Page 98 - DCOM309_INSURANCE_LAWS_AND_PRACTICES

Unit 6: The Insurance Act, 1938

(c) Any prescribed assets shall, subject to such conditions, if any, as may be prescribed, be Notes
deemed to be assets invested or kept invested in approved investments specified in sub-section
(1) of section 27A.
(3) In computing the assets referred to in sub-section (1),–

(a) Any investment made with reference to any currency other than the Indian rupee which is
in excess of the amount required to meet the liabilities of the insurer in India with reference
to that currency, to the extent of such excess; and
(b) Any investment made in the purchase of any immoveable property outside India or on
the security of any such property, shall not be taken into account:
Provided that nothing contained in this sub-section shall affect the operation of sub-section (2):
Provided further that the Authority may, either generally or in any particular case, direct that
any investment, whether made before or after the commencement of the Insurance (Amendment)
Act, 1950 (47 of 1950), and whether made in or outside India, shall, subject to such conditions as
may be imposed, be taken into account, in such manner as may be specified in computing the
assets referred to in sub-section (1) and where any direction has been issued under this proviso
copies thereof shall be laid before Parliament as soon as may be after it is issued.
(4) Where an insurer has accepted reassurance in respect of any policies of life insurance issued
by another insurer and maturing for payment in India or has ceded reassurance to another
insurer in respect of any such policies issued by himself, the sum referred to in sub-section (1)
shall be increased by the amount of the liability involved in such acceptance and decreased by
the amount of the liability involved in such cession.
(5) The Government securities and other approved securities in which assets are under
sub-section (1) to be invested and kept invested shall be held by the insurer free of any
encumbrance, charge, hypothecation or lien.
(6) The assets required by this section to be held invested by an insurer incorporated or domiciled
outside India shall, except to the extent of any part thereof which consists of foreign assets held
outside India, be held in India and all such assets shall be held in trust for the discharge of the
liabilities of the nature referred to in sub-section (1) and shall be vested in trustees resident in
India and approved by the Authority, and the instrument of trust under this sub-section shall be
executed by the insurer with the approval of the Authority and shall define the manner in which
alone the subject-matter of the trust shall be dealt with.

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Caution This sub-section shall apply to an insurer-incorporated India whose share capital
to the extent of one-third is owned by, or the members of whose governing body to the
extent of one-third consists of, members domiciled elsewhere than in India.

6.2.6 Power to Appoint Staff

The authority may appoint such staff, and at such places as it or he may consider necessary, for
the scrutiny of the returns, statements and information furnished by insurers under this Act and
generally to ensure the efficient performance of the functions of the Authority under this Act.
Self Assessment

Fill in the blanks:
3. Every insurer shall invest and at all times keep invested assets equivalent to not less than
the sum of the amount of his ……………………………. to holders of life insurance policies
in India on account of matured claims.

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