1 INTRODUCTION The concept of insurance has been prevalent in India since ancient times amongst Hindus Overseas traders practised a system of marine insurance The joint family system peculiar to India was a method of social insurance of every member of the family on his life The law relating to insurance has gradually developed undergoing several phases from nationalisation of the insurance industry to the recent reforms permitting entry of private players and foreign investment in the insurance industryThe development and growth of the insurance industry in India has gone through three distinct stages

11 Formation of insurance industry in IndiaInsurance law in India had its origins in the United Kingdom with the establishment of a British firm the Oriental Life Insurance Company in 1818 in Calcutta followed by the Bombay Life Assurance Company in 1823 the Madras Equitable Life Insurance Society in 1829 and the Oriental Life Assurance Company in 1874 However till the establishment of the Bombay Mutual Life Assurance Society in 1871 Indians were charged an extra premium of up to 20 as compared to the British The first statutory measure in India to regulate the life insurance business was in 1912 with the passing of the Indian Life Assurance CompaniesAct 1912 (ldquoAct of 1912rdquo) (which was based on the English Act of 1909) Other classes of insurance business were left out of the scope of the Act of 1912 as such kinds of insurance were still in rudimentary form and legislative controls were not considered necessaryGeneral insurance on the other hand also has its origins in the United Kingdom The first general insurance company Triton Insurance Company Ltd was promoted in 1850 by British nationals in Calcutta The first general insurance company established by an Indian was Indian Mercantile Insurance Company Ltd in Bombay in 1907 Eventually with the growth of fire accident and marine insurance the need was felt to bring such kinds of insurance within t he purview of the Act of 19121

While there were a number of attempts to introduce such legislation over the years non-lifeinsurance was finally regulated in 1938 through the passing of the Insurance Act 1938 (ldquoAct of 1938rdquo) The Act of 1938 along with various amendments over the years continues till date to be the definitive piece of legislation on insurance and controls both life insurance and general insurance

12 Nationalization of the Insurance Business in IndiaAn Ordinance was issued on 19th January 1956 nationalising the Life Insurance sector and Life Insurance Corporation came into existence in the same year The LIC absorbed 154 Indian 16 non-Indian insurers as also 75 provident societiesmdash245 Indian and foreign insurers in all The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector However an exception was made in the case of any company firm or persons intending to carry on life insurance business in India in respect of the lives of ldquopersons ordinarily resident outside Indiardquo provided the approval of the Central Government was obtained The exception was however not absolute and a curious prohibition existed 1 KN Kabra ldquoNationalisation of Life insurance businessrdquo Economic and Political Weekly Vol XXI No 47 Nov 1986 via httpwwwjstororgstable4376358seq=1page_scan_tab_contents accessed on 26416

Such company firm or person would not be permitted to insure the life of any ldquoperson ordinarily resident outside Indiardquo during any period of their temporary residence in India In 1972 with the passing of the General Insurance Business (Nationalisation) Act general insurance business was nationalized with effect from 1st January 1973 107 insurers were amalgamated and grouped into four companies namely National Insurance Company Ltd the New India Assurance Company Ltd the Oriental Insurance Company Ltd and the United India Insurance Company Ltd The General Insurance Corporation of India was incorporated as a company in 1971 and it commence business on January 1sst 19732

13 Entry of Private SectorFrom 1991 onwards the Indian Government introduced various reforms in the financial sector paving the way for the liberalization of the Indian economy It was a matter of time before this liberalization affect ed the insurance sector A huge gap in the funds required for infrastructure was felt particularly since much of these funds could be f illed by life insurance funds being long tenure fundsConsequently in 1993 the Government of India set up an eight-member committee chaired by Mr R N Malhotra a former Governor of Indias apex bank the Reserve Bank of India to review the prevailing structure of regulation and supervision of the insurance sector and to make recommendations for strengthening and modernizing the regulatory system The committee submitted its report in 1994 wherein among other things it recommended that the private sector be permitted to enter the insurance industry They stated that foreign companies be allowed to enter by floating Indian companies preferably a joint venture with Indian partners Following the recommendations of the Malhotra Committee report in 1999 the Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry The IRDA was incorporated as a statutory body in April 2000 The key objectives of the IRDA include promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums while ensuring the financial security of the insurance market The IRDA opened up the market in August 2000 with the invitation for application for registrations Foreign companies were allowed ownership of up to 26 The Authority has the power to frame regulations under Section 114A of the Insurance Act 1938 and has from 2000 onwards framed various regulations ranging from registration of companies for carrying on insurance business to protection of policyholdersrsquo interests In December 2000 the subsidiaries of the General Insurance Corporation of India were restructured as independent companies and at the same time GIC was converted into a national re-insurer Parliament passed a bill de-linking the four subsidiaries from GIC in July 2002 Today there are 28 general insurance companies including the ECGC and Agriculture Insurance Corporation of India and 24 life insurance companies operating in the country3

2 ldquoInsurance in India the journey from origin to evolutionrdquo DNA India via httpwwwdnaindiacomspecial-featuresreport-insurance-in-india-the-journey-from-origin-to-evolution-1563019 accessed on 264163 ldquoHistory of Insurance in Indiardquo 2007 IRDAI via httpswwwirdaigovinADMINCMScmsNormalData_Layoutaspxpage=PageNo4ampmid=2 on 26416

2 ROLE OF REGULATORY FRAMEWORK Regulations define the requirements of an insurer provide consumer protection through the supervision of insurers to safeguard their solvency and thus shield the customer from buying insurance from an unsuitable company The Indian insurance industry has a huge potential and the framework of insurance regulation must enable the industry to tap this vast potential The regulatory framework in relation to insurance is desired to take care of three major concerns viz (a) Protection of interests of consumers (b) Ensure the financial soundness of the insurance industry (c) Pave the way to help a healthy growth of the insurance market where both the government and private parties play simultaneously A well developed and well regulated insurance sector is needed for economic development of the country as it provides long term funds for development of a sound infrastructural base and at the same time strengthens the risk taking capacity of the insurance companies4 But all regulators need to keep in mind that there is a fine distinction between regulation and control as regulations lay down norms while controls have a propensity to micromanage institutions Thus the regulators must take care to ensure that regulations do not slide into control5

The basic objectives of the insurance regulations are as under 1 To protect customers from misleading sellers (by regulating the delivery channel eg through standards for agentslicensing agents and brokers) and unfair claims practices for example by requiring disclosure and by regulating complaints or by regulating rate settingpricing (some jurisdictions have limits for rate or require prior approval) and by regulating policies (formscontracts and exclusions) 2 To protect the financial viability of insurers eg by requiring standards for qualifications solvency performance risk limitation disclosure reserves reporting (periodicity accounting and information systems) auditors investment restrictions 3 To define general features of insurance eg the provision of insurance the types of products and the different types of insurance (eg short and long term national or cross border operations life insurance and general insurance 4 To define duties and responsibilities eg the persons permitted to engage in insurance activities ownership (management domicile holdings and foreign investors) the regulatory agency responsibilities for insurance regulations and compliance sanctions and penalties for non compliance or omission 5 To define the conditions for the entry and exit of players in the market6

4ldquoInsurance in Indiardquo India Core via httpwwwindiacorecominsurancehtml Accessed on 264165 httpunpan1unorgintradocgroupspublicdocumentsapcityunpan021309pdf Accessed on 26416 6 Fulbag Singh and Sonia Chawla ldquoLife Insurance Regulatory Framework in India Developments Issues and Concernsrdquo The ICFAI Journal of Insurance Law Vol V No3 July 2007 p15

3 INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY

The IRD Act has established the Insurance Regulatory and Development Authority (ldquoIRDArdquo or ldquoAuthorityrdquo) as a statutory regulator to regulate and promote the insurance industry in India and to protect the interests of holders of insurance policies The IRD Act also carried out a series of amendments to the Act of 1938 and conferred the powers of the Controller of Insurance on t he IRDA The members of the IRDA are appointed by the Central Government from amongst persons of ability integrity and standing who have knowledge or experience in life insurance general insurance actuarial science finance economics law accountancy administration etc The Authority consists of a chairperson not more than five whole-time members and not more than four part-time members The Authority has been entrusted with the duty to regulate promote and ensur e the orderly growth of the insurance and re-insurance business in India In furtherance of this responsibility it has been conferred with numerous powers and functions which include prescribing regulations on the investments of funds by insurance companies regulating maintenance of the margin of solvency adjudication of disputes between insurers and inter mediaries supervising the functioning of the Tariff Advisory Committee specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organizations and specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector7

INSURANCE REGULATORY DEVELPMENT AUTHORITY ACT (IRDA) 1999This Act was passed by Parliament in Dec1999 amp it received presidential assent in Jan2000 The aim of the Authority is ldquoto protect the interest of holders of Insurance policies to regulate promote and ensure orderly growth of Insurance industry amp for matters connected therewith or incidental theretordquo8

Under this Act an authority called IRDA is established which replaces Controller of Insurance under Insurance Act 1938Features of Authority1048698 Corporate body by the aforesaid name which means it will act as group of persons called members who will work jointly not as an individual person like Controller of Insurance1048698 Having perpetual succession which means any member may resign or die but the Authority will work1048698 A common seal with power to enter into a contract by affixing a stamp on the documents1048698 Sue or be sued means the Authority can file a case against any person or organization and vice versaComposition of AuthorityThe Authority shall consist of nine persons as per details givenbelow

7 ldquoRegulation of Insurancerdquo via httpwwwnishithdesaicomfileadminuser_uploadpdfsInsurance_Law_-_Regulations_in_Indiapdf accessed on 264168 ldquoInsurance Regulatoryand Development Authority of Indiardquo httpwwwnosorgmediadocumentsvocinsservicesm5-1fpdf accessed on 26416

3 INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY

The IRD Act has established the Insurance Regulatory and Development Authority (ldquoIRDArdquo or ldquoAuthorityrdquo) as a statutory regulator to regulate and promote the insurance industry in India and to protect the interests of holders of insurance policies The IRD Act also carried out a series of amendments to the Act of 1938 and conferred the powers of the Controller of Insurance on t he IRDA The members of the IRDA are appointed by the Central Government from amongst persons of ability integrity and standing who have knowledge or experience in life insurance general insurance actuarial science finance economics law accountancy administration etc The Authority consists of a chairperson not more than five whole-time members and not more than four part-time members The Authority has been entrusted with the duty to regulate promote and ensur e the orderly growth of the insurance and re-insurance business in India In furtherance of this responsibility it has been conferred with numerous powers and functions which include prescribing regulations on the investments of funds by insurance companies regulating maintenance of the margin of solvency adjudication of disputes between insurers and inter mediaries supervising the functioning of the Tariff Advisory Committee specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organizations and specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector7

INSURANCE REGULATORY DEVELPMENT AUTHORITY ACT (IRDA) 1999This Act was passed by Parliament in Dec1999 amp it received presidential assent in Jan2000 The aim of the Authority is ldquoto protect the interest of holders of Insurance policies to regulate promote and ensure orderly growth of Insurance industry amp for matters connected therewith or incidental theretordquo8

Under this Act an authority called IRDA is established which replaces Controller of Insurance under Insurance Act 1938Features of Authority1048698 Corporate body by the aforesaid name which means it will act as group of persons called members who will work jointly not as an individual person like Controller of Insurance1048698 Having perpetual succession which means any member may resign or die but the Authority will work1048698 A common seal with power to enter into a contract by affixing a stamp on the documents1048698 Sue or be sued means the Authority can file a case against any person or organization and vice versaComposition of AuthorityThe Authority shall consist of nine persons as per details givenbelow

7 ldquoRegulation of Insurancerdquo via httpwwwnishithdesaicomfileadminuser_uploadpdfsInsurance_Law_-_Regulations_in_Indiapdf accessed on 264168 ldquoInsurance Regulatoryand Development Authority of Indiardquo httpwwwnosorgmediadocumentsvocinsservicesm5-1fpdf accessed on 26416

1048698 Chairperson1048698 Not more than 5 whole time members1048698 Not more than 4 part time membersThese persons shall be appointed by the Central Govt From amongst persons of ability integrity amp standing who have knowledge or experience in life Insurance general Insurance actuarial science finance economics law accountancy administration or other discipline which would in the opinion of the Central Govt be useful to the Authority (Section 4)Tenure (Section 5)1048698 The Chairman tenure will be for 5 years and eligible for reappointment till he attains the age of 65 years1048698 The appointment of members will be for 5 years and eligible for reappointment but not exceeding the age 62 yearsRemoval of Members (Section 6)The Central Government can remove any member of theAuthority if he -a) Is declared bankruptb) Has become physically or mentally incapable of acting as a memberc) Has been awarded punishment by any Courtd) Has acquired such financial or other interest which affect his function as a membere) Has so abused his position as to render his continuation in office detrimental to the public interest But no member can be removed form the office unless amp until the reasonable opportunity of being heard is given to such member in the matter

Duties Powers amp Functions of Authority (Section 14)Duties The Authority shall have the duty to regulate promote and ensure orderly growth of the Insurance business and reinsurance business subject to the provisions of any other provisions of the actPowers amp Functions to-(a) Issue to the applicant (Insurance company or Insurance Agent or Surveyors or Insurance Brokers or Third Party Administrators) a certificate of registration renew modify withdraw suspend or cancel such registration(b) Protection of the interests of the policyholders in matters concerning assigning of policy nomination by policyholders 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 insurance brokers agents surveyors Third Party Administrator (d) Specifying the code of conduct for surveyors and loss assessors (Who assess the loss of policyholder in case of General Insurance)(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 on insurance companies Agents Insurance Brokers Surveyors and Third party Administrator

(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 insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act 1938 (wef 112007 TAC has ceased to function)(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 ie having sufficient funds to pay insurance claim amount(m) To settle the disputes between insurers and intermediaries or insurance intermediaries(n) Supervising the functioning 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 clause(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

4 IMPORTANT REGULATION

1 Registration of Insurance Business

Every insurer seeking to carry out the business of insurance in India is required to obtain a certificate of registration from the IRDA prior to commencement of business The pre-conditions for applying for such registration have been set out under the Act of 1938 the IRD Act and the various regulations prescribed by the AuthorityThe following are some of the import ant general registration requirements that an applicant would need to fulfil(a) The applicant would need to be a company registered under the provisions of the IndianCompanies Act 1956 Consequently any person intending to carry on insurance business in India would need to set up a separate entity in India(b) The aggregate equity participation of a foreign company (either by itself or through its subsidiary companies or its nominees) in the applicant company cannot not exceed twenty six per cent of the paid up capital of the insurance company However the Insurance Act and the regulations there under provide for the manner of computation of such twenty-six per cent(c) The applicant can carry on any one of life insurance business general insurance business or reinsurance business Separate companies would be needed if the intent were t o conduct more than one business(d) The name of the applicant needs to contain the words ldquoinsurance companyrdquo or ldquoassurance companyrdquo9

2 Capital Structure Requirement The applicant would need to meet with the following capital structure requirements10(a) A minimum paid up equity capital of rupees one billion in case of an applicant which seeks to carry on the business of life insurance or general insurance(b) A minimum paid-up equity capital of rupees two billion in case of a person carrying on exclusively the business of reinsuranceIn determining the aforesaid capital requirement the deposits to be made and any preliminary expenses incurred in the formation and registration of the company would be includedA ldquopromoterrdquo of the company is not permitted to hold at any time more than twenty-six per cent of the paid-up capital in any Indian insurance company However an interim measure has been permitted percentages higher than twenty six percent are permitted if the promoters divest in a phased manner over a period of ten years from the date of commencement of business the share capital held by them in excess of twenty six per centAn applicant desiring to carry on insurance business in India is required to make a requisition for a registration application to the IRDA in a prescribed format along with all the relevant documents

3 Renewal of Certificate

9 Insurance Regulatory and Development Authority (Registration of Indian Insurance Companies) Regulations 2000 via httpswwwirdagovinADMINCMScmsfrmGeneral_Layoutaspxpage=PageNo60ampflag=1 accessed on 2641610 Supra 7

(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 insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act 1938 (wef 112007 TAC has ceased to function)(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 ie having sufficient funds to pay insurance claim amount(m) To settle the disputes between insurers and intermediaries or insurance intermediaries(n) Supervising the functioning 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 clause(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

4 IMPORTANT REGULATION

1 Registration of Insurance Business

Every insurer seeking to carry out the business of insurance in India is required to obtain a certificate of registration from the IRDA prior to commencement of business The pre-conditions for applying for such registration have been set out under the Act of 1938 the IRD Act and the various regulations prescribed by the AuthorityThe following are some of the import ant general registration requirements that an applicant would need to fulfil(a) The applicant would need to be a company registered under the provisions of the IndianCompanies Act 1956 Consequently any person intending to carry on insurance business in India would need to set up a separate entity in India(b) The aggregate equity participation of a foreign company (either by itself or through its subsidiary companies or its nominees) in the applicant company cannot not exceed twenty six per cent of the paid up capital of the insurance company However the Insurance Act and the regulations there under provide for the manner of computation of such twenty-six per cent(c) The applicant can carry on any one of life insurance business general insurance business or reinsurance business Separate companies would be needed if the intent were t o conduct more than one business(d) The name of the applicant needs to contain the words ldquoinsurance companyrdquo or ldquoassurance companyrdquo9

2 Capital Structure Requirement The applicant would need to meet with the following capital structure requirements10(a) A minimum paid up equity capital of rupees one billion in case of an applicant which seeks to carry on the business of life insurance or general insurance(b) A minimum paid-up equity capital of rupees two billion in case of a person carrying on exclusively the business of reinsuranceIn determining the aforesaid capital requirement the deposits to be made and any preliminary expenses incurred in the formation and registration of the company would be includedA ldquopromoterrdquo of the company is not permitted to hold at any time more than twenty-six per cent of the paid-up capital in any Indian insurance company However an interim measure has been permitted percentages higher than twenty six percent are permitted if the promoters divest in a phased manner over a period of ten years from the date of commencement of business the share capital held by them in excess of twenty six per centAn applicant desiring to carry on insurance business in India is required to make a requisition for a registration application to the IRDA in a prescribed format along with all the relevant documents

3 Renewal of Certificate

9 Insurance Regulatory and Development Authority (Registration of Indian Insurance Companies) Regulations 2000 via httpswwwirdagovinADMINCMScmsfrmGeneral_Layoutaspxpage=PageNo60ampflag=1 accessed on 2641610 Supra 7

4 IMPORTANT REGULATION

1 Registration of Insurance Business

Every insurer seeking to carry out the business of insurance in India is required to obtain a certificate of registration from the IRDA prior to commencement of business The pre-conditions for applying for such registration have been set out under the Act of 1938 the IRD Act and the various regulations prescribed by the AuthorityThe following are some of the import ant general registration requirements that an applicant would need to fulfil(a) The applicant would need to be a company registered under the provisions of the IndianCompanies Act 1956 Consequently any person intending to carry on insurance business in India would need to set up a separate entity in India(b) The aggregate equity participation of a foreign company (either by itself or through its subsidiary companies or its nominees) in the applicant company cannot not exceed twenty six per cent of the paid up capital of the insurance company However the Insurance Act and the regulations there under provide for the manner of computation of such twenty-six per cent(c) The applicant can carry on any one of life insurance business general insurance business or reinsurance business Separate companies would be needed if the intent were t o conduct more than one business(d) The name of the applicant needs to contain the words ldquoinsurance companyrdquo or ldquoassurance companyrdquo9

2 Capital Structure Requirement The applicant would need to meet with the following capital structure requirements10(a) A minimum paid up equity capital of rupees one billion in case of an applicant which seeks to carry on the business of life insurance or general insurance(b) A minimum paid-up equity capital of rupees two billion in case of a person carrying on exclusively the business of reinsuranceIn determining the aforesaid capital requirement the deposits to be made and any preliminary expenses incurred in the formation and registration of the company would be includedA ldquopromoterrdquo of the company is not permitted to hold at any time more than twenty-six per cent of the paid-up capital in any Indian insurance company However an interim measure has been permitted percentages higher than twenty six percent are permitted if the promoters divest in a phased manner over a period of ten years from the date of commencement of business the share capital held by them in excess of twenty six per centAn applicant desiring to carry on insurance business in India is required to make a requisition for a registration application to the IRDA in a prescribed format along with all the relevant documents

3 Renewal of Certificate

9 Insurance Regulatory and Development Authority (Registration of Indian Insurance Companies) Regulations 2000 via httpswwwirdagovinADMINCMScmsfrmGeneral_Layoutaspxpage=PageNo60ampflag=1 accessed on 2641610 Supra 7

An insurer who has been granted a certificate of registration should renew the registration before the 31 day of December each year and such application should be accompanied by evidence of fees that should be the higher of-middot fifty thousand rupees for each class of insurance business andmiddot one fifth of one per cent of tot al gross premium writ ten direct by an insurer in India during the financial year preceding the year in which the application for renewal of certificate is required to be made or the application for renewal of certificate is required t o be made or rupees fifty million whichever is less (and in case of an insurer carrying on solely re-insurance business instead of the total gross premium written direct in India the total premium in respect of facultative re-insurance accepted by him in India shall be taken into account) This fee may vary according to the total gross premium writ ten direct in India during the year preceding the year in which the application is required to be made by the insurer in the class of insurance business to which the registration relates but shall not exceed one-fourth of one percent of such premium income or rupees fifty million whichever is less or be less in any case than fifty thousand rupees for each class of insurance business However in the case of an insurer carrying on solely re-insurance business the total premiums in respect of facultative re-insurance accepted by him in India shall be taken into account

4 Suspension of Registration The registration of an Indian insurance company or insurer may be suspended for a class or classes of insurance business in addition to any penalty that may be imposed or any action that may be taken for such period as may be specified by the Authority in the following casesmiddot conducts its business in a manner prejudicial to the interests of the policy-holdersmiddot fails to furnish any information as required by the Authority relating to its insurance businessmiddot does not submit periodical returns as required under the Act or by the Authoritymiddot does not co-operate in any inquiry conducted by the Authoritymiddot indulges in manipulating the insurance businessmiddot fails to make investment in the infrastructure or social sector as specified under the Insurance Act

5 Cancellation of certificate of Registration The Authority in case of repeated defaults of the grounds for suspension of a certificate of registration may impose a penalty in the form of cancellation of the certificate The Authority is compulsorily required to cancel the registration of an insurer either w holly or in so far as it relates to a particular class of insurance business as the case may bemiddot if the insurer fails to comply with t he provisions relating t o deposits ormiddot if the insurer fails at any time to comply with the provisions relating t o the excess of the value of his assets over the amount of his liabilities ormiddot if the insurer is in liquidation or is adjudged an insolvent or

middot if the business or a class of the business of the insurer has been transferred to any person or has been transferred to or amalgamated with the business of any other insurer ormiddot if the whole of the deposit made in respect of the insurance business has been returned to the insurermiddot if in the case of an insurer the standing contract is cancelled or is suspended and continues to be suspended for a period of six months ormiddot if the Central Government of India so directs In addition to the above the Authority has the discretion to cancel the registration of an insurermiddot if the insurer makes default in complying with or acts in contravention of any requirement of the Insurance Act or of any rule or any regulation or order made or any direction issued thereunder ormiddot if the Authority has reason to believe that any claim upon the insurer arising in India under any policy of insurance remains unpaid for three months after final judgment in regular course of law ormiddot if the insurer carries on any business other than insurance business or any prescribed business ormiddot if the insurer makes a default in complying with any direct ion issued or order made as the case may be by the Authority under the IRDA Act 1999middot If the insurer makes a default in complying with or acts in contravent ion of any requirement of theCompanies Act or the LIC Act or the GIC Act or the Foreign Exchange Management Act 2000The order of cancellation shall take effect on the date on which notice of t he order of cancellation is served on the insurer Thereafter the insurer would be prohibited from entering into any new contracts of insurance but all rights and liabilities in respect of contracts of insurance entered into by him before the cancellation takes effect shall continue as if the cancellation had not taken placeThe Authority may after the expiry of six months from the date on which the cancellation order takes effect apply to t he Court for an order to wind up t he insurance company or to wind up the affairs of the company in respect of a class of insurance business unless the registration of the insurance company has been revived or an application for winding up has already been presented to the CourtThe Authority has a discretion where the registration of an insurer has been cancelled to revive the registration if the insurer within six months from the date on which t he cancellation took effectmiddot makes the deposits ormiddot complies with the provisions as to the excess of the value of his assets over the amount of his liabilities ormiddot has his standing contract restored ormiddot has the application accepted ormiddot satisfies the Authority that no claim upon him remains unpaid ormiddot has complied with any requirements of the Insurance Act or the IRDA Act or any rule or regulation or any order made thereunder or any direct ion issued under these Acts or

middot that he has ceased to carry on any business other than insurance business or any prescribed business

6 Deposits Every insurer should in respect of the insurance business carried on by him in India deposit with the Reserve Bank of India (ldquoRBIrdquo) for and on behalf of the Central Government of India the following amounts either in cash or in approved securities estimated at the market value of the securities on the day of deposit or partly in cash and par tly in approved securitiesmiddot 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 31 day of March 2000 not exceeding rupees hundred millionmiddot in the case of general insurance business a sum equivalent to three per cent of his t otal gross st premium written in India in any financial year commencing after the 31 day of March 2000 not exceeding rupees hundred millionmiddot in the case of re-insurance business a sum of rupees two hundred millionmiddot If business done or to be done is marine insurance only and relates exclusively to country craft or its cargo or both only rupees one hundred thousand should be deposited with the RBIThese deposits will be held by the RBI though for the credit of the insurer and are returnable to the insurer in the event the provisions of t he Insurance Act mandate such return Interest accruing due and collected on deposited securities will be paid to t he insurer subject to any deductions of the normal commission chargeable for the realization of interest In addition it is import ant to note that the deposits willmiddot not be susceptible to any assignment or charge ormiddot not be available for the discharge of any liability of the insurer other than liabilities arising out of policies of insurance issued by the insurer so long as any such liabilities remain undischarged ormiddot not be liable to attachment in execution of any decree except a decree obtained by a policy-holder of the insurer in respect of a debt due upon a policy which debt the policy-holder has failed to realize in any other wayWhere the insurer has ceased to carry on all classes of insurance business in India the deposit made with the RBI shall on an application being made to the Court be returned to the insurer after satisfaction of all his liabilities in India in respect of all classes of insurance business

7 Valuation Of Assets -Liabilities And Solvency Margins An insurer should maintain at all times an excess of the value of his assets over the amount of his liabilities of not less than the relevant amount arrived at in the following manner (required solvency margin)(a) in the case of an insurer carrying on life insurance business t he required solvency margin shall be the higher of rupees five hundred million (one billion in case of re-insurers) or the aggregate sum arrived at based on the calculations specified in the Insurance Act

(b) in the case of an insurer carrying on general insurance business the required solvency margin shall be the highest of the following amounts -(i) rupees five hundred million (rupees one billion in case of a re-insurer) or(ii) a sum equivalent to twenty per cent of net premium income or (iii) a sum equivalent to thirty per cent of net incurred claims11

This shall be subject to credit for re-insurance in computing net premiums and net incurredclaims being actual but a percentage determined by the regulations not exceeding fifty per centAn insurer who fails to maintain the required solvency margin will be deemed to be insolvent and maybe wound up by the court An insurer is requir ed under the IRDA (Assets Liabilities and SolvencyMargin of Insurers) Regulations 2000 to prepare a statement of solvency margin in accordance with Schedule III-A in respect of life insurance business and in Form KG in accordance with Schedule III-B in respect of general insurance business as the case may beEvery insurer is required to prepare a statement of the value of assets in accordance with the provisions of the aforesaid regulations Every insurer should prepare a statement of the amount of liabilities in accordance with the provisions of Schedule II-A of the aforesaid regulations in respect of the life insurance business and in Form HG in accordance with Schedule II-B in respect of the general insurance business The aforesaid forms should be furnished separately for business within India and the total business transacted by t he insurer In the event that an insurer transacts insurance business in a country outside India and submits the statements or returns or any such particulars to a public authority of that country he is required to enclose such particulars along with the Forms specified in the aforesaid regulations and the IRDA (Actuarial Report and Abstract) Regulations 2000

8 Submission of Return Every insurer should submit to the Authority the following returns showing that as of 31 day of December of the preceding year the assets held and invested investments made out of the controlled fund and all other particulars necessary to establish that the requirements of theInsurance Act have been complied with

9 Advertisement Directions

11 Section 64VA (1A) Explanation Insurance Act net incurred claims means the average of the net incurred claims during thespecified period of not exceeding three preceding financial years

The IRDA (Insurance Advertisements) Regulations 2000 seeks to regulate and control every insurance advertisement12 issued by the insurer intermediary or insurance agent13 For this purpose every insurer intermediary or insurance agent is required to establish and maintain a system of control over the content form and method of dissemination of all advertisements concerning its policies and such advertisement should be filed with t he Authority as soon as it is first issued An advertisement issued by an insurer should not fall in the category of an unfair or misleading advertisement An unfair or misleading advertisement means and includes any advertisementmiddot that fails to clearly identif y the product as insurancemiddot makes claims beyond the ability of the policy t o deliver or beyond the reasonable expectation of performancemiddot describes benefits that do not match the policy provisionsmiddot uses words or phrases in a way which hides or minimizes the costs of the hazard insured against or the risks inherent in the policymiddot omits to disclose or discloses insufficiently important exclusions limitations and conditions of the contractmiddot gives information in a misleading waymiddot illustrates future benefits on assumptions which are not realist ic nor realizable in the light of the insurers current performancemiddot where the benefits are not guaranteed does not explicitly say so as prominently as the benefits are stated or says so in manner or form that it could remain unnoticedmiddot implies a group or other relationship like sponsorship affiliation or approval that does not existmiddot makes unfair or incomplete comparisons with products which are not comparable or disparages competitors

Every advertisement should disclose the full particulars and identity of the insurer and that insurance is the subject matter of solicitation In the event that such advertisement describes any benefits the form number of the policy and the type of coverage should be fully

12 Regulation 2(b) IRDA (Insurance Advertisements) Regulations 2000 ldquoInsurance advertisementsrdquo means and includes anycommunication directly or indirectly related to a policy and intended to result in the eventual sale or solicitation of a policy from themembers of the public and shall include all forms of printed and published materials or any material using the print and orelectronic medium for public communication such as(i) newspapers magazines and sales talk(ii) billboards hoardings panels(iii) radio television website e-mail portals(iv) representations by intermediaries(v) leaflets13 Regulation 2(c) IRDA (Insurance Advertisements) Regulations 2000 ldquoIntermediary or insurance intermediaryrdquo includesinsurance brokers reinsurance brokers insurance consultants surveyors and loss assessors or any other persons representing orassisting an insurer in one or more of the following(i) soliciting negotiating procuring or effectuating an insurance contract or renewal of an insurance contract(ii) disseminating information relating to coverage or rates

disclosed In case of Internet advertisements the website or portal of the insurer or intermediary should contain disclosure statements which outline the sites specific policies vis-agrave-vis the privacy of personal information for the protection of both their own businesses and the consumers they serve and should also display the registration or license numbers In addition to these requirements every insurer or intermediary is also required to follow recognized standards of professional conduct as prescribed by the Advertisement Standards Council of India

10 Foreign Exchange Laws The Reserve Bank of India (ldquoRBIrdquo) is the apex bank of India established in 1935 under the Reserve Bank of India Act 1934 The Exchange Control Department within the RBI is responsible for the regulation and enforcement of exchange controls Prior t o 1999 India had stringent exchange control regulations under the Foreign Exchange Regulation Act 1973 (FERA) The Foreign DirectInvestment (ldquoFDIrdquo) regime in India has been progressively liberalized in the nineties with the passageof the Foreign Exchange Management Act 1999 (ldquoFEMArdquo) which replaced FERA Most restrict ionson foreign investment have been removed and the procedures have been simplified Non-residents can invest directly in India either w holly or as a joint venture Foreign investment is allowed in virtually all sectors including the services sector subject to Government permission in certain casesInsurance companies that are registered with the IRDA are permitted to issue general insurance policies denominated in foreign currency and are also permitted to receive premiums in foreign currency without the prior approval of the RBI However this is permitted only for certain kinds of cases such as marine insurance for vessels owned by foreign shipping companies and chartered by Indian companies aviation insurance for aircrafts imported from outside India on leasehire basis for the purpose of air taxi operations etc Authorised dealers are also permitted t o settle claims in foreign currency on general insurance policies subject to certain conditions such as the claim has been made for the loss occurred during the policy period the claim has been settled as per t he surveyors report and other substantiating documents claims on account of reinsurance are being lodged with the reinsurers and will be received as per the reinsurance agreement the remittance is being made to the non-resident beneficiary under the policy etc However in the case of resident beneficiaries the claim is required to be settled in rupee equivalent of the foreign currency due and under no circumstances can payment be made in foreign currency to a resident beneficiaryAs per the provisions of the Foreign Exchange Management (Insurance) Regulations 2000 no person resident in India is permitted t o take any general or life insurance policy issued by an insurer outside India However the RBI may permit for sufficient reasons a resident in India to take any life insurance policy issued by an insurer outside India However an exemption has recently been made only for units located in Special Economic Zones (ldquoSEZsrdquo) for general insurance policies taken by such units Therefore remittances towards premium for general insurance policies taken out by units located in SEZs from insurers

outside India are permit ted provided that the premiums are paid out of the foreign exchange balancesA person resident in India but not permanently resident14 therein is permitted to continue holding any insurance policy issued to him by an insurer outside India if the premium on such policy is paid out of foreign currency resources outside India A person resident in India may take a general insurance policy issued by an insurer outside India provided that before taking the policy he has obtained a no objection certificate from the Central Government of India Further a person resident in India is also permitted to continue to hold any insurance policy issued by an insurer outside India when such person was resident outside India subject to fulfilment of certain conditions

A foreign company may enter the insurance business in India in either of the following waysFDI is permitted in India primarily either under t he automatic route or with prior government approval Where FDI does not fall under the automatic route the foreign invest or would require the approval from the Foreign Investment Promotion Board (ldquoFIPBrdquo) Indian companies are generally permitted t o accept FDI without prior approval provided certain sectoral policies and investment limits are met In the insurance sector there is 26 sectoral cap on FDI subject to obtaining license from the IRDA which means that a foreign company can invest up to only 26in an Indian insurance company (calculated in the manner specified in the Insurance Act and regulations thereunder) while 74 would have t o be invested by an Indian companyIn the event that a foreign insurance company is not desirous of directly investing in an Indian insurance company it may in the beginning set up a branch or liaison office subject to theapproval of the RBI andor the Government of India in this regard The branch office in India is permitted to undertake only a certain set of activities such as carrying our research work for the parent company representing the parent company in India etc A liaison office is also permitted to undertake only a certain set of activities such as acting as a communication channel between the parent company and Indian companies

11 ldquoGuidelines on Appointment of Insurance Agents 2015

Code of Conduct

Every agent15 shall adhere to the code of conduct specified below-

Every insurance agent shall14 ldquoNot permanently residentrdquo means a person resident in India for employment of a specified duration (irrespective of the lengththereof) or for a specific job or assignment the duration of which does not exceed three years15 Section 2(10) Insurance Act 1938 ldquoinsurance agentrdquo means an insurance agent licensed under section 42 who receives oragrees to receive payment by way of commission or other remuneration in consideration of his soliciting or procuring insurancebusiness including business relating to the continuance renewal or revival of policies of insurance

1 identify himself and the insurer of whom he is an insurance agent2 show the agency identity card to the prospect and also disclose the agency

appointment letter to the prospect on demand3 disseminate the requisite information in respect of insurance products offered

for sale by his insurer and take into account the needs of the prospect while recommending a specific insurance plan

4 where the Insurance agent represents more than one insurer offering same line of products he should dispassionately advice the policyholder on the products of all Insurers whom he is representing and the product best suited to the specific needs of the prospect

5 disclose the scales of commission in respect of the insurance product offered for sale if asked by the prospect

6 indicate the premium to be charged by the insurer for the insurance product offered for sale

7 explain to the prospect the nature of information required in the proposal form by the insurer and also the importance of disclosure of material information in the purchase of an insurance contract

8 bring to the notice of the insurer every fact about the prospect relevant to insurance underwriting including any adverse habits or income inconsistency of the prospect within the knowledge of the agent in the form of a report called ldquoInsurance Agentrsquos Confidential Reportrdquo along with every proposal submitted to the insurer wherever applicable and any material fact that may adversely affect the underwriting decision of the insurer as regards acceptance of the proposal by making all reasonable enquiries about the prospect

9 obtain the requisite documents at the time of filing the proposal form with the insurer and other documents subsequently asked for by the insurer for completion of the proposal

10 advise every prospect to effect nomination under the policy11 inform promptly the prospect about the acceptance or rejection of the proposal

by the insurer12 render necessary assistance and advice to every policyholder on all policy

servicing matters including assignment of policy change of address or exercise of options under the policy or any other policy service wherever necessary

13 render necessary assistance to the policyholders or claimants or beneficiaries in complying with the requirements for settlement of claims by the insurer16

No insurance agent shall-1 solicit or procure insurance business without being appointed to act as such by

the insure2 induce the prospect to omit any material information in the proposal form

16 GUIDELINES ON APPOINTMENT OF INSURANCE AGENTS 2015 Regulation 8 httpswwwirdagovinadmincmscmswhatsNew_Layoutaspxpage=PageNo2451ampflag=1 accessed on 26416

middot if the business or a class of the business of the insurer has been transferred to any person or has been transferred to or amalgamated with the business of any other insurer ormiddot if the whole of the deposit made in respect of the insurance business has been returned to the insurermiddot if in the case of an insurer the standing contract is cancelled or is suspended and continues to be suspended for a period of six months ormiddot if the Central Government of India so directs In addition to the above the Authority has the discretion to cancel the registration of an insurermiddot if the insurer makes default in complying with or acts in contravention of any requirement of the Insurance Act or of any rule or any regulation or order made or any direction issued thereunder ormiddot if the Authority has reason to believe that any claim upon the insurer arising in India under any policy of insurance remains unpaid for three months after final judgment in regular course of law ormiddot if the insurer carries on any business other than insurance business or any prescribed business ormiddot if the insurer makes a default in complying with any direct ion issued or order made as the case may be by the Authority under the IRDA Act 1999middot If the insurer makes a default in complying with or acts in contravent ion of any requirement of theCompanies Act or the LIC Act or the GIC Act or the Foreign Exchange Management Act 2000The order of cancellation shall take effect on the date on which notice of t he order of cancellation is served on the insurer Thereafter the insurer would be prohibited from entering into any new contracts of insurance but all rights and liabilities in respect of contracts of insurance entered into by him before the cancellation takes effect shall continue as if the cancellation had not taken placeThe Authority may after the expiry of six months from the date on which the cancellation order takes effect apply to t he Court for an order to wind up t he insurance company or to wind up the affairs of the company in respect of a class of insurance business unless the registration of the insurance company has been revived or an application for winding up has already been presented to the CourtThe Authority has a discretion where the registration of an insurer has been cancelled to revive the registration if the insurer within six months from the date on which t he cancellation took effectmiddot makes the deposits ormiddot complies with the provisions as to the excess of the value of his assets over the amount of his liabilities ormiddot has his standing contract restored ormiddot has the application accepted ormiddot satisfies the Authority that no claim upon him remains unpaid ormiddot has complied with any requirements of the Insurance Act or the IRDA Act or any rule or regulation or any order made thereunder or any direct ion issued under these Acts or

middot that he has ceased to carry on any business other than insurance business or any prescribed business

6 Deposits Every insurer should in respect of the insurance business carried on by him in India deposit with the Reserve Bank of India (ldquoRBIrdquo) for and on behalf of the Central Government of India the following amounts either in cash or in approved securities estimated at the market value of the securities on the day of deposit or partly in cash and par tly in approved securitiesmiddot 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 31 day of March 2000 not exceeding rupees hundred millionmiddot in the case of general insurance business a sum equivalent to three per cent of his t otal gross st premium written in India in any financial year commencing after the 31 day of March 2000 not exceeding rupees hundred millionmiddot in the case of re-insurance business a sum of rupees two hundred millionmiddot If business done or to be done is marine insurance only and relates exclusively to country craft or its cargo or both only rupees one hundred thousand should be deposited with the RBIThese deposits will be held by the RBI though for the credit of the insurer and are returnable to the insurer in the event the provisions of t he Insurance Act mandate such return Interest accruing due and collected on deposited securities will be paid to t he insurer subject to any deductions of the normal commission chargeable for the realization of interest In addition it is import ant to note that the deposits willmiddot not be susceptible to any assignment or charge ormiddot not be available for the discharge of any liability of the insurer other than liabilities arising out of policies of insurance issued by the insurer so long as any such liabilities remain undischarged ormiddot not be liable to attachment in execution of any decree except a decree obtained by a policy-holder of the insurer in respect of a debt due upon a policy which debt the policy-holder has failed to realize in any other wayWhere the insurer has ceased to carry on all classes of insurance business in India the deposit made with the RBI shall on an application being made to the Court be returned to the insurer after satisfaction of all his liabilities in India in respect of all classes of insurance business

7 Valuation Of Assets -Liabilities And Solvency Margins An insurer should maintain at all times an excess of the value of his assets over the amount of his liabilities of not less than the relevant amount arrived at in the following manner (required solvency margin)(a) in the case of an insurer carrying on life insurance business t he required solvency margin shall be the higher of rupees five hundred million (one billion in case of re-insurers) or the aggregate sum arrived at based on the calculations specified in the Insurance Act

(b) in the case of an insurer carrying on general insurance business the required solvency margin shall be the highest of the following amounts -(i) rupees five hundred million (rupees one billion in case of a re-insurer) or(ii) a sum equivalent to twenty per cent of net premium income or (iii) a sum equivalent to thirty per cent of net incurred claims11

This shall be subject to credit for re-insurance in computing net premiums and net incurredclaims being actual but a percentage determined by the regulations not exceeding fifty per centAn insurer who fails to maintain the required solvency margin will be deemed to be insolvent and maybe wound up by the court An insurer is requir ed under the IRDA (Assets Liabilities and SolvencyMargin of Insurers) Regulations 2000 to prepare a statement of solvency margin in accordance with Schedule III-A in respect of life insurance business and in Form KG in accordance with Schedule III-B in respect of general insurance business as the case may beEvery insurer is required to prepare a statement of the value of assets in accordance with the provisions of the aforesaid regulations Every insurer should prepare a statement of the amount of liabilities in accordance with the provisions of Schedule II-A of the aforesaid regulations in respect of the life insurance business and in Form HG in accordance with Schedule II-B in respect of the general insurance business The aforesaid forms should be furnished separately for business within India and the total business transacted by t he insurer In the event that an insurer transacts insurance business in a country outside India and submits the statements or returns or any such particulars to a public authority of that country he is required to enclose such particulars along with the Forms specified in the aforesaid regulations and the IRDA (Actuarial Report and Abstract) Regulations 2000

8 Submission of Return Every insurer should submit to the Authority the following returns showing that as of 31 day of December of the preceding year the assets held and invested investments made out of the controlled fund and all other particulars necessary to establish that the requirements of theInsurance Act have been complied with

9 Advertisement Directions

11 Section 64VA (1A) Explanation Insurance Act net incurred claims means the average of the net incurred claims during thespecified period of not exceeding three preceding financial years

The IRDA (Insurance Advertisements) Regulations 2000 seeks to regulate and control every insurance advertisement12 issued by the insurer intermediary or insurance agent13 For this purpose every insurer intermediary or insurance agent is required to establish and maintain a system of control over the content form and method of dissemination of all advertisements concerning its policies and such advertisement should be filed with t he Authority as soon as it is first issued An advertisement issued by an insurer should not fall in the category of an unfair or misleading advertisement An unfair or misleading advertisement means and includes any advertisementmiddot that fails to clearly identif y the product as insurancemiddot makes claims beyond the ability of the policy t o deliver or beyond the reasonable expectation of performancemiddot describes benefits that do not match the policy provisionsmiddot uses words or phrases in a way which hides or minimizes the costs of the hazard insured against or the risks inherent in the policymiddot omits to disclose or discloses insufficiently important exclusions limitations and conditions of the contractmiddot gives information in a misleading waymiddot illustrates future benefits on assumptions which are not realist ic nor realizable in the light of the insurers current performancemiddot where the benefits are not guaranteed does not explicitly say so as prominently as the benefits are stated or says so in manner or form that it could remain unnoticedmiddot implies a group or other relationship like sponsorship affiliation or approval that does not existmiddot makes unfair or incomplete comparisons with products which are not comparable or disparages competitors

Every advertisement should disclose the full particulars and identity of the insurer and that insurance is the subject matter of solicitation In the event that such advertisement describes any benefits the form number of the policy and the type of coverage should be fully

12 Regulation 2(b) IRDA (Insurance Advertisements) Regulations 2000 ldquoInsurance advertisementsrdquo means and includes anycommunication directly or indirectly related to a policy and intended to result in the eventual sale or solicitation of a policy from themembers of the public and shall include all forms of printed and published materials or any material using the print and orelectronic medium for public communication such as(i) newspapers magazines and sales talk(ii) billboards hoardings panels(iii) radio television website e-mail portals(iv) representations by intermediaries(v) leaflets13 Regulation 2(c) IRDA (Insurance Advertisements) Regulations 2000 ldquoIntermediary or insurance intermediaryrdquo includesinsurance brokers reinsurance brokers insurance consultants surveyors and loss assessors or any other persons representing orassisting an insurer in one or more of the following(i) soliciting negotiating procuring or effectuating an insurance contract or renewal of an insurance contract(ii) disseminating information relating to coverage or rates

disclosed In case of Internet advertisements the website or portal of the insurer or intermediary should contain disclosure statements which outline the sites specific policies vis-agrave-vis the privacy of personal information for the protection of both their own businesses and the consumers they serve and should also display the registration or license numbers In addition to these requirements every insurer or intermediary is also required to follow recognized standards of professional conduct as prescribed by the Advertisement Standards Council of India

10 Foreign Exchange Laws The Reserve Bank of India (ldquoRBIrdquo) is the apex bank of India established in 1935 under the Reserve Bank of India Act 1934 The Exchange Control Department within the RBI is responsible for the regulation and enforcement of exchange controls Prior t o 1999 India had stringent exchange control regulations under the Foreign Exchange Regulation Act 1973 (FERA) The Foreign DirectInvestment (ldquoFDIrdquo) regime in India has been progressively liberalized in the nineties with the passageof the Foreign Exchange Management Act 1999 (ldquoFEMArdquo) which replaced FERA Most restrict ionson foreign investment have been removed and the procedures have been simplified Non-residents can invest directly in India either w holly or as a joint venture Foreign investment is allowed in virtually all sectors including the services sector subject to Government permission in certain casesInsurance companies that are registered with the IRDA are permitted to issue general insurance policies denominated in foreign currency and are also permitted to receive premiums in foreign currency without the prior approval of the RBI However this is permitted only for certain kinds of cases such as marine insurance for vessels owned by foreign shipping companies and chartered by Indian companies aviation insurance for aircrafts imported from outside India on leasehire basis for the purpose of air taxi operations etc Authorised dealers are also permitted t o settle claims in foreign currency on general insurance policies subject to certain conditions such as the claim has been made for the loss occurred during the policy period the claim has been settled as per t he surveyors report and other substantiating documents claims on account of reinsurance are being lodged with the reinsurers and will be received as per the reinsurance agreement the remittance is being made to the non-resident beneficiary under the policy etc However in the case of resident beneficiaries the claim is required to be settled in rupee equivalent of the foreign currency due and under no circumstances can payment be made in foreign currency to a resident beneficiaryAs per the provisions of the Foreign Exchange Management (Insurance) Regulations 2000 no person resident in India is permitted t o take any general or life insurance policy issued by an insurer outside India However the RBI may permit for sufficient reasons a resident in India to take any life insurance policy issued by an insurer outside India However an exemption has recently been made only for units located in Special Economic Zones (ldquoSEZsrdquo) for general insurance policies taken by such units Therefore remittances towards premium for general insurance policies taken out by units located in SEZs from insurers

outside India are permit ted provided that the premiums are paid out of the foreign exchange balancesA person resident in India but not permanently resident14 therein is permitted to continue holding any insurance policy issued to him by an insurer outside India if the premium on such policy is paid out of foreign currency resources outside India A person resident in India may take a general insurance policy issued by an insurer outside India provided that before taking the policy he has obtained a no objection certificate from the Central Government of India Further a person resident in India is also permitted to continue to hold any insurance policy issued by an insurer outside India when such person was resident outside India subject to fulfilment of certain conditions

A foreign company may enter the insurance business in India in either of the following waysFDI is permitted in India primarily either under t he automatic route or with prior government approval Where FDI does not fall under the automatic route the foreign invest or would require the approval from the Foreign Investment Promotion Board (ldquoFIPBrdquo) Indian companies are generally permitted t o accept FDI without prior approval provided certain sectoral policies and investment limits are met In the insurance sector there is 26 sectoral cap on FDI subject to obtaining license from the IRDA which means that a foreign company can invest up to only 26in an Indian insurance company (calculated in the manner specified in the Insurance Act and regulations thereunder) while 74 would have t o be invested by an Indian companyIn the event that a foreign insurance company is not desirous of directly investing in an Indian insurance company it may in the beginning set up a branch or liaison office subject to theapproval of the RBI andor the Government of India in this regard The branch office in India is permitted to undertake only a certain set of activities such as carrying our research work for the parent company representing the parent company in India etc A liaison office is also permitted to undertake only a certain set of activities such as acting as a communication channel between the parent company and Indian companies

11 ldquoGuidelines on Appointment of Insurance Agents 2015

Code of Conduct

Every agent15 shall adhere to the code of conduct specified below-

Every insurance agent shall14 ldquoNot permanently residentrdquo means a person resident in India for employment of a specified duration (irrespective of the lengththereof) or for a specific job or assignment the duration of which does not exceed three years15 Section 2(10) Insurance Act 1938 ldquoinsurance agentrdquo means an insurance agent licensed under section 42 who receives oragrees to receive payment by way of commission or other remuneration in consideration of his soliciting or procuring insurancebusiness including business relating to the continuance renewal or revival of policies of insurance

1 identify himself and the insurer of whom he is an insurance agent2 show the agency identity card to the prospect and also disclose the agency

appointment letter to the prospect on demand3 disseminate the requisite information in respect of insurance products offered

for sale by his insurer and take into account the needs of the prospect while recommending a specific insurance plan

4 where the Insurance agent represents more than one insurer offering same line of products he should dispassionately advice the policyholder on the products of all Insurers whom he is representing and the product best suited to the specific needs of the prospect

5 disclose the scales of commission in respect of the insurance product offered for sale if asked by the prospect

6 indicate the premium to be charged by the insurer for the insurance product offered for sale

7 explain to the prospect the nature of information required in the proposal form by the insurer and also the importance of disclosure of material information in the purchase of an insurance contract

8 bring to the notice of the insurer every fact about the prospect relevant to insurance underwriting including any adverse habits or income inconsistency of the prospect within the knowledge of the agent in the form of a report called ldquoInsurance Agentrsquos Confidential Reportrdquo along with every proposal submitted to the insurer wherever applicable and any material fact that may adversely affect the underwriting decision of the insurer as regards acceptance of the proposal by making all reasonable enquiries about the prospect

9 obtain the requisite documents at the time of filing the proposal form with the insurer and other documents subsequently asked for by the insurer for completion of the proposal

10 advise every prospect to effect nomination under the policy11 inform promptly the prospect about the acceptance or rejection of the proposal

by the insurer12 render necessary assistance and advice to every policyholder on all policy

servicing matters including assignment of policy change of address or exercise of options under the policy or any other policy service wherever necessary

13 render necessary assistance to the policyholders or claimants or beneficiaries in complying with the requirements for settlement of claims by the insurer16

No insurance agent shall-1 solicit or procure insurance business without being appointed to act as such by

the insure2 induce the prospect to omit any material information in the proposal form

16 GUIDELINES ON APPOINTMENT OF INSURANCE AGENTS 2015 Regulation 8 httpswwwirdagovinadmincmscmswhatsNew_Layoutaspxpage=PageNo2451ampflag=1 accessed on 26416

middot that he has ceased to carry on any business other than insurance business or any prescribed business

6 Deposits Every insurer should in respect of the insurance business carried on by him in India deposit with the Reserve Bank of India (ldquoRBIrdquo) for and on behalf of the Central Government of India the following amounts either in cash or in approved securities estimated at the market value of the securities on the day of deposit or partly in cash and par tly in approved securitiesmiddot 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 31 day of March 2000 not exceeding rupees hundred millionmiddot in the case of general insurance business a sum equivalent to three per cent of his t otal gross st premium written in India in any financial year commencing after the 31 day of March 2000 not exceeding rupees hundred millionmiddot in the case of re-insurance business a sum of rupees two hundred millionmiddot If business done or to be done is marine insurance only and relates exclusively to country craft or its cargo or both only rupees one hundred thousand should be deposited with the RBIThese deposits will be held by the RBI though for the credit of the insurer and are returnable to the insurer in the event the provisions of t he Insurance Act mandate such return Interest accruing due and collected on deposited securities will be paid to t he insurer subject to any deductions of the normal commission chargeable for the realization of interest In addition it is import ant to note that the deposits willmiddot not be susceptible to any assignment or charge ormiddot not be available for the discharge of any liability of the insurer other than liabilities arising out of policies of insurance issued by the insurer so long as any such liabilities remain undischarged ormiddot not be liable to attachment in execution of any decree except a decree obtained by a policy-holder of the insurer in respect of a debt due upon a policy which debt the policy-holder has failed to realize in any other wayWhere the insurer has ceased to carry on all classes of insurance business in India the deposit made with the RBI shall on an application being made to the Court be returned to the insurer after satisfaction of all his liabilities in India in respect of all classes of insurance business

7 Valuation Of Assets -Liabilities And Solvency Margins An insurer should maintain at all times an excess of the value of his assets over the amount of his liabilities of not less than the relevant amount arrived at in the following manner (required solvency margin)(a) in the case of an insurer carrying on life insurance business t he required solvency margin shall be the higher of rupees five hundred million (one billion in case of re-insurers) or the aggregate sum arrived at based on the calculations specified in the Insurance Act

(b) in the case of an insurer carrying on general insurance business the required solvency margin shall be the highest of the following amounts -(i) rupees five hundred million (rupees one billion in case of a re-insurer) or(ii) a sum equivalent to twenty per cent of net premium income or (iii) a sum equivalent to thirty per cent of net incurred claims11

This shall be subject to credit for re-insurance in computing net premiums and net incurredclaims being actual but a percentage determined by the regulations not exceeding fifty per centAn insurer who fails to maintain the required solvency margin will be deemed to be insolvent and maybe wound up by the court An insurer is requir ed under the IRDA (Assets Liabilities and SolvencyMargin of Insurers) Regulations 2000 to prepare a statement of solvency margin in accordance with Schedule III-A in respect of life insurance business and in Form KG in accordance with Schedule III-B in respect of general insurance business as the case may beEvery insurer is required to prepare a statement of the value of assets in accordance with the provisions of the aforesaid regulations Every insurer should prepare a statement of the amount of liabilities in accordance with the provisions of Schedule II-A of the aforesaid regulations in respect of the life insurance business and in Form HG in accordance with Schedule II-B in respect of the general insurance business The aforesaid forms should be furnished separately for business within India and the total business transacted by t he insurer In the event that an insurer transacts insurance business in a country outside India and submits the statements or returns or any such particulars to a public authority of that country he is required to enclose such particulars along with the Forms specified in the aforesaid regulations and the IRDA (Actuarial Report and Abstract) Regulations 2000

8 Submission of Return Every insurer should submit to the Authority the following returns showing that as of 31 day of December of the preceding year the assets held and invested investments made out of the controlled fund and all other particulars necessary to establish that the requirements of theInsurance Act have been complied with

9 Advertisement Directions

11 Section 64VA (1A) Explanation Insurance Act net incurred claims means the average of the net incurred claims during thespecified period of not exceeding three preceding financial years

The IRDA (Insurance Advertisements) Regulations 2000 seeks to regulate and control every insurance advertisement12 issued by the insurer intermediary or insurance agent13 For this purpose every insurer intermediary or insurance agent is required to establish and maintain a system of control over the content form and method of dissemination of all advertisements concerning its policies and such advertisement should be filed with t he Authority as soon as it is first issued An advertisement issued by an insurer should not fall in the category of an unfair or misleading advertisement An unfair or misleading advertisement means and includes any advertisementmiddot that fails to clearly identif y the product as insurancemiddot makes claims beyond the ability of the policy t o deliver or beyond the reasonable expectation of performancemiddot describes benefits that do not match the policy provisionsmiddot uses words or phrases in a way which hides or minimizes the costs of the hazard insured against or the risks inherent in the policymiddot omits to disclose or discloses insufficiently important exclusions limitations and conditions of the contractmiddot gives information in a misleading waymiddot illustrates future benefits on assumptions which are not realist ic nor realizable in the light of the insurers current performancemiddot where the benefits are not guaranteed does not explicitly say so as prominently as the benefits are stated or says so in manner or form that it could remain unnoticedmiddot implies a group or other relationship like sponsorship affiliation or approval that does not existmiddot makes unfair or incomplete comparisons with products which are not comparable or disparages competitors

Every advertisement should disclose the full particulars and identity of the insurer and that insurance is the subject matter of solicitation In the event that such advertisement describes any benefits the form number of the policy and the type of coverage should be fully

12 Regulation 2(b) IRDA (Insurance Advertisements) Regulations 2000 ldquoInsurance advertisementsrdquo means and includes anycommunication directly or indirectly related to a policy and intended to result in the eventual sale or solicitation of a policy from themembers of the public and shall include all forms of printed and published materials or any material using the print and orelectronic medium for public communication such as(i) newspapers magazines and sales talk(ii) billboards hoardings panels(iii) radio television website e-mail portals(iv) representations by intermediaries(v) leaflets13 Regulation 2(c) IRDA (Insurance Advertisements) Regulations 2000 ldquoIntermediary or insurance intermediaryrdquo includesinsurance brokers reinsurance brokers insurance consultants surveyors and loss assessors or any other persons representing orassisting an insurer in one or more of the following(i) soliciting negotiating procuring or effectuating an insurance contract or renewal of an insurance contract(ii) disseminating information relating to coverage or rates

disclosed In case of Internet advertisements the website or portal of the insurer or intermediary should contain disclosure statements which outline the sites specific policies vis-agrave-vis the privacy of personal information for the protection of both their own businesses and the consumers they serve and should also display the registration or license numbers In addition to these requirements every insurer or intermediary is also required to follow recognized standards of professional conduct as prescribed by the Advertisement Standards Council of India

10 Foreign Exchange Laws The Reserve Bank of India (ldquoRBIrdquo) is the apex bank of India established in 1935 under the Reserve Bank of India Act 1934 The Exchange Control Department within the RBI is responsible for the regulation and enforcement of exchange controls Prior t o 1999 India had stringent exchange control regulations under the Foreign Exchange Regulation Act 1973 (FERA) The Foreign DirectInvestment (ldquoFDIrdquo) regime in India has been progressively liberalized in the nineties with the passageof the Foreign Exchange Management Act 1999 (ldquoFEMArdquo) which replaced FERA Most restrict ionson foreign investment have been removed and the procedures have been simplified Non-residents can invest directly in India either w holly or as a joint venture Foreign investment is allowed in virtually all sectors including the services sector subject to Government permission in certain casesInsurance companies that are registered with the IRDA are permitted to issue general insurance policies denominated in foreign currency and are also permitted to receive premiums in foreign currency without the prior approval of the RBI However this is permitted only for certain kinds of cases such as marine insurance for vessels owned by foreign shipping companies and chartered by Indian companies aviation insurance for aircrafts imported from outside India on leasehire basis for the purpose of air taxi operations etc Authorised dealers are also permitted t o settle claims in foreign currency on general insurance policies subject to certain conditions such as the claim has been made for the loss occurred during the policy period the claim has been settled as per t he surveyors report and other substantiating documents claims on account of reinsurance are being lodged with the reinsurers and will be received as per the reinsurance agreement the remittance is being made to the non-resident beneficiary under the policy etc However in the case of resident beneficiaries the claim is required to be settled in rupee equivalent of the foreign currency due and under no circumstances can payment be made in foreign currency to a resident beneficiaryAs per the provisions of the Foreign Exchange Management (Insurance) Regulations 2000 no person resident in India is permitted t o take any general or life insurance policy issued by an insurer outside India However the RBI may permit for sufficient reasons a resident in India to take any life insurance policy issued by an insurer outside India However an exemption has recently been made only for units located in Special Economic Zones (ldquoSEZsrdquo) for general insurance policies taken by such units Therefore remittances towards premium for general insurance policies taken out by units located in SEZs from insurers

outside India are permit ted provided that the premiums are paid out of the foreign exchange balancesA person resident in India but not permanently resident14 therein is permitted to continue holding any insurance policy issued to him by an insurer outside India if the premium on such policy is paid out of foreign currency resources outside India A person resident in India may take a general insurance policy issued by an insurer outside India provided that before taking the policy he has obtained a no objection certificate from the Central Government of India Further a person resident in India is also permitted to continue to hold any insurance policy issued by an insurer outside India when such person was resident outside India subject to fulfilment of certain conditions

A foreign company may enter the insurance business in India in either of the following waysFDI is permitted in India primarily either under t he automatic route or with prior government approval Where FDI does not fall under the automatic route the foreign invest or would require the approval from the Foreign Investment Promotion Board (ldquoFIPBrdquo) Indian companies are generally permitted t o accept FDI without prior approval provided certain sectoral policies and investment limits are met In the insurance sector there is 26 sectoral cap on FDI subject to obtaining license from the IRDA which means that a foreign company can invest up to only 26in an Indian insurance company (calculated in the manner specified in the Insurance Act and regulations thereunder) while 74 would have t o be invested by an Indian companyIn the event that a foreign insurance company is not desirous of directly investing in an Indian insurance company it may in the beginning set up a branch or liaison office subject to theapproval of the RBI andor the Government of India in this regard The branch office in India is permitted to undertake only a certain set of activities such as carrying our research work for the parent company representing the parent company in India etc A liaison office is also permitted to undertake only a certain set of activities such as acting as a communication channel between the parent company and Indian companies

11 ldquoGuidelines on Appointment of Insurance Agents 2015

Code of Conduct

Every agent15 shall adhere to the code of conduct specified below-

Every insurance agent shall14 ldquoNot permanently residentrdquo means a person resident in India for employment of a specified duration (irrespective of the lengththereof) or for a specific job or assignment the duration of which does not exceed three years15 Section 2(10) Insurance Act 1938 ldquoinsurance agentrdquo means an insurance agent licensed under section 42 who receives oragrees to receive payment by way of commission or other remuneration in consideration of his soliciting or procuring insurancebusiness including business relating to the continuance renewal or revival of policies of insurance

1 identify himself and the insurer of whom he is an insurance agent2 show the agency identity card to the prospect and also disclose the agency

appointment letter to the prospect on demand3 disseminate the requisite information in respect of insurance products offered

for sale by his insurer and take into account the needs of the prospect while recommending a specific insurance plan

4 where the Insurance agent represents more than one insurer offering same line of products he should dispassionately advice the policyholder on the products of all Insurers whom he is representing and the product best suited to the specific needs of the prospect

5 disclose the scales of commission in respect of the insurance product offered for sale if asked by the prospect

6 indicate the premium to be charged by the insurer for the insurance product offered for sale

7 explain to the prospect the nature of information required in the proposal form by the insurer and also the importance of disclosure of material information in the purchase of an insurance contract

8 bring to the notice of the insurer every fact about the prospect relevant to insurance underwriting including any adverse habits or income inconsistency of the prospect within the knowledge of the agent in the form of a report called ldquoInsurance Agentrsquos Confidential Reportrdquo along with every proposal submitted to the insurer wherever applicable and any material fact that may adversely affect the underwriting decision of the insurer as regards acceptance of the proposal by making all reasonable enquiries about the prospect

9 obtain the requisite documents at the time of filing the proposal form with the insurer and other documents subsequently asked for by the insurer for completion of the proposal

10 advise every prospect to effect nomination under the policy11 inform promptly the prospect about the acceptance or rejection of the proposal

by the insurer12 render necessary assistance and advice to every policyholder on all policy

servicing matters including assignment of policy change of address or exercise of options under the policy or any other policy service wherever necessary

13 render necessary assistance to the policyholders or claimants or beneficiaries in complying with the requirements for settlement of claims by the insurer16

No insurance agent shall-1 solicit or procure insurance business without being appointed to act as such by

the insure2 induce the prospect to omit any material information in the proposal form

16 GUIDELINES ON APPOINTMENT OF INSURANCE AGENTS 2015 Regulation 8 httpswwwirdagovinadmincmscmswhatsNew_Layoutaspxpage=PageNo2451ampflag=1 accessed on 26416

(b) in the case of an insurer carrying on general insurance business the required solvency margin shall be the highest of the following amounts -(i) rupees five hundred million (rupees one billion in case of a re-insurer) or(ii) a sum equivalent to twenty per cent of net premium income or (iii) a sum equivalent to thirty per cent of net incurred claims11

This shall be subject to credit for re-insurance in computing net premiums and net incurredclaims being actual but a percentage determined by the regulations not exceeding fifty per centAn insurer who fails to maintain the required solvency margin will be deemed to be insolvent and maybe wound up by the court An insurer is requir ed under the IRDA (Assets Liabilities and SolvencyMargin of Insurers) Regulations 2000 to prepare a statement of solvency margin in accordance with Schedule III-A in respect of life insurance business and in Form KG in accordance with Schedule III-B in respect of general insurance business as the case may beEvery insurer is required to prepare a statement of the value of assets in accordance with the provisions of the aforesaid regulations Every insurer should prepare a statement of the amount of liabilities in accordance with the provisions of Schedule II-A of the aforesaid regulations in respect of the life insurance business and in Form HG in accordance with Schedule II-B in respect of the general insurance business The aforesaid forms should be furnished separately for business within India and the total business transacted by t he insurer In the event that an insurer transacts insurance business in a country outside India and submits the statements or returns or any such particulars to a public authority of that country he is required to enclose such particulars along with the Forms specified in the aforesaid regulations and the IRDA (Actuarial Report and Abstract) Regulations 2000

8 Submission of Return Every insurer should submit to the Authority the following returns showing that as of 31 day of December of the preceding year the assets held and invested investments made out of the controlled fund and all other particulars necessary to establish that the requirements of theInsurance Act have been complied with

9 Advertisement Directions

11 Section 64VA (1A) Explanation Insurance Act net incurred claims means the average of the net incurred claims during thespecified period of not exceeding three preceding financial years

The IRDA (Insurance Advertisements) Regulations 2000 seeks to regulate and control every insurance advertisement12 issued by the insurer intermediary or insurance agent13 For this purpose every insurer intermediary or insurance agent is required to establish and maintain a system of control over the content form and method of dissemination of all advertisements concerning its policies and such advertisement should be filed with t he Authority as soon as it is first issued An advertisement issued by an insurer should not fall in the category of an unfair or misleading advertisement An unfair or misleading advertisement means and includes any advertisementmiddot that fails to clearly identif y the product as insurancemiddot makes claims beyond the ability of the policy t o deliver or beyond the reasonable expectation of performancemiddot describes benefits that do not match the policy provisionsmiddot uses words or phrases in a way which hides or minimizes the costs of the hazard insured against or the risks inherent in the policymiddot omits to disclose or discloses insufficiently important exclusions limitations and conditions of the contractmiddot gives information in a misleading waymiddot illustrates future benefits on assumptions which are not realist ic nor realizable in the light of the insurers current performancemiddot where the benefits are not guaranteed does not explicitly say so as prominently as the benefits are stated or says so in manner or form that it could remain unnoticedmiddot implies a group or other relationship like sponsorship affiliation or approval that does not existmiddot makes unfair or incomplete comparisons with products which are not comparable or disparages competitors

Every advertisement should disclose the full particulars and identity of the insurer and that insurance is the subject matter of solicitation In the event that such advertisement describes any benefits the form number of the policy and the type of coverage should be fully

12 Regulation 2(b) IRDA (Insurance Advertisements) Regulations 2000 ldquoInsurance advertisementsrdquo means and includes anycommunication directly or indirectly related to a policy and intended to result in the eventual sale or solicitation of a policy from themembers of the public and shall include all forms of printed and published materials or any material using the print and orelectronic medium for public communication such as(i) newspapers magazines and sales talk(ii) billboards hoardings panels(iii) radio television website e-mail portals(iv) representations by intermediaries(v) leaflets13 Regulation 2(c) IRDA (Insurance Advertisements) Regulations 2000 ldquoIntermediary or insurance intermediaryrdquo includesinsurance brokers reinsurance brokers insurance consultants surveyors and loss assessors or any other persons representing orassisting an insurer in one or more of the following(i) soliciting negotiating procuring or effectuating an insurance contract or renewal of an insurance contract(ii) disseminating information relating to coverage or rates

disclosed In case of Internet advertisements the website or portal of the insurer or intermediary should contain disclosure statements which outline the sites specific policies vis-agrave-vis the privacy of personal information for the protection of both their own businesses and the consumers they serve and should also display the registration or license numbers In addition to these requirements every insurer or intermediary is also required to follow recognized standards of professional conduct as prescribed by the Advertisement Standards Council of India

10 Foreign Exchange Laws The Reserve Bank of India (ldquoRBIrdquo) is the apex bank of India established in 1935 under the Reserve Bank of India Act 1934 The Exchange Control Department within the RBI is responsible for the regulation and enforcement of exchange controls Prior t o 1999 India had stringent exchange control regulations under the Foreign Exchange Regulation Act 1973 (FERA) The Foreign DirectInvestment (ldquoFDIrdquo) regime in India has been progressively liberalized in the nineties with the passageof the Foreign Exchange Management Act 1999 (ldquoFEMArdquo) which replaced FERA Most restrict ionson foreign investment have been removed and the procedures have been simplified Non-residents can invest directly in India either w holly or as a joint venture Foreign investment is allowed in virtually all sectors including the services sector subject to Government permission in certain casesInsurance companies that are registered with the IRDA are permitted to issue general insurance policies denominated in foreign currency and are also permitted to receive premiums in foreign currency without the prior approval of the RBI However this is permitted only for certain kinds of cases such as marine insurance for vessels owned by foreign shipping companies and chartered by Indian companies aviation insurance for aircrafts imported from outside India on leasehire basis for the purpose of air taxi operations etc Authorised dealers are also permitted t o settle claims in foreign currency on general insurance policies subject to certain conditions such as the claim has been made for the loss occurred during the policy period the claim has been settled as per t he surveyors report and other substantiating documents claims on account of reinsurance are being lodged with the reinsurers and will be received as per the reinsurance agreement the remittance is being made to the non-resident beneficiary under the policy etc However in the case of resident beneficiaries the claim is required to be settled in rupee equivalent of the foreign currency due and under no circumstances can payment be made in foreign currency to a resident beneficiaryAs per the provisions of the Foreign Exchange Management (Insurance) Regulations 2000 no person resident in India is permitted t o take any general or life insurance policy issued by an insurer outside India However the RBI may permit for sufficient reasons a resident in India to take any life insurance policy issued by an insurer outside India However an exemption has recently been made only for units located in Special Economic Zones (ldquoSEZsrdquo) for general insurance policies taken by such units Therefore remittances towards premium for general insurance policies taken out by units located in SEZs from insurers

outside India are permit ted provided that the premiums are paid out of the foreign exchange balancesA person resident in India but not permanently resident14 therein is permitted to continue holding any insurance policy issued to him by an insurer outside India if the premium on such policy is paid out of foreign currency resources outside India A person resident in India may take a general insurance policy issued by an insurer outside India provided that before taking the policy he has obtained a no objection certificate from the Central Government of India Further a person resident in India is also permitted to continue to hold any insurance policy issued by an insurer outside India when such person was resident outside India subject to fulfilment of certain conditions

A foreign company may enter the insurance business in India in either of the following waysFDI is permitted in India primarily either under t he automatic route or with prior government approval Where FDI does not fall under the automatic route the foreign invest or would require the approval from the Foreign Investment Promotion Board (ldquoFIPBrdquo) Indian companies are generally permitted t o accept FDI without prior approval provided certain sectoral policies and investment limits are met In the insurance sector there is 26 sectoral cap on FDI subject to obtaining license from the IRDA which means that a foreign company can invest up to only 26in an Indian insurance company (calculated in the manner specified in the Insurance Act and regulations thereunder) while 74 would have t o be invested by an Indian companyIn the event that a foreign insurance company is not desirous of directly investing in an Indian insurance company it may in the beginning set up a branch or liaison office subject to theapproval of the RBI andor the Government of India in this regard The branch office in India is permitted to undertake only a certain set of activities such as carrying our research work for the parent company representing the parent company in India etc A liaison office is also permitted to undertake only a certain set of activities such as acting as a communication channel between the parent company and Indian companies

11 ldquoGuidelines on Appointment of Insurance Agents 2015

Code of Conduct

Every agent15 shall adhere to the code of conduct specified below-

Every insurance agent shall14 ldquoNot permanently residentrdquo means a person resident in India for employment of a specified duration (irrespective of the lengththereof) or for a specific job or assignment the duration of which does not exceed three years15 Section 2(10) Insurance Act 1938 ldquoinsurance agentrdquo means an insurance agent licensed under section 42 who receives oragrees to receive payment by way of commission or other remuneration in consideration of his soliciting or procuring insurancebusiness including business relating to the continuance renewal or revival of policies of insurance

1 identify himself and the insurer of whom he is an insurance agent2 show the agency identity card to the prospect and also disclose the agency

appointment letter to the prospect on demand3 disseminate the requisite information in respect of insurance products offered

for sale by his insurer and take into account the needs of the prospect while recommending a specific insurance plan

4 where the Insurance agent represents more than one insurer offering same line of products he should dispassionately advice the policyholder on the products of all Insurers whom he is representing and the product best suited to the specific needs of the prospect

5 disclose the scales of commission in respect of the insurance product offered for sale if asked by the prospect

6 indicate the premium to be charged by the insurer for the insurance product offered for sale

7 explain to the prospect the nature of information required in the proposal form by the insurer and also the importance of disclosure of material information in the purchase of an insurance contract

8 bring to the notice of the insurer every fact about the prospect relevant to insurance underwriting including any adverse habits or income inconsistency of the prospect within the knowledge of the agent in the form of a report called ldquoInsurance Agentrsquos Confidential Reportrdquo along with every proposal submitted to the insurer wherever applicable and any material fact that may adversely affect the underwriting decision of the insurer as regards acceptance of the proposal by making all reasonable enquiries about the prospect

9 obtain the requisite documents at the time of filing the proposal form with the insurer and other documents subsequently asked for by the insurer for completion of the proposal

10 advise every prospect to effect nomination under the policy11 inform promptly the prospect about the acceptance or rejection of the proposal

by the insurer12 render necessary assistance and advice to every policyholder on all policy

servicing matters including assignment of policy change of address or exercise of options under the policy or any other policy service wherever necessary

13 render necessary assistance to the policyholders or claimants or beneficiaries in complying with the requirements for settlement of claims by the insurer16

No insurance agent shall-1 solicit or procure insurance business without being appointed to act as such by

the insure2 induce the prospect to omit any material information in the proposal form

16 GUIDELINES ON APPOINTMENT OF INSURANCE AGENTS 2015 Regulation 8 httpswwwirdagovinadmincmscmswhatsNew_Layoutaspxpage=PageNo2451ampflag=1 accessed on 26416

The IRDA (Insurance Advertisements) Regulations 2000 seeks to regulate and control every insurance advertisement12 issued by the insurer intermediary or insurance agent13 For this purpose every insurer intermediary or insurance agent is required to establish and maintain a system of control over the content form and method of dissemination of all advertisements concerning its policies and such advertisement should be filed with t he Authority as soon as it is first issued An advertisement issued by an insurer should not fall in the category of an unfair or misleading advertisement An unfair or misleading advertisement means and includes any advertisementmiddot that fails to clearly identif y the product as insurancemiddot makes claims beyond the ability of the policy t o deliver or beyond the reasonable expectation of performancemiddot describes benefits that do not match the policy provisionsmiddot uses words or phrases in a way which hides or minimizes the costs of the hazard insured against or the risks inherent in the policymiddot omits to disclose or discloses insufficiently important exclusions limitations and conditions of the contractmiddot gives information in a misleading waymiddot illustrates future benefits on assumptions which are not realist ic nor realizable in the light of the insurers current performancemiddot where the benefits are not guaranteed does not explicitly say so as prominently as the benefits are stated or says so in manner or form that it could remain unnoticedmiddot implies a group or other relationship like sponsorship affiliation or approval that does not existmiddot makes unfair or incomplete comparisons with products which are not comparable or disparages competitors

Every advertisement should disclose the full particulars and identity of the insurer and that insurance is the subject matter of solicitation In the event that such advertisement describes any benefits the form number of the policy and the type of coverage should be fully

12 Regulation 2(b) IRDA (Insurance Advertisements) Regulations 2000 ldquoInsurance advertisementsrdquo means and includes anycommunication directly or indirectly related to a policy and intended to result in the eventual sale or solicitation of a policy from themembers of the public and shall include all forms of printed and published materials or any material using the print and orelectronic medium for public communication such as(i) newspapers magazines and sales talk(ii) billboards hoardings panels(iii) radio television website e-mail portals(iv) representations by intermediaries(v) leaflets13 Regulation 2(c) IRDA (Insurance Advertisements) Regulations 2000 ldquoIntermediary or insurance intermediaryrdquo includesinsurance brokers reinsurance brokers insurance consultants surveyors and loss assessors or any other persons representing orassisting an insurer in one or more of the following(i) soliciting negotiating procuring or effectuating an insurance contract or renewal of an insurance contract(ii) disseminating information relating to coverage or rates

disclosed In case of Internet advertisements the website or portal of the insurer or intermediary should contain disclosure statements which outline the sites specific policies vis-agrave-vis the privacy of personal information for the protection of both their own businesses and the consumers they serve and should also display the registration or license numbers In addition to these requirements every insurer or intermediary is also required to follow recognized standards of professional conduct as prescribed by the Advertisement Standards Council of India

10 Foreign Exchange Laws The Reserve Bank of India (ldquoRBIrdquo) is the apex bank of India established in 1935 under the Reserve Bank of India Act 1934 The Exchange Control Department within the RBI is responsible for the regulation and enforcement of exchange controls Prior t o 1999 India had stringent exchange control regulations under the Foreign Exchange Regulation Act 1973 (FERA) The Foreign DirectInvestment (ldquoFDIrdquo) regime in India has been progressively liberalized in the nineties with the passageof the Foreign Exchange Management Act 1999 (ldquoFEMArdquo) which replaced FERA Most restrict ionson foreign investment have been removed and the procedures have been simplified Non-residents can invest directly in India either w holly or as a joint venture Foreign investment is allowed in virtually all sectors including the services sector subject to Government permission in certain casesInsurance companies that are registered with the IRDA are permitted to issue general insurance policies denominated in foreign currency and are also permitted to receive premiums in foreign currency without the prior approval of the RBI However this is permitted only for certain kinds of cases such as marine insurance for vessels owned by foreign shipping companies and chartered by Indian companies aviation insurance for aircrafts imported from outside India on leasehire basis for the purpose of air taxi operations etc Authorised dealers are also permitted t o settle claims in foreign currency on general insurance policies subject to certain conditions such as the claim has been made for the loss occurred during the policy period the claim has been settled as per t he surveyors report and other substantiating documents claims on account of reinsurance are being lodged with the reinsurers and will be received as per the reinsurance agreement the remittance is being made to the non-resident beneficiary under the policy etc However in the case of resident beneficiaries the claim is required to be settled in rupee equivalent of the foreign currency due and under no circumstances can payment be made in foreign currency to a resident beneficiaryAs per the provisions of the Foreign Exchange Management (Insurance) Regulations 2000 no person resident in India is permitted t o take any general or life insurance policy issued by an insurer outside India However the RBI may permit for sufficient reasons a resident in India to take any life insurance policy issued by an insurer outside India However an exemption has recently been made only for units located in Special Economic Zones (ldquoSEZsrdquo) for general insurance policies taken by such units Therefore remittances towards premium for general insurance policies taken out by units located in SEZs from insurers

outside India are permit ted provided that the premiums are paid out of the foreign exchange balancesA person resident in India but not permanently resident14 therein is permitted to continue holding any insurance policy issued to him by an insurer outside India if the premium on such policy is paid out of foreign currency resources outside India A person resident in India may take a general insurance policy issued by an insurer outside India provided that before taking the policy he has obtained a no objection certificate from the Central Government of India Further a person resident in India is also permitted to continue to hold any insurance policy issued by an insurer outside India when such person was resident outside India subject to fulfilment of certain conditions

A foreign company may enter the insurance business in India in either of the following waysFDI is permitted in India primarily either under t he automatic route or with prior government approval Where FDI does not fall under the automatic route the foreign invest or would require the approval from the Foreign Investment Promotion Board (ldquoFIPBrdquo) Indian companies are generally permitted t o accept FDI without prior approval provided certain sectoral policies and investment limits are met In the insurance sector there is 26 sectoral cap on FDI subject to obtaining license from the IRDA which means that a foreign company can invest up to only 26in an Indian insurance company (calculated in the manner specified in the Insurance Act and regulations thereunder) while 74 would have t o be invested by an Indian companyIn the event that a foreign insurance company is not desirous of directly investing in an Indian insurance company it may in the beginning set up a branch or liaison office subject to theapproval of the RBI andor the Government of India in this regard The branch office in India is permitted to undertake only a certain set of activities such as carrying our research work for the parent company representing the parent company in India etc A liaison office is also permitted to undertake only a certain set of activities such as acting as a communication channel between the parent company and Indian companies

11 ldquoGuidelines on Appointment of Insurance Agents 2015

Code of Conduct

Every agent15 shall adhere to the code of conduct specified below-

Every insurance agent shall14 ldquoNot permanently residentrdquo means a person resident in India for employment of a specified duration (irrespective of the lengththereof) or for a specific job or assignment the duration of which does not exceed three years15 Section 2(10) Insurance Act 1938 ldquoinsurance agentrdquo means an insurance agent licensed under section 42 who receives oragrees to receive payment by way of commission or other remuneration in consideration of his soliciting or procuring insurancebusiness including business relating to the continuance renewal or revival of policies of insurance

1 identify himself and the insurer of whom he is an insurance agent2 show the agency identity card to the prospect and also disclose the agency

appointment letter to the prospect on demand3 disseminate the requisite information in respect of insurance products offered

for sale by his insurer and take into account the needs of the prospect while recommending a specific insurance plan

4 where the Insurance agent represents more than one insurer offering same line of products he should dispassionately advice the policyholder on the products of all Insurers whom he is representing and the product best suited to the specific needs of the prospect

5 disclose the scales of commission in respect of the insurance product offered for sale if asked by the prospect

6 indicate the premium to be charged by the insurer for the insurance product offered for sale

7 explain to the prospect the nature of information required in the proposal form by the insurer and also the importance of disclosure of material information in the purchase of an insurance contract

8 bring to the notice of the insurer every fact about the prospect relevant to insurance underwriting including any adverse habits or income inconsistency of the prospect within the knowledge of the agent in the form of a report called ldquoInsurance Agentrsquos Confidential Reportrdquo along with every proposal submitted to the insurer wherever applicable and any material fact that may adversely affect the underwriting decision of the insurer as regards acceptance of the proposal by making all reasonable enquiries about the prospect

9 obtain the requisite documents at the time of filing the proposal form with the insurer and other documents subsequently asked for by the insurer for completion of the proposal

10 advise every prospect to effect nomination under the policy11 inform promptly the prospect about the acceptance or rejection of the proposal

by the insurer12 render necessary assistance and advice to every policyholder on all policy

servicing matters including assignment of policy change of address or exercise of options under the policy or any other policy service wherever necessary

13 render necessary assistance to the policyholders or claimants or beneficiaries in complying with the requirements for settlement of claims by the insurer16

No insurance agent shall-1 solicit or procure insurance business without being appointed to act as such by

the insure2 induce the prospect to omit any material information in the proposal form

16 GUIDELINES ON APPOINTMENT OF INSURANCE AGENTS 2015 Regulation 8 httpswwwirdagovinadmincmscmswhatsNew_Layoutaspxpage=PageNo2451ampflag=1 accessed on 26416

disclosed In case of Internet advertisements the website or portal of the insurer or intermediary should contain disclosure statements which outline the sites specific policies vis-agrave-vis the privacy of personal information for the protection of both their own businesses and the consumers they serve and should also display the registration or license numbers In addition to these requirements every insurer or intermediary is also required to follow recognized standards of professional conduct as prescribed by the Advertisement Standards Council of India

10 Foreign Exchange Laws The Reserve Bank of India (ldquoRBIrdquo) is the apex bank of India established in 1935 under the Reserve Bank of India Act 1934 The Exchange Control Department within the RBI is responsible for the regulation and enforcement of exchange controls Prior t o 1999 India had stringent exchange control regulations under the Foreign Exchange Regulation Act 1973 (FERA) The Foreign DirectInvestment (ldquoFDIrdquo) regime in India has been progressively liberalized in the nineties with the passageof the Foreign Exchange Management Act 1999 (ldquoFEMArdquo) which replaced FERA Most restrict ionson foreign investment have been removed and the procedures have been simplified Non-residents can invest directly in India either w holly or as a joint venture Foreign investment is allowed in virtually all sectors including the services sector subject to Government permission in certain casesInsurance companies that are registered with the IRDA are permitted to issue general insurance policies denominated in foreign currency and are also permitted to receive premiums in foreign currency without the prior approval of the RBI However this is permitted only for certain kinds of cases such as marine insurance for vessels owned by foreign shipping companies and chartered by Indian companies aviation insurance for aircrafts imported from outside India on leasehire basis for the purpose of air taxi operations etc Authorised dealers are also permitted t o settle claims in foreign currency on general insurance policies subject to certain conditions such as the claim has been made for the loss occurred during the policy period the claim has been settled as per t he surveyors report and other substantiating documents claims on account of reinsurance are being lodged with the reinsurers and will be received as per the reinsurance agreement the remittance is being made to the non-resident beneficiary under the policy etc However in the case of resident beneficiaries the claim is required to be settled in rupee equivalent of the foreign currency due and under no circumstances can payment be made in foreign currency to a resident beneficiaryAs per the provisions of the Foreign Exchange Management (Insurance) Regulations 2000 no person resident in India is permitted t o take any general or life insurance policy issued by an insurer outside India However the RBI may permit for sufficient reasons a resident in India to take any life insurance policy issued by an insurer outside India However an exemption has recently been made only for units located in Special Economic Zones (ldquoSEZsrdquo) for general insurance policies taken by such units Therefore remittances towards premium for general insurance policies taken out by units located in SEZs from insurers

outside India are permit ted provided that the premiums are paid out of the foreign exchange balancesA person resident in India but not permanently resident14 therein is permitted to continue holding any insurance policy issued to him by an insurer outside India if the premium on such policy is paid out of foreign currency resources outside India A person resident in India may take a general insurance policy issued by an insurer outside India provided that before taking the policy he has obtained a no objection certificate from the Central Government of India Further a person resident in India is also permitted to continue to hold any insurance policy issued by an insurer outside India when such person was resident outside India subject to fulfilment of certain conditions

A foreign company may enter the insurance business in India in either of the following waysFDI is permitted in India primarily either under t he automatic route or with prior government approval Where FDI does not fall under the automatic route the foreign invest or would require the approval from the Foreign Investment Promotion Board (ldquoFIPBrdquo) Indian companies are generally permitted t o accept FDI without prior approval provided certain sectoral policies and investment limits are met In the insurance sector there is 26 sectoral cap on FDI subject to obtaining license from the IRDA which means that a foreign company can invest up to only 26in an Indian insurance company (calculated in the manner specified in the Insurance Act and regulations thereunder) while 74 would have t o be invested by an Indian companyIn the event that a foreign insurance company is not desirous of directly investing in an Indian insurance company it may in the beginning set up a branch or liaison office subject to theapproval of the RBI andor the Government of India in this regard The branch office in India is permitted to undertake only a certain set of activities such as carrying our research work for the parent company representing the parent company in India etc A liaison office is also permitted to undertake only a certain set of activities such as acting as a communication channel between the parent company and Indian companies

11 ldquoGuidelines on Appointment of Insurance Agents 2015

Code of Conduct

Every agent15 shall adhere to the code of conduct specified below-

Every insurance agent shall14 ldquoNot permanently residentrdquo means a person resident in India for employment of a specified duration (irrespective of the lengththereof) or for a specific job or assignment the duration of which does not exceed three years15 Section 2(10) Insurance Act 1938 ldquoinsurance agentrdquo means an insurance agent licensed under section 42 who receives oragrees to receive payment by way of commission or other remuneration in consideration of his soliciting or procuring insurancebusiness including business relating to the continuance renewal or revival of policies of insurance

1 identify himself and the insurer of whom he is an insurance agent2 show the agency identity card to the prospect and also disclose the agency

appointment letter to the prospect on demand3 disseminate the requisite information in respect of insurance products offered

for sale by his insurer and take into account the needs of the prospect while recommending a specific insurance plan

4 where the Insurance agent represents more than one insurer offering same line of products he should dispassionately advice the policyholder on the products of all Insurers whom he is representing and the product best suited to the specific needs of the prospect

5 disclose the scales of commission in respect of the insurance product offered for sale if asked by the prospect

6 indicate the premium to be charged by the insurer for the insurance product offered for sale

7 explain to the prospect the nature of information required in the proposal form by the insurer and also the importance of disclosure of material information in the purchase of an insurance contract

8 bring to the notice of the insurer every fact about the prospect relevant to insurance underwriting including any adverse habits or income inconsistency of the prospect within the knowledge of the agent in the form of a report called ldquoInsurance Agentrsquos Confidential Reportrdquo along with every proposal submitted to the insurer wherever applicable and any material fact that may adversely affect the underwriting decision of the insurer as regards acceptance of the proposal by making all reasonable enquiries about the prospect

9 obtain the requisite documents at the time of filing the proposal form with the insurer and other documents subsequently asked for by the insurer for completion of the proposal

10 advise every prospect to effect nomination under the policy11 inform promptly the prospect about the acceptance or rejection of the proposal

by the insurer12 render necessary assistance and advice to every policyholder on all policy

servicing matters including assignment of policy change of address or exercise of options under the policy or any other policy service wherever necessary

13 render necessary assistance to the policyholders or claimants or beneficiaries in complying with the requirements for settlement of claims by the insurer16

No insurance agent shall-1 solicit or procure insurance business without being appointed to act as such by

the insure2 induce the prospect to omit any material information in the proposal form

16 GUIDELINES ON APPOINTMENT OF INSURANCE AGENTS 2015 Regulation 8 httpswwwirdagovinadmincmscmswhatsNew_Layoutaspxpage=PageNo2451ampflag=1 accessed on 26416

outside India are permit ted provided that the premiums are paid out of the foreign exchange balancesA person resident in India but not permanently resident14 therein is permitted to continue holding any insurance policy issued to him by an insurer outside India if the premium on such policy is paid out of foreign currency resources outside India A person resident in India may take a general insurance policy issued by an insurer outside India provided that before taking the policy he has obtained a no objection certificate from the Central Government of India Further a person resident in India is also permitted to continue to hold any insurance policy issued by an insurer outside India when such person was resident outside India subject to fulfilment of certain conditions

A foreign company may enter the insurance business in India in either of the following waysFDI is permitted in India primarily either under t he automatic route or with prior government approval Where FDI does not fall under the automatic route the foreign invest or would require the approval from the Foreign Investment Promotion Board (ldquoFIPBrdquo) Indian companies are generally permitted t o accept FDI without prior approval provided certain sectoral policies and investment limits are met In the insurance sector there is 26 sectoral cap on FDI subject to obtaining license from the IRDA which means that a foreign company can invest up to only 26in an Indian insurance company (calculated in the manner specified in the Insurance Act and regulations thereunder) while 74 would have t o be invested by an Indian companyIn the event that a foreign insurance company is not desirous of directly investing in an Indian insurance company it may in the beginning set up a branch or liaison office subject to theapproval of the RBI andor the Government of India in this regard The branch office in India is permitted to undertake only a certain set of activities such as carrying our research work for the parent company representing the parent company in India etc A liaison office is also permitted to undertake only a certain set of activities such as acting as a communication channel between the parent company and Indian companies

11 ldquoGuidelines on Appointment of Insurance Agents 2015

Code of Conduct

Every agent15 shall adhere to the code of conduct specified below-

Every insurance agent shall14 ldquoNot permanently residentrdquo means a person resident in India for employment of a specified duration (irrespective of the lengththereof) or for a specific job or assignment the duration of which does not exceed three years15 Section 2(10) Insurance Act 1938 ldquoinsurance agentrdquo means an insurance agent licensed under section 42 who receives oragrees to receive payment by way of commission or other remuneration in consideration of his soliciting or procuring insurancebusiness including business relating to the continuance renewal or revival of policies of insurance

1 identify himself and the insurer of whom he is an insurance agent2 show the agency identity card to the prospect and also disclose the agency

appointment letter to the prospect on demand3 disseminate the requisite information in respect of insurance products offered

for sale by his insurer and take into account the needs of the prospect while recommending a specific insurance plan

4 where the Insurance agent represents more than one insurer offering same line of products he should dispassionately advice the policyholder on the products of all Insurers whom he is representing and the product best suited to the specific needs of the prospect

5 disclose the scales of commission in respect of the insurance product offered for sale if asked by the prospect

6 indicate the premium to be charged by the insurer for the insurance product offered for sale

7 explain to the prospect the nature of information required in the proposal form by the insurer and also the importance of disclosure of material information in the purchase of an insurance contract

8 bring to the notice of the insurer every fact about the prospect relevant to insurance underwriting including any adverse habits or income inconsistency of the prospect within the knowledge of the agent in the form of a report called ldquoInsurance Agentrsquos Confidential Reportrdquo along with every proposal submitted to the insurer wherever applicable and any material fact that may adversely affect the underwriting decision of the insurer as regards acceptance of the proposal by making all reasonable enquiries about the prospect

9 obtain the requisite documents at the time of filing the proposal form with the insurer and other documents subsequently asked for by the insurer for completion of the proposal

10 advise every prospect to effect nomination under the policy11 inform promptly the prospect about the acceptance or rejection of the proposal

by the insurer12 render necessary assistance and advice to every policyholder on all policy

servicing matters including assignment of policy change of address or exercise of options under the policy or any other policy service wherever necessary

13 render necessary assistance to the policyholders or claimants or beneficiaries in complying with the requirements for settlement of claims by the insurer16

No insurance agent shall-1 solicit or procure insurance business without being appointed to act as such by

the insure2 induce the prospect to omit any material information in the proposal form

16 GUIDELINES ON APPOINTMENT OF INSURANCE AGENTS 2015 Regulation 8 httpswwwirdagovinadmincmscmswhatsNew_Layoutaspxpage=PageNo2451ampflag=1 accessed on 26416

1 identify himself and the insurer of whom he is an insurance agent2 show the agency identity card to the prospect and also disclose the agency

appointment letter to the prospect on demand3 disseminate the requisite information in respect of insurance products offered

for sale by his insurer and take into account the needs of the prospect while recommending a specific insurance plan

4 where the Insurance agent represents more than one insurer offering same line of products he should dispassionately advice the policyholder on the products of all Insurers whom he is representing and the product best suited to the specific needs of the prospect

5 disclose the scales of commission in respect of the insurance product offered for sale if asked by the prospect

6 indicate the premium to be charged by the insurer for the insurance product offered for sale

7 explain to the prospect the nature of information required in the proposal form by the insurer and also the importance of disclosure of material information in the purchase of an insurance contract

8 bring to the notice of the insurer every fact about the prospect relevant to insurance underwriting including any adverse habits or income inconsistency of the prospect within the knowledge of the agent in the form of a report called ldquoInsurance Agentrsquos Confidential Reportrdquo along with every proposal submitted to the insurer wherever applicable and any material fact that may adversely affect the underwriting decision of the insurer as regards acceptance of the proposal by making all reasonable enquiries about the prospect

9 obtain the requisite documents at the time of filing the proposal form with the insurer and other documents subsequently asked for by the insurer for completion of the proposal

10 advise every prospect to effect nomination under the policy11 inform promptly the prospect about the acceptance or rejection of the proposal

by the insurer12 render necessary assistance and advice to every policyholder on all policy

servicing matters including assignment of policy change of address or exercise of options under the policy or any other policy service wherever necessary

13 render necessary assistance to the policyholders or claimants or beneficiaries in complying with the requirements for settlement of claims by the insurer16

No insurance agent shall-1 solicit or procure insurance business without being appointed to act as such by

the insure2 induce the prospect to omit any material information in the proposal form

16 GUIDELINES ON APPOINTMENT OF INSURANCE AGENTS 2015 Regulation 8 httpswwwirdagovinadmincmscmswhatsNew_Layoutaspxpage=PageNo2451ampflag=1 accessed on 26416

3 induce the prospect to submit wrong information in the proposal form or documents submitted to the insurer for acceptance of the proposal

4 resort to multilevel marketing for soliciting and procuring insurance policies andor induct any prospectpolicyholder to join a multilevel level marketing scheme

5 behave in a discourteous manner with the prospect6 interfere with any proposal introduced by any other insurance agent7 offer different rates advantages terms and conditions other than those offered

by his insurer8 demand or receive a share of proceeds from the beneficiary under an insurance

contract9 force a policyholder to terminate the existing policy and to effect a new policy

from him within three years from the date of such termination of the earlier policy

10 apply for fresh agency appointment to act as an insurance agent if his agency appointment was earlier cancelled by the designated official and a period of five years has elapsed from the date of such cancellation

11 become or remain a director of any insurer Every insurance agent shall with a view to conserve the insurance business already

procured through him make every attempt to ensure remittance of the premiums by the policyholders within the stipulated time by giving notice to the policyholder orally and in writing

Any person who acts as an insurance agent in contravention of the provisions of this Act shall be liable to a penalty which may extend to ten thousand rupees and any insurer or any person acting on behalf of an insurer who appoints any person as an insurance agent not permitted to act as such or transact any insurance business in India through any such person shall be liable to penalty which may extend to one crore rupees

The insurer shall be responsible for all acts and omissions of its agents including violation of code of conduct specified under these guidelines and shall be liable to a penalty which may extend to one crore rupees17

17 ibid

CONCLUSION

CONCLUSION