - The chairperson or the presiding member, as the case may be, shall exercise an absolute discretion in regard to the inclusion or non inclusion og any matter in the minutes on any ground specified in this sub-regulation.

(8) Minutes of the meetings kept in accordance with this regulation shall be evidence of me proceedings recorded therein.

(9) The desinged officer shall after the approval of tlie minutes by thr chainperson or the presiding member, as the case may be, send a copy of the minutes as rnyrtered in the minute books to every member of the Authority lor his information.

(10) The designated officer shall also communicate, with the approval oi llie chairperson or the presiding member, the relevant extracts of the decision taken at the meeting of the Authority or any of its committees to all concerned for necessary follow-up action and monitor their compliance by evolving a suitable reporting system. Periodical reports on follow-up action shall be submitted to tlie Authority.

REGULATION 7. INVITEES AT MEETING

- Any person whose presence at meeting is desired for his advice/consultation, may be invited to attend the meeting by the chairperson.

REGULATION 8. MISCELLANEOUS PROVISIONS

- (1) The provisions of these regulations shall apply mutatis mutandis to meetings of Committees of members.

(2) The Chairperson may attend any committee meeting as ex officio member and whenever the Chairperson attends any committee meeting, he shall preside over that meeting.

(3) No member, other than the Chairperson or a person specifically authorised by him, shall give information to the press or any other public media on matters relating to the working of the Authority and decisions taken at meetings.

INSURANCE ADVISORY COMMITTEE (MEETINGS) REGULATIONS, 2000

F.No. IRDA/Reg/7/2000, dated the 14th July, 2000-In exercise of powers conferred by clause (e) of sub-section (2) and sub-section (1) of section 26 read with section 25 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), the Authority, in consultation with the Insurance Advisory Committee, hereby makes the following regulations, namely:-

REGULATION 1. SHORT TITLE, EXTENT AND COMMENCEMENT

- (1) These regulations may be called the Insurance Advisory Committee (Meetings) Regulations, 2000.

(2) They shall come into force on the date of their publication in the Official Gazette.

REGULATION 2. DEFINITIONS

-In these regulations, unless the context otherwise requires:

(a) "Act" means the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999).

(b) "Advisory Committee" means the Insurance Advisory Committee as constituted by the Authority pursuant to the provisions of Sec. 25 of the Act.

(c) "Authority" means the Insurance Regulatory and Development Authority established under sub-section (1) of Sec. 3 of the Act.

(d) "Chairperson" means the Chairperson of the Authority.

(e) "Designated Officer" means any officer of the Authority charged with the duty and responsibility of issuance of notice, circulation of agenda, recording and safe-keeping of the minutes of the meeting of the Advisory Committee.

(f) "Member" means a member of the Advisory Committee as constituted by the Authority under Sec. 25 of the Act and includes ex-officio members (i.e., the Chairperson and members of the Authority).

(g) "Members of the Authority" means the members of the Authority including the Chairperson appointed by the Central Government pursuant to the provisions of Sec. 4 of the Act.

(h) "Total strength" means the total number of members of the Advisory Committee including ex officio members, existing at the relevant time.

(i) Words and expressions used in these regulations and not defined but defined in the Act shall have the same meaning respectively assigned to them in the Act.

REGULATION 3. PROCEDURE FOR MEETINGS OF THE ADVISORY COMMITTEE

- (1) The Advisory Committee may meet for the despatch of business, adjourn and otherwise regulate its meetings, as provided in these regulations.

(2) The Advisory Committee may meet as often as may be considered necessary but not less than three times in a year, for advising the Authority on matters relating to the making of the regulations under Sec. 26 of the Act and also on such other matters as may be prescribed under sub-section (5) of Sec. 25 of the Act.

(3) The meetings of the Advisory Committee shall be held at such place and time as may be decided by the Chairperson.

(4) For purposes of convenience of attention to business, the Chairperson may with the consent of the Advisory Committee also constitute subcommittee of members whose decision thereon will be available to the Advisory Committee.

(5) The notice and agenda for the meeting shall normally be circulate seven days in advance by the Designated Officer. The notice and agenda may be delivered to the members personally upon acknowledgment or despatched by registered post or courier service or transmitted through any other secure and reliable modem means of communication, as may be recognised under any law for the time-being in force. Provided, however, that the Chairperson may convene an emergent meeting of the Advisory Committee by giving at least forty-eight hours' notice.

(6) Every meeting of the Advisory Committee or sub-committee shall be presided over by the Chairperson. If for any reason, the Chairperson is unable to attend a meeting of the Advisory Committee, any other ex officio member, being a full-time member of the Authority chosen by the members present shall preside at the meeting.

(7) An item not included in the agenda of a meeting of the Advisory Committee may be taken up for consideration, if so approved by the Chairperson or the presiding member as the case may be.

REGULATION 4. QUORUM

- (1) The quorum for transaction of business at a meeting of the Advisory Committee or sub-committee shall be a minimum of one-third of the total strength. Provided, however, that any fraction that might arise while calculating the one-third total strength be disregarded.

(2) If at any such meeting, quorum is not present, the Chairperson or the presiding member as the case may be, shall after waiting for the thirty minutes from the scheduled commencement time of the meeting, adjourn the meeting for such hour on the same day or some other day as he may think fit. Where at the adjourned meeting also the required quorum is not present, the members present shall constitute the quorum and proceed with the transaction of business.

(3) A member shall attend all the meetings of the Advisory Committee or sub-committee, save where leave of absence has been sought and the same has been granted by the Chairperson or the presiding member.

(4) Where a member ceases to attend consecutively three meetings of the Advisory Committee without just and sufficient cause, the Authority may consider exclusion of his name from the Advisory Committee and fill in the-resultant vacancy as it may consider necessary.

REGULATION 5. MINUTES OF THE MEETINGS

- (1) The Chairperson or the presiding member shall cause the minutes to be recorded of the proceedings at the meetings of the Advisory Committee or sub-committee in such form and manner as may be considered appropriate by him.

(2) The minutes shall also contain the names of members present at the meeting.

(3) The minutes of each meeting shall contain a fair and correct summary of the decisions arrived at the meeting.

(4) The designated officer shall send a copy of the minutes as finalised and approved by the Chairperson or the presiding member, as the case may be, to each of the members for his/her information.

REGULATION 6. MISCELLANEOUS PROVISIONS

- (1) Each member for attending the meetings of the Advisory Committee or sub-committee shall be entitled to reimbursement of expenses, sitting fees, incidentals, etc., from the Authority, as per the stipulations made in this behalf by the Authority from time to time.

(2) No member, other than the Chairperson or a person specifically authorised by him shall give information to the Press or to any other public media on matters relating to the decisions taken at the meetings of the Advisory Committee or sub-committees.