( 1) No person shall, after the expiry of six months from the commencement of this Act, pay or contract to pay any remuneration or reward whether by way of commission or otherwise for soliciting or procuring insurance business in India to any person1[ except an insurance agent or an intermediary or insurance intermediary ].
2[ (1A) In this section and sections3[ 40A], 41 and 43, reference to an insurance agent shall be construed as including reference to an individual soliciting or procuring insurance business exclusively in4[ the territories which, immediately before the 1st November, 1956, were comprised in a Part B State] notified in this behalf by the Central Government in the Official Gazette and holding a valid licence as insurance agent under the law of5[ that Part B State].]
( 2) No insurance agent6[ ***] shall be paid or contract to be paid by way of Commission or as remuneration in any form an amount exceeding, in the case of life insurance business, forty per cent, of the first year's premium payable on any policy or policies effected through him and five per cent, of a renewal premium,2[ payable on such a policy], or, in the case of business of any other class, fifteen percent, of the premium:
Provided that insurers, in respect of life insurance business only, may pay, during the first ten years of their business to their insurance agents fifty-five per cent of the first year's premium payable on any policy or policies effected through them and six per cent, of the renewal premiums2[ payable on such policies]:
3[ Provided further that nothing in this sub-section shall apply in respect of any policy of life insurance issued after the 31st day of December, 1950, or in respect of any policy of general insurance issued after the commencement of the Insurance (Amendment) Act, 1950 (47 of 1950).]
2[ ( 2 A) Save as hereinafter provided,7[ no insurance agent or intermediary or insurance intermediary ] agent shall be paid or contract to be paid by way of commission or as remuneration in any form any amount in respect of any policy not effected through hi m:
Provided that where a policy of life insurance has lapsed, and it cannot under the terms and conditions applicable to it be revived without further me dical examination of the person whose life was insured thereby, an insurer, after giving by notice in writing to the insurance agent through whom the policy was effected3[ if such agent continues to be an agent of the insurer] an opportunity to effect the revival of the policy within a time specified in the notice, being not less than one month from the date of the receipt by hi m of the notice, may pay to another insurance agent who effects the revival of the policy an amount calculated at a rate not exceeding half the rate of commission at which the agent through whom the policy was effected would have been paid had the policy not lapsed, on the sum payable on revival of the policy on account of arrear premiums (excluding any interest on such arrear premiums) and also on the subsequent renewal premiums payable on the policy.]
( 3 ) Nothing in this section shall prevent the payment under any contract existing prior to the 27 th day of January, 1937 , of gratuities or renewal commission to8[ any person, whether an insurance agent within the me aning of this Act or not,] or to hi s representatives after hi s decease in respect of insurance business effected through hi m before the said date.
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1. Substituted by Act 42 of 2002, section 8, for "except an insurance agent or a principal, chief or special agent" (w.e.f. 23-9-2002).
2. Inserted by Act 6 of 1946, section 21 (w.e.f. 20-3-1946).
3. Inserted by Act 47 of 1950, section 30 (w.e.f. 1-9-1950).
4. Substituted by the Adaptation of Laws (No. 3) Order, 1956, for "a Part B State".
5. Substituted by the Adaptation of Laws (No. 3) Order, 1956, for "the State".
6. The words "licensed under section 42" omitted by Act 11 of 1939, section 16.
7. Substituted by Act 42 of 2002, section 8, for "no insurance agent" (w.e.f. 23-9-2002).
8. Substituted by Act 11 of 1939, section 16, for "an insurance agent".