The Insurance Act, 1938

(1) This Act may be called the Insurance Act, 1938. 1[(2) It extends to the whole of India 2***.] (3) It shall come into force on such date3 as the Central Government may, by notification in theOfficial Gazette, appoint in this behalf.

In this Act, unless there is anything repugnant in the subject or context, -- 1[(1) actuary means an actuary as defined in clause (a) of sub-section (1) of section 2 of theActuaries Act, 2006 (35 of 2006); (1A) Authority means the Insurance Regulatory and Development Authority of Indiaestablished under sub-section (1) of section 3 of the Insurance Regulatory and DevelopmentAuthority Act, 1999 (41 of 1999);] 2[(2) policy-holder includes a person to whom the whole of the interest of the policy-holder inthe policy is assigned once and for all, but does not include an assignee thereof whose interest in thepolicy is defeasible or is for the time being subject to any condition ;] 3[(3) approved securities means-- (i) Government securities and other securities charged on the revenues of the CentralGovernment or of the Government of a 4*** State or guaranteed fully as regards principal andinterest by the Central Government, or the Government of any 2*** State ; (ii) debentures or other securities for money issued under the authority of any Central Act orAct of a State Legislature by or on behalf of a port trust or municipal corporation or cityimprovement trust in any presidency-town ; (iii) shares of a corporation established by law and guaranteed fully by the CentralGovernment or the Government of a 5*** State as to the repayment of the principal and thepayment of dividend ; (iv) securities issued or guaranteed fully as regards principal and interest by the Governmentof any Part B State and specified as approved securities for the purposes of this Act by theCentral Government by notification in the Official Gazette ; and 6* * * * * Provided that securities or debentures specified in item (v) shall be recognished as approvedsecurities only for such purposes and for such period and subject to such conditions as may beprescribed ;] 7[Explanation. -- In sub-clauses (i) and (iii), Government of a State in relation to anyperiod before the 1st November, 1956, means the Government of a Part A State.] 8[(4) auditor means a person qualified under the Chartered Accountants Act, 1949 (38 of 1949),to act as an auditor of companies;] 9[(4A) banking company and company shall have the meanings respectively assigned to themin clauses (c) and (d) of sub-section (1) of section 5 of the Banking Companies Act, 1949 (10 of1949) 10***;] (5) certified in relation to any copy or translation of a document required to be furnished by oron behalf of 11[an insurer or a provident society as defined in Part III] means certified by a principalofficer of 12[such insurer or provident society] to be a true copy or a correct translation, as the casemay be; 13* * * * * 14[(5B) Controller of Insurance means the officer appointed by the Central Government undersection 2B to exercise all the powers, discharge the functions and perform the duties of the Authorityunder this Act or the Life Insurance Corporation Act, 1956 (31 of 1956) or the General InsuranceBusiness (Nationalisation) Act, 1972 (57 of 1972) or the Insurance Regulatory and DevelopmentAuthority Act, 1999 (41 of 1999);] (6) Court means the principal Civil Court of original jurisdiction in a district, and includes theHigh Court in exercise of its ordinary original civil jurisdiction; 15[(6A) fire insurance business means the business of effecting, otherwise than incidentally tosome other class of insurance business, contracts of insurance against loss by or incidental to fire orother occurrence customarily included among the risks insured against in fire insurance policies; (6B) general insurance business means fire, marine or miscellaneous insurance business,whether carried on singly or in combination with one or more of them;] 16[(6C) health insurance business means the effecting of contracts which provide for sicknessbenefits or medical, surgical or hospital expense benefits, whether in-patient or out-patient travelcover and personal accident cover;] 17[(7) Government security means a Government security as defined in the Public Debt Act,1944 (18 of 1944);] 18[(7A) Indian insurance company means any insurer, being a company which is limited byshares, and, -- (a) which is formed and registered under the Companies Act, 2013 (18 of 2013) as a publiccompany or is converted into such a company within one year of the commencement of theInsurance Laws (Amendment) Act, 2015 (5 of 2015); 19[(b) in which the aggregate holdings of equity shares by foreign investors including portfolioinvestors, do not exceed seventy-four per cent. of the paid-up equity capital of such Indianinsurance company, and the foreign investment in which shall be subject to such conditions andmanner, as may be prescribed. ] Explanation. --For the purposes of this sub-clause, the expression control shall include theright to appoint a majority of the directors or to control the management or policy decisionsincluding by virtue of their shareholding or management rights or shareholders agreements orvoting agreements; (c) whose sole purpose is to carry on life insurance business or general insurance business orre-insurance business or health insurance business;] 20* * * * * 21[(8A) insurance co-operative society means any insurer being a co-operative society, -- (a) which is registered on or after the commencement of the Insurance (Amendment) Act,2002 (42 of 2002), as a co-operative society under the Co-operative Societies Act, 1912 (2 of1912) or under any other law for the time being in force in any State relating to Co-operativeSocieties or under the Multi-State Co-operative Societies Act, 1984 (51 of 1984); 22[(b) having a minimum paid-up capital of rupees one hundred crore in case of life insurancebusiness, general insurance business and health insurance business;] (c) in which no body corporate, whether incorporated or not, formed or registered outsideIndia, either by itself or through its subsidiaries or nominees, at any time, holds more thantwenty-six per cent of the capital of such Co-operative Society; (d) whose sole purpose is to carry on life insurance business or general insurancebusiness 23[or health insurance business] in India;] 24[(9) insurer means-- (a) an Indian Insurance Company, or (b) a statutory body established by an Act of Parliament to carry on insurance business, or (c) an insurance co-operative society, or (d) a foreign company engaged in re-insurance business through a branch established inIndia. Explanation. -- For the purposes of this sub-clause, the expression foreign company shallmean a company or body established or incorporated under a law of any country outside Indiaand includes Lloyd's established under the Lloyd's Act, 1871 (United Kingdom) or any of itsMembers;] (10) insurance agent means an insurance agent 25*** 26*** who receives or agrees to receivepayment by way of commission or other remuneration in consideration of his soliciting or procuringinsurance business 27[including business relating to the continuance, renewal or revival of policies ofinsurance]; 28[(10A) investment company means a company whose principal business is the acquisition ofshares, stocks, debentures or other securities ;] 29[(10B) intermediary or insurance intermediary shall have the meaning assigned to it inclause (f) of sub-section (1) of section 2 of the Insurance Regulatory and Development AuthorityAct, 1999 (41 of 1999);] 30[(11) life insurance business means the business of effecting contracts of insurance uponhuman life, including any contract whereby the payment of money is assured on death (except deathby accident only) or the happening of any contingency dependent on human life, and any contract which is subject to payment of premiums for a term dependent on human life and shall be deemed toinclude-- (a) the granting of disability and double or triple indemnity accident benefits, if so providedin the contract of insurance, (b) the granting of annuities upon human life ; and (c) the granting of superannuation allowances and 31[benefit payable out of any fund]applicable solely to the relief and maintenance of persons engaged or who have been engaged inany particular profession, trade or employment or of the dependents of such persons ;] 32[Explanation. -- For the removal of doubts, it is hereby declared that life insurancebusiness shall include any unit linked insurance policy or scrips or any such instrument or unit,by whatever name called, which provides a component of investment and a component ofinsurance issued by an insurer referred to in clause (9) of this section.] 33* * * * * 32* * * * * 34[(13A) marine insurance business means the business of effecting contracts of insurance uponvessels of any description, including cargoes, freights and other interests which may be legallyinsured, in or in relation to such vessels, cargoes and freights, goods, wares, merchandise andproperty of whatever description insured for any transit by land or water, or both, and whether or notincluding warehouse risks or similar risks in addition, or as incidental to such transit, and includesany other risks customarily included among the risks insured against in marine insurance policies ; (13B) miscellaneous insurance business means the business of effecting contracts of insurancewhich is not principally or wholly of any kind or kinds included in clauses (6A), (11) and (13A);] 35[(13BA) National Company Law Tribunal means the National Company Law Tribunalconstituted under section 10FB of the Companies Act, 1956 (1 of 1956); (13BB) the National Company Law Appellate Tribunal means the National Company LawAppellate Tribunal constituted under sub-section (1) of section 10FR of the Companies Act, 1956(1 of 1956);] (14) prescribed means prescribed by rules made under 36[this Act]; and 37* * * * * 38* * * * * (16) private company and public company have the meanings respectively assigned to themin 39[clause (68) and clause (72) of section 2 of the Companies Act, 2013 (18 of 2013)]; 40[(16A) regulations means the regulations framed by the Insurance Regulatory andDevelopment Authority of India established under the Insurance Regulatory and DevelopmentAuthority Act, 1999 (41 of 1999); (16B) re-insurance means the insurance of part of one insurers risk by another insurer whoaccepts the risk for a mutually acceptable premium; (16C) Securities Appellate Tribunal means the Securities Appellate Tribunal establishedunder section 15K of the Securities and Exchange Board of India Act, 1992 (15 of 1992);] 41* * * * *

1[2A. Interpretation of certain words and expressions. --Words and expressions used and notdefined in this Act but defined in the Life Insurance Corporation Act, 1956 (31 of 1956), the GeneralInsurance Business (Nationalisation) Act, 1972 (57 of 1972) and the Insurance Regulatory andDevelopment Authority Act, 1999 shall have the meanings respectively assigned to them in those Acts.]

1[2B. Appointment of Controller of Insurance. -- 2[(1) If at any time, the Authority is supersededunder 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 Controllerof 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 regardto the following considerations, namely, whether the person to be appointed has had experience inindustrial, commercial or insurance matters and whether such person has actuarial qualifications.]

1[2C. Prohibition of transaction of insurance business by certain persons. -- (1) Save ashereinafter provided, no person shall, after the commencement of the Insurance (Amendment) Act, 1950(47 of 1950), begin to carry on any class of insurance business in 2[India] and no insurer carrying on anyclass of insurance business in 2[India] shall after the expiry of one year from such commencement,continue to carry on any such business unless he is-- (a) a public company, or (b) a society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under anyother law for the time being in force in any State relating to co-operative societies, or (c) a body corporate incorporated under the law of any country outside 3[India] not being of thenature of a private company : Provided that the Central Government may, by notification in the Official Gazette, exempt from theoperation of this section to such extent for such period and subject to such conditions as it may specify,any person or insurer for the purpose of carrying on the business of granting superannuation allowancesand annuities of the nature specified in sub-clause (c) of clause (11) of section 2 or for the purpose ofcarrying on any general insurance business : Provided further that in the case of an insurer carrying on any general insurance business no suchnotification shall be issued having effect for more than three year at any one time. 4[Provided also that no insurer other than an Indian insurance company shall begin to carry on anyclass of insurance business in India under this Act on or after the commencement of the InsuranceRegulatory and Development Authority Act, 1999 (41 of 1999).] 5[Provided also an insurer, being an Indian Insurance Company, insurance co-operative society or, abody corporate referred to in clause (c) of this sub-section carrying on the business of insurance,may carry on any business of insurance in any Special Economic Zone as defined in clause (za) of section2 of the Special Economic Zones Act, 2005 (28 of 2005).] (2) Every notification issued under sub-section (1) shall be laid before Parliament as soon as may beafter it is issued.] 6[(3) Notwithstanding anything contained in sub-section (1), an insurance co-operative society maycarry on any class of insurance business in India under this Act on or after the commencement of theInsurance (Amendment) Act, 2002 (42 of 2002).]