Page 91 - DCOM309_INSURANCE_LAWS_AND_PRACTICES

Insurance Laws and Practices

Notes In this unit, we will study about the Insurance Act 1938.The insurance sector went through a full
circle of phases from being unregulated to completely regulate and then currently being partly
deregulated. It is governed by a number of acts. The Insurance Act of 1938 was the first legislation
governing all forms of insurance to provide strict state control over insurance business. Life
insurance in India was completely nationalized on January 19, 1956, through the Life Insurance
Corporation Act. All 245 insurance companies operating then in the country were merged into
one entity, the Life Insurance Corporation of India.
In the next unit, you will study about the History and overview of IRDA Act. You will also read
about the salient features of IRDA act. The unit will also summarize the main provisions of
IRDA act.

6.1 Definitions

Following section will give you an insight on the various definitions mentioned under the
Insurance Act, 1938:

6.1.1 Short Title, Extent and Commencement

1. (1) This Act may be called Insurance Act, 1938.
(2) It extends to the whole of India.
(3) It shall come into force on such date as the Central Government may, by Notification in the
Official Gazette, appoint in this behalf.
Definitions:
2. In this Act, unless there is anything repugnant in the subject or context,–

(1) “Authority” means the Insurance Regulatory and Development Authority established under
sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999;

(2) “Policy-holder” includes a person to whom the whole of the interest of the policy-holder in
the policy is assigned once and for all, but does not include an assignee thereof whose interest in
the policy is infeasible or is for the time being subject to any condition;
(3) “Approved securities”, means:
(i) Government securities and other securities charged on the revenue of the Central
Government or of the Government of a State or guaranteed fully as regards principal and
interest by the Central Government or the Government of any State;

(ii) Debentures or other securities for money issued under the authority of any Central Act or
Act of a State Legislature by or on behalf of a port trust or municipal corporation or city
improvement trust in any Presidency-town;

(iii) Shares of a corporation established by law and guaranteed fully by the Central Government
or the Government of a State as to the repayment of the principal and the payment of the
dividend;
(iv) Securities issued or guaranteed fully as regards principal and interest by the Government
of any Part B State and specified as approved securities for the purposes of this Act by the
Central Government by notification in the Official Gazette;

(4)”Auditor” means a person qualified under the Chartered Accountants Act, 1949 (38 of 1949),
to act as an auditor of companies;

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