Law relating to general insurance
The concept of Insurance has been prevalent in India since ancient times amongst Hindus. Overseas traders practiced a system of marine Insurance. The joint family system, peculiar to India, was a method of social insurance of every member of the family on his life. The law relating to insurance has gradually developed, undergoing several phases from nationalization of the insurance industry to the recent reforms permitting entry of private players and forcing investment in the insurance Industry. In 1912 The Indian Life Assurance Companies Act came into force for regulating the item insurance business. In 1928 The Indian Insurance Companies Act was enacted for enabling the government to collect statistical information on both life and non-life insurance businesses. The first comprehend side law relating to insurance in India was the Insurance Act 1938. General insurance Corporation of India act was passed in 1972 to govern the general insurance which was nationalized in 1972. Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation is a statutory body in April 2000 has fastidiously stuck to its schedule of framing regulations and registering the private sector insurance companies. Since being set up as an independent statutory body the IRDA has put in a framework of globally compatible regulations. The Insurance Regulatory and Development Authority Act 1999 is an act to provide for the establishment of an Authority to protect the interests of holders of insurance policies, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or Incidental thereto and further to amend the Insurance Act, 1938. the Life Insurance Corporation Act, 1956 and the General insurance Business (Nationalization) Act, 1972 to end the monopoly of the Life Insurance Corporation of India (for life insurance business) and General Insurance Corporation and its subsidiaries (for general insurance business). Now the primary legislation that deals with insurance business in India is: Insurance Act, 1938, and Insurance Regulatory & Development Authority Act, 1999.
Insurance Act 1938
It is the most important legislation. This act of 1938 was enforced from July 1, 1938. The act of 1938 Is considered as an important law relating to general Insurance, marine insurance, fire insurance and miscellaneous Insurance. This Act was passed to organize and control the Insurance business in India. The act has been amended a number of times notably by passing of the Insurance Regulatory and Development Authority Act, 1999. The important provisions of the Indian Insurance Act 1938 may be classed into the following heads.
- Accounts and returns
- Limitations in expenses of management
- Prohibition of rebates
- Powers of investigation
- Licensing of agents
- Advance payment of premium
- Tariff advisory committee.
- Duties and powers of controller of insurance.
Indian Marine Insurance Act 1963
Indian parliament passed Indian Marine Insurance Act in 1963 which came into existence on august 1, 1963. It is an Act to codify the law relating to marine insurance.
General Insurance Business (Nationalization) Act, 1972
The Act came into force on 1st January l973. It is an Act to provide for the acquisition and transfer of shares of Indian insurance companies and undertakings of other existing insurers in order to serve better the needs of the economy by securing the development of general insurance business in the best interests of the community and to ensure that the operation of the economic system does not result in the concentration of wealth to the common detriment, for the regulation and control of such business and for matters connected therewith or incidental thereto. This act was passed with the objective of nationalization of general insurance business in India. The general insurance corporation was established under this act. This corporation was authorized solely to conduct the whole general business in India along with its four subsidiaries. The subsidiaries are Oriental insurance Corporation of India, National Insurance Corporation of India, New India Corporation of India and United India Insurance Corporation.
The General Insurance Business (Nationalization) Amendment Act, 2002
This Act is passed to further amend the General Insurance Business (Nationalization) Act, 1972. With the General Insurance Business (Nationalization) Amendment Act 2002 (40 of 2002) coming into force from March 21, 2003 GIC ceased to be a holding company of its subsidiaries. Their ownership was vested with the Government of India.
The act creates the insurance regulatory authority, defines the authority’s functions and establishes its funding. The act became law on Dec. 29, 1999. It includes amendments to the Insurance Act of 1938, the Life Insurance Corporation Act of 1956 and the General Insurance Business (Nationalization) Act of 1972. The Insurance Regulatory and Development Authority (IRDA) is a national agency of the Government of India, based in Hyderabad. It was formed by an act of Indian Parliament known as IRDA Act 1999, which was amended in 2002 to incorporate some emerging requirements. Mission of IRDA as stated in the act is to protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto.