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    Unit 6 - PBI

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    tptp1801

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    Unit 6 - PBI

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    tptp1801
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    unit 6 - PBI

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    4 views10 pages

    Unit 6 - PBI

    Uploaded by

    tptp1801

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 10

    Unit 6: Insurance Regulation

    & Legal Framework


    General principles of Insurance contracts are same as essential elements
    of contract that you have studied in business law and specific principles
    are those covered under chap 4
    Consumer Protection Act 1986
    The Insurance Contract Act 1938 – Salient
    Features
    It was the first comprehensive legislation governing both life and non-
    life companies providing strict control over insurance business.
    The salient features of this Act were as follows:
    • Constituting a Department of Insurance to supervise and control
    insurance business.
    • Compulsory registration of insurance companies & submission of
    annual financial returns.
    • Provision for initial deposits to allow only serious players in the field.
    • Compulsory investment of life fund to the extent of 55% in
    Government approved securities.
    • Prohibiting rebating, restriction on payment of commission and
    licensing of agents were other important provisions to bring in a sort
    of professionalism in to this business.
    • Periodical Valuation was made compulsory to assess financial viability
    of the insurance companies.
    • Provision was made for policyholder’s director in the Board.
    • Policy formats were standardised and premium tables were to be
    certified by an Actuary.
    THE LIFE INSURANCE
    CORPORATION ACT, 1956 (LIC ACT
    1956)
    • An Act to provide for the nationalisation of life insurance business in
    India by transferring all such business to a Corporation established for
    the purpose and to provide for the regulation and control of the
    business of the Corporation and for matters connected therewith or
    incidental thereto.
    Main Objective of LIC Act - Spread Life Insurance widely and in
    particular to the rural areas and to the socially and economically
    backward classes with a view to reaching all insurable persons in the
    country and providing them adequate financial cover against death at a
    reasonable cost.
    THE GENERAL INSURANCE BUSINESS
    (NATIONALISATION) ACT, 1972 (GIC ACT 1972)
    • 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.
    Main Objective of GIC Act - is to provide reinsurance services and support to
    the Indian insurance industry. It aims to maintain the stability and growth of
    the insurance sector by offering risk transfer solutions and ensuring the
    availability of reinsurance capacity for various risks.

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