Thedeclaration to be furnished by a transferee in pursuance of Cl. (b)(i) of sub-section (4) of Sec. 6-A of the Act to a public companylimited by shares having its registered office in the States andcarrying on any class of insurance business shall be in Form V-F.
17-A. Declaration as to beneficial interest in shares.- Thedeclaration to be made in pursuance of sub-section (5) of Sec. 6-A ofthe Act to a public company limited by shares having its registeredoffice in the States and carrying on life-insurance business by aperson who has any interest in any of its shares standing in the nameof another person shall be in Form V-G.
17-AA. Form for declaration.- The declaration to be made inpursuance of subsection (5) of Sec. 6-A of the Act to a publiccompany limited by shares having its registered office in India andcarrying on general insurance business by a person who has anyinterest in any of its shares standing in the name of another personshall be in Form V-GG.
17-B. Disposal of shares by Administrator-General.- As soon as theAdministrator-General of a State has taken charge of any shares of apublic company vesting in him under sub-sections (8) of Sec. 6-A ofthe Act. he shall furnish full details of the shares to theController and he shall try, as soon as may be, to sell the shares,whether as a whole or in part or whether in the open market or byprivate sale, at a price not lower than the price fixed by theController who may vary the price fixed from time to time.
Theproceeds shall be handed over to such person as in the opinion of theAdministrator-General, is by law entitled thereto.
Limitation of Expenses of Management 17-C. Statement of the bases of premiums.- (1) The Statement ofthe bases of premiums under sub-section (1) of Sec. 40-B of the Actshall be in Form V-H.
(2) In respect of premiums currently used by an insurer at thecommencement of the Insurance (Amendment) Act, 1950, the statement ofthe bases of premiums certified by an actuary shall be furnished tothe Controller within six months from such commencement.
(3) A statement on the bases of premiums to be newly used aftersuch commencement certified by an actuary shall be furnished to theController before such premiums, are offered by the insurer toprospective policyholders.
17-D. Limitation of expenses of management in life-insurancebusiness.- After the 31st day of December, 1950, no insurer shall, inrespect of the lifeinsurance business transacted by him in India,spend as expenses of management in any calendar year an amountexceeding the aggregate sum of-
(i) five per cent of all premiums received during the year onpolicies granting an immediate annuity or a deferred annuity inconsideration of a single premium, and five per cent of all premiumsreceived on other single premium policies during the year;
(ii) ten per cent of all first year's premiums and four per centof all renewal premiums, received during the year on policiesgranting deferred annuity in consideration of more than one premium;
(iii) one-twentieth of one per cent of the average of the totalsums assured by policies on which no further premiums are payable(less reinsurances) at the beginning and end of the year.
(iv) one per cent of all annuities paid during the year; (v) anamount computed on the basis of the percentages for the time beingappropriate to the duration, of the insurer's life-insurance businessspecified in the following table, namely:
Duration of insurer's life insurance business Percentage of premiums (less re-Duration of insurer's lifeinsurance business insurances) received during the year other than premiums referred to in items (i) and (ii)above of first year's premiums of renewal premiums First four years 10 20 Fifth to seventh years 96 '/2 19 Eighth to tenth years 93 18 After the tenth year, if the insurer's business in force-(a) is less than two crores of rupees 90 18
(b) is less than five crores of rupees but not less than two crores of rupees 90 17
(c) is less than ten crores of rupees but not less than five crores of rupees 90 16
(d) is not less than ten crores of rupees 90 15:
Provided that the percentages specified in the above tableshall, in respect of any first year's premium where the maximumpremiums paying period under the policy is not throughout life notmore than eleven years, be reduced to a number equal to seven and ahalf times the number of whole years in that period.
Explanation I.- In this rule, "business in force" meansin relation to any expense incurred, the total sum assured, withbonuses, without taking into account re-insurances ceded or accepted,by an insurer in respect of the whole of his life-insurance businesson the last working day of the year preceding the calendar year inwhich the expense is incurred.
Explanation II.- The duration of an insurer's life-insurancebusiness shall be reckoned from the beginning of the calendar year ofcommencement of the business if the date of commencement is in thefirst half of the year and from the end of the calendar year of suchcommencement if the date of commencement is in the second half of theyear.
17-E. Limitation of expenses of management in general insurancebusiness.- ( 1) After the 31st day of December, 1949, no insurer shall, in respectof general insurance business transacted him in India other thanmarine insurance business, spend in any calendar year as expenses ofmanagement, including commission or remuneration for procuringbusiness an amount exceeding the sum of-
1. the amount of commission or other remuneration paid toinsurance agents and principal agents in respect of that businesstransacted in the year but not exceeding in respect of fire-insurancebusiness 5 per cent and in respect of miscellaneous insurance 10 percent of the gross premium income written direct in India in respectof that business in the year; and
2. an amount computed on the basis of percentages appropriate tothe various parts of his total gross premium income written direct inIndia during the year.
Part of the total gross premium of the insurer written direct in India (Fire and Miscellaneous business combined) Percentage of premiums First 10 lakhs of rupees 35 Next 5 lakhs of rupees 32 '/2 Next 5 lakhs rupees 30 Next 71/2 lakhs rupees 27'1/2 Next 71/2 lakhs of rupees 25 Next 10 lakhs of rupees 22 1/2 The balance 20
(2) After the 31st day of December, 1949, no insurer shall, inrespect of marine insurance business transacted by him in India,spend in any calendar year as expenses of management, includingcommission or remuneration for procuring business an amount exceedingthe sum of-
(i) the amount of commission or other remuneration paid toinsurance agents and principal agents in respect of that businesstransacted in the year but not exceeding in amount five per cent ofthe gross premium income written direct in India in respect of thebusiness in the year; and (ii) an amount computed on the basis ofpercentages appropriate to the various parts of his total grosspremium income written direct in India during the year.
Part of total gross premium income of the insurer written direct in India Percentage of premiums First 5 lakhs of rupees 25 Next 5 lakhs of rupees 22 '/2 Next 5 lakhs of rupees 20 Next 7 '/2 lakhs of rupees 17 '/2 The Balance 15
(3) Notwithstanding anything contained in sub-rules (1) and(2), an insurer may, during the first ten years of his generalinsurance business, spend in any calendar year as expenses ofmanagement, including commission or remuneration for procuringbusiness an additional amount, in respect of his general insurancebusiness, not exceeding-
(i) during the first three years, the interest earned on thepaid-up capital in that year;
(ii) during the second period of three years, an amount equal to10 per cent of the gross premium income written direct in India, orto the interest earned on the paid-up capital in that year, whicheveris less;
(iii) during the seventh and eighth years an amount equal to 5 percent of the gross premium income written direct in India, orthree-fourths of the interest earned on the paid-up capital in thatyear whichever is less:
Provided that nothing in this clause shallapply to regulate the expenses of an insurer in any such year if hisgross premium income in that year exceeds twenty-five lakhs ofrupees;
(iv) during the ninth and tenth years an amount equal to 3 percent of the gross premium income written direct in India, or to halfof the interest earned on the paid-up capital in that year whicheveris less:
Provided that nothing in this clause shall apply to regulate theexpenses of an insurer in any such year if his gross premium incomein that year exceeds twenty-five lakhs of rupees.
Explanation.-- [****] 17-F. Head Office expenses.- (l) The share of the Head Officeexpenses in the case of an insurer having his principal place ofbusiness outside India for the purposes of Secs. 40-B and 40-C of theact shall not be less than -
(i) in respect of life-insurance business 10 per cent of the firstyear's premium as shown in the revenue account, and 1 per cent of therenewal premiums as shown in the revenue account in respect of thatbusiness transacted in India during the year; and
(ii) in respect of general insurance business 5 per cent of thegross premium income written direct in India during the year inrespect of that business. (2) The share of the Head Office expensesin the case of an insurer having his principal place of business inIndia for the purposes of sub-clause (i) of Cl.
(b) of theexplanation to sec. 40-C of the. Act, shall not exceed 5 per cent ofthe gross premium income written direct outside India during theyear.
17-FA. Principal office expenses.- For the purposes of sub-clause(ii) of Cl.
(b) of the Explanation to Sec. 40-C of the Act, the shareof the expenses in the case of an insurer having his principal placeof business outside India in respect of general-insurance businesstransacted by him outside India through his office in India shall notexceed 5 per cent of the gross premium income written direct outsideIndia through his office in India during the year.
17-FB. Calculation of proper share of managerial expenses.- Forthe purposes of sub-clause (iii) of Cl. (b) of the explanation toSec. 40-Cof the Act the proper share of managerial expenses, that maybe excluded in computing the expenses of management in India, shallbe computed in the following manner, namely:
(a) in the case of an insurer having his principal place ofbusiness in India, the same proportion of the total remunerationreceived by the Chief Executive Officer of the insurer (by whatevername called) as 15 per cent of the paid-up capital of the insurerbears to the total gross premium written direct in India by theinsurer;
(b) in the case of an insurer having his principal place ofbusiness outside India, nil Contravention of Limitation of Expenses and Tariff Regulations 17-G. Action against Extravagant Life Insurers.- (l) If it appearsfrom the report of an actuarial valuation under sub-section (3) ofSec. 64-K of the Act read with the statutory returns relating toaccounts that the insurer concerned is insolvent, the Controller maycancel the registration of such insurer and request the ExecutiveCommittee of the Life Insurance Council to consider whether in thecircumstances of the case it is possible to have the business of theinsurer reconstructed or whether some other insurer is willing totake over the business.
(2) When such a request is received, the Executive Committee ofthe Life Insurance Council shall meet not later than one month of thereceipt of such request to consider the matter and within seven daysof such meeting shall communicate its decision to the Controller.
(3) If the Executive Committee is unable to meet within the timespecified in sub-rule (2) or is unable to suggest any practical stepsfor the reconstruction or transfer, the Controller may, as soon asmay be, apply to the Court for the winding up of that insurer.
(4) If the valuation under sub-section (3) of Sec. (3) of Sec.64-K does not disclose the insurer to be insolvent, the actuarymaking the investigation shall append to his report a statementwhether an encroachment on the bonus loadings contained in thepremium has occurred and whether such encroachment is due eitherpartly or wholly to heavy-expenses incurred by the insurer aftergiving credit for any profits made in other directions.
TheController may request the Executive Committee of the Life InsuranceCouncil for advice so that such encroachment may neither continue norrecur and the Executive Committee shall meet within a month of thereceipt of such request and make such recommendations as it deemsfit.
(5) On receipt of the recommendations referred to in sub-rule (3)or subrule (4), the Controller may issue such directions to theinsurer concerned as he deems fit and if the insurer complies withsuch directions, the cancelled registration may be revived whereverpossible or where it is not so possible, the insurer may beregistered afresh.
(6) If the directions are not complied with, the Controller mayapply to the Court for the winding up of the insurer.
17-H. Action against Extravagant General Insurers.- (1) Inpursuance of subsection (3) of Sec. 64-M of the Act the Controllermay-
(a) cancel the registration of the insurer under the Act, and
(b) request the Executive Committee of the General InsuranceCouncil to consider practical steps for the reconstruction of theinsurer concerned or for transferring its business to some otherinsurer.
(2) When such a request as is referred to in the precedingsub-rule is received by the Executive Committee of the GeneralInsurance Council, it shall meet not later than one month of thereceipt of such request to consider the request and within seven daysof such meeting shall communicate its decision to the Controller.
(3) The Controller may, after considering the recommendations ofthe Executive Committee in this behalf apply to the Court for thewinding up of the insurer concerned if he thinks fit.
Provident Societies
18. Transaction of bond investment business. (l) Providentsocieties which immediately before the commencement of the Act weretransacting bond investment business may continue to receive premiumsor contributions and to make payments in respect of such business butshall not undertake any new business of that class.
(2) For the purpose of sub-rule (1), "bond investmentbusiness" means the business of effecting contracts by the issueof bonds, endowment certificates or other documents, whereby inreturn for one or more premiums paid to the provident society, thepayment is insured of a sum o: series of sums, at a future date ordates, whether fixed before hand or determined by chance..