Page 95 - DCOM309_INSURANCE_LAWS_AND_PRACTICES

Insurance Laws and Practices

Notes The Bill could not be taken up in the Rajya Sabha as the ruling party does not enjoy a
majority in the Upper House. It needs BJP’s support for pushing the insurance sector
reforms.
Private sector insurance companies are demanding a hike in the sectoral FDI cap as they
need capital from their foreign partners to expand business.

At present, there are over 20 private sector life and non-life insurance companies each,
besides state-owned LIC, GIC and four general insurance companies.
The insurance industry was opened up for private sector in 2000 after the enactment of the
Insurance Regulatory and Development Authority Act, 1999 (IRDA Act, 1999).
This Act permitted foreign shareholding in insurance companies to the extent of 26 per
cent with an aim to provide better insurance coverage and to augment the flow of long-
term resources for financing infrastructure.
Source: http://articles.economictimes.indiatimes.com/2013-10-27/news/43432791_1_insurance-sector-
development-authority-act-insurance-bill

Self Assessment

Fill in the blanks:

1. …………………………………. company means a company whose principal business is the
acquisition of shares, stocks debentures or other securities.
2. ……………………… insurance business means fire, marine or miscellaneous insurance
business, whether carried on singly or in combination with one or more of them.

6.2 Main Provisions of the Insurance Act, 1938

Following are the main provisions of the Insurance Act, 1938 which you need to know:

6.2.1 Appointment of Authority of Insurance

(1) If at any time, the Authority is superseded under sub-section (1) of section 19 of the
Insurance Regulatory and Development Authority Act, 1999, the Central Government
may, by notification in the Official Gazette, appoint a person to be the Controller of
Insurance till such time the Authority is reconstituted under sub-section (3) of section 19 of
that Act.
(2) In making any appointment under this section, the Central Government shall have due
regard to the following considerations, namely, whether the person to be appointed has
had experience in industrial, commercial or insurance matter and whether such person
has actuarial qualifications.

6.2.2 Requirements as to Capital

Remember, no insurer carrying on the business of life insurance, general insurance or re-insurance
in India on or after the commencement of the Insurance Regulatory and Development Authority
Act, 1999, shall be registered unless he has:
(a) A paid-up equity capital of rupees one hundred crore, in case of a person carrying on the
business of life insurance or general insurance; or

(b) A paid-up equity capital of rupees two hundred crore, in case of a person carrying on
exclusively the business as a reinsurer:

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