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Insurance Laws and Practices

Notes Nothing in this Act shall apply to the preparation of accounts by an insurer and the audit and
submission thereof in respect of any accounting year which has expired prior to the
commencement of this Act, and notwithstanding the other provisions of this Act, such accounts
shall be prepared, audited and submitted in accordance with the law in force immediately
before the commencement of this Act.

6.2.5 Investment of Assets

(1) Every insurer shall invest and at all times keep invested assets equivalent to not less than the
sum of–

(a) The amount of his liabilities to holders of life insurance policies in India on account of
matured claims, and
(b) The amount required to meet the liability on policies of life insurance maturing for
payment in India, less–
(i) The amount of premiums which have fallen due to the insurer on such policies but
have not been paid and the days of grace for payment of which have not expired, and

(ii) Any amount due to the insurer for loans granted on and within the surrender values
of policies of life insurance maturing for payment in India issued by him or by an
insurer whose business he has acquired and in respect of which he has assumed
liability, in the manner following, namely, twenty-five per cent of the said sum in
Government securities, a further sum equal to not less than twenty-five per cent of
the said sum in Government securities or other approved securities and the balance
in any of the approved investments specified in sub-section (1) of section 27A or,
subject to the limitations, conditions and restrictions specified in sub-section (2) of
that section, in any over investment.
(2) For the purposes of sub-section (1):
(a) The amount of any deposit made under section 7 or section 98 by the insurer in respect of
his life insurance business shall be deemed to be assets invested or kept invested
Government securities;
(b) The securities of, or guaranteed as to principal and interest by, the Government of the
United Kingdom shall be regarded as approved securities other than Government securities
for a period of four years from the commencement of the Insurance (Amendment) Act,
1950 (47 of 1950), in the manner and to the extent hereinafter specified, namely:
(i) During the first year, to the extent of twenty-five per cent in value of the sum
referred to in sub-section (1);
(ii) During the second year, to the extent of eighteen and three fourths per cent in value
of the said sum;

(iii) During the third year, to the extent of twelve and a half per cent in value of the said
sum; and
(iv) During the fourth year, to the extent of six and a quarter per cent in value of the said
sum:
Provided that, if the Authority so directs in any case, the securities specified in clause (b) shall be
regarded as approved securities other than Government securities for a longer period than four
years, but not exceeding six years in all and the manner in which and the extent to which the
securities shall be so regarded shall be as specified in the direction;

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