Page 100 - DCOM309_INSURANCE_LAWS_AND_PRACTICES

Unit 6: The Insurance Act, 1938

appoints as a principal agent, chief agent or special agent any person not entitled to act as such Notes
or transacts any insurance business in India through any such person, shall be punishable with
fine which may extend to one thousand rupees.
(7) Where the person contravening sub-section (6) is a company or a firm, then, without prejudice
to any other proceedings which may be taken against the company or firm, every director,
manager, secretary or any other officer of the company, and every partner of the firm who is
knowingly a party to such contravention shall be punishable with fine which may extend to five
hundred rupees.
(8) The provisions of sub-sections (6) and (7) shall not take effect until the expiry of six months
from the commencement of the Insurance (Amendment) Act, 1950.
(9) No insurer shall, on or after the commencement of the Insurance (Amendment) Act, 2002,
appointment or transacts any insurance business in India through any principal agent, chief
agent or special agent.

Self Assessment

Fill in the blanks:
5. A …………………………. issued under this section shall entitle the holder thereof to act as
a principal agent, chief agent, or special agent, as the case may be, for any insurer.
6. In the case of a company or firm, any of its directors or partners does not suffer from any
of the said ………………………………….., and a certificate to Act as a principal agent, chief
agent or special agent, as the case may be, for the purpose of procuring insurance business
shall be issued to him.

6.4 Regulation of Employment of Principal Agents

Let’s have a look at the regulation of employment of principal agents.
(1) No insurer shall, after the expiration of seven years from the commencement of the Insurance
(Amendment) Act, 1950, appoint, or transact any insurance business in India, through a principal
agent.

(2) Every contract between an insurer and a principal agent shall be in writing and the terms
contained in Part A of the Sixth Schedule shall be deemed to be incorporated in, and form part of,
every such contract.
(3) No insurer shall, after the commencement of the Insurance (Amendment) Act, 1950 (47 of
1950), appoint any person as a principal agent except in a presidency-town unless the appointment
is by way of renewal of any contract subsisting at such commencement.

(4) Within sixty days of the commencement of the Insurance (Amendment) Act, 1950 (47 of 1950),
every principal agent shall file with the insurer concerned a full list of insurance agents employed
by him indicating the terms of the contract between the principal agent and each of such insurance
agents, and, if any principal agent fails to file such a list within the period specified, any
commission payable to such principal agent on premiums received from the date of expiry of
the said period of sixty days until the date of the filing of the said list shall, notwithstanding
anything in any contract to the contrary, cease to be so payable.
(5) A certified copy of every contract as is referred to in sub-section (2) shall be furnished by the
insurer to the Authority within thirty days of his entering into such contract.

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