THE INSURANCE ACT, 1938, PART II, SECTION 2

(3) No insurer other than a provident society as defined in Part III, who begins to carry on insurance business after the commencement of this Act, shall adopt as its name and so such insurer carrying on business before the commencement of this Act shall continue after the expiry of six months from the commencement thereof to use as its name any combination of words which includes the word “provident”.

Requirements as to capital and share-holdings36[6. (1) No insurer, other than an insurer who was transacting any class of insurance business in Bangladesh immediately before the commencement of the Insurance (Amendment) Ordinance, 1984 (L of 1984), shall be registered after such commencement for transacting any class of insurance business unless he has a paid-up capital of not less than the amount specified in the Seventh Schedule and his shares have been subscribed in such manner as may be prescribed:

Provided that the Government may, by notification in the official Gazette, relax the provision of this section relating to the amount of paid-up capital, subject to such conditions as it deems fit to specify, for a period not exceeding three years from the date of commencement of the Insurance (Amendment) Ordinance, 1984 (L of 1984).]

Deposits7. 37[(1) Every insurer shall deposit, at the time of making application for registration, and keep deposited with the Bangladesh Bank, for and on behalf of the Government, the amount specified in the Seventh Schedule, either in cash or in approved securities estimated at the market value of the securities on the day of the deposit, or partly in cash and partly in approved securities so estimated.]

(2) [Omitted by section 6 of the Insurance (Amendment) Ordinance, 1984 (Ordinance No. L of 1984).]

(3) and (4) [Omitted by section 10 of the Insurance (Amendment) Act, 1958 (Act No. XXVII of 1958).]

(5) and (6) [Omitted by section 6 of the Insurance (Amendment) Ordinance, 1984 (Ordinance No. L of 1984).]

(7) [Omitted by section 10 of the Insurance (Amendment) Act, 1958 (Act No. XXVII of 1958).]

(8) A deposit made in cash shall be held by the Bangladesh Bank to the credit of the insurer and shall except to the extent, if any, to which the cash has been invested in securities under sub-section (9A), be returnable to the insurer in cash in any case in which under the provisions of this Act a deposit is to be returned; and any interest accruing due and collected on securities deposited under sub-section (1) or sub-section (2) shall be paid to the insurer, subject only to deduction of the normal commission chargeable for the realisation of interest.

38[(9) The insurer may at any time replace any securities deposited by him under this section with the Bangladesh Bank either by cash or by other approved securities or partly by cash and partly by other approved securities, provided that such cash, or the value of such other approved securities estimated at the market rates prevailing at the time of replacement, or such cash together with such value, as the case may be, is not less than the value of the securities replaced estimated at the market rates prevailing when they were deposited.

(9A) The Bangladesh Bank shall, if so requested by the insurer,-

(a) sell any securities deposited by him with the Bank under this section and hold the cash realised by such sale as deposit, or

(b) invest in approved securities specified by the insurer the whole or any part of a deposit held by it in cash or the whole or any part of cash received by it on the sale of or on the maturing of securities deposited by the insurer, and hold the securities in which investment is so made as deposit, and may charge the normal commission on such sale or on such investment.

(9B) Where sub-section (9A) applies,-

(a) If the cash realised by the sale of or on the maturing of the securities (excluding in the former case the interest accrued) falls short of the market value of the securities at the date on which they were deposited with the Bank, the insurer shall make good the deficiency by a further deposit either in cash or in approved securities estimated at the market value of the securities on the day on which they are deposited, or partly in cash and partly in approved securities so estimated, within a period of two months from the date on which the securities matured or were sold and unless he does so the insurer shall be deemed to have failed to comply with the requirements of this section as to deposits; and

(b) if the cash realised by the sale of or on the maturing of the securities (excluding in the former case the interest accrued) exceeds the market value of the securities at the date on which they were deposited with the Bank, the Government may, if satisfied that the full amount required to be deposited under sub-section (1) is in deposit, direct the Bangladesh Bank to return the excess.]

(10) If any part of a deposit made under this section is used in the discharge of any liability of the insurer, the insurer shall deposit such additional sum in cash or approved securities estimated at the market value of the securities on the day of deposit, or partly in cash and partly in such securities, as will make up the amount so used. The insurer shall be deemed to have failed to comply with the requirements of sub-section (1), unless the deficiency is supplied within a period of two months from the date when the deposit or any part thereof is so used for discharge of liabilities.

Reservation of deposits8. (1) Any deposit made under section 7 or section 98 shall be deemed to be part of the assets of the insurer but shall not be susceptible of any assignment or charge; nor shall it be available for the discharge of any liability of the insurer other than liabilities arising out of policies of insurance issued by the insurer so long as any such liabilities remain undischarged; nor shall it be liable to attachment in execution of any decree except a decree obtained by a policy-holder of the insurer in respect of a debt due upon a policy which debt the policy-holder has failed to realise in any other way.

(2) Where a deposit is made in respect of life insurance business the deposit made in respect thereof shall not be available for the discharge of any liability of the insurer other than liabilities arising out of policies of life insurance issued by the insurer.

Refund of deposits9. (1) Where an insurer has ceased to carry on in Bangladesh any class of insurance business in respect of which a deposit has been made under section 7 or section 98 and his liabilities in Bangladesh in respect of business of that class have been satisfied or are otherwise provided for, the Court may, on the application of the insurer, order the return to the insurer of so much of the deposit as does not relate to the classes of insurance, if any, which he continues to carry on.

(2) [Omitted by section 3 and the Second Schedule of the Bangladesh Laws (Revision And Declaration) Act, 1973 (Act No. VIII of 1973).]

Separation of accounts and funds10. (1) Where the insurer carries on business of more than one of the classes specified in clauses (a), (b), (c) and (d) of sub-section (1) of section 7, he shall keep a separate account of all receipts and payments in respect of each such class of insurance business and where the insurer carries on business of the class specified in clause (d) of that sub-section whether alone or in conjunction with business of another class, he shall,

unless the Chief Controller of Insurance waives this requirement in writing, keep a separate account of all receipts and payments in respect of each such sub-class of the class specified in clause (d) as may be prescribed in this behalf.

(2) Where the insurer carries on the business of life insurance, all receipts due in respect of such business, shall be carried to and shall form a separate fund to be called the life insurance fund the assets of which shall be kept free from all encumbrances and distinct and separate from all other assets of the insurer and the deposit made by the insurer in respect of life insurance business shall be deemed to be a part to the assets of such fund; and every insurer shall furnish to the Chief Controller of Insurance along with the returns referred to in section 11, a statement showing in detail such assets as at the close of every calendar year duly certified by an auditor:

Provided that an insurer may show in such statement all the assets held in his life department and any deductions on account of general reserves and other liabilities of that department:

Provided further that the Chief Controller may call for a statement similarly certified of such assets as at any other date specified by him to be furnished within a period of three months from the date with reference to which the statement is called for.

39[(2A) No insurer carrying on life insurance business shall be entitled to be registered for any class of insurance business in addition to the class or classes for which he has been already registered unless the Chief Controller of Insurance is satisfied that the assets of the life insurance fund of the insurer are adequate to meet all his liabilities on policies of life insurance maturing for payment.]

(3) The life insurance fund shall be as absolutely the security of the life policy-holders as though it belonged to an insurer carrying on no other business than life insurance business and shall not be liable for any contracts of the insurer

for which it would not have been liable had the business of the insurer been only that of life insurance and shall not be applied directly or indirectly for any purposes other than those of the life insurance business of the insurer.

Accounts and balance-sheet11. (1) Every insurer, in the case of an insurer specified in sub-clause (a) (ii) or sub-clause (b) of clause (9) of section 2 in respect of all insurance business transacted by him, and in the case of any other insurer in respect of the insurance business transacted by him in Bangladesh, shall at the expiration of each calendar year prepare with reference to that year-

(a) in accordance with the regulations contained in Part I of the First Schedule, a balance-sheet in the form set forth in Part II of that Schedule;

(b) in accordance with the regulations contained in Part I of the Second Schedule, a profit and loss account in the forms set forth in Part II of that Schedule, except where the insurer carries on business of one class only of the classes specified in clauses (a), (b) and (c) of sub-section (1) of section 7 and no other business;

(c) in respect of each class or sub-class of insurance business for which he is required under sub-section (1) of section 10 to keep a separate account of receipts and payments, a revenue account in accordance with the regulations, and in the form or forms, set forth in the Third Schedule applicable to that class or sub-class of insurance business.

(2) Unless the insurer is a company as defined in clause (2) of sub-section (1) of section 2 of the Companies Act, 1913, the accounts and statements referred to in sub-section (1) shall be signed by the insurer, or in the case of a company by the chairman, if any, and two directors and the principal officer of the company, or in the case of a firm by two partners of the firm and shall be accompanied by a statement containing the names and descriptions of the persons in charge of the management of the business during the period to which such accounts and statements refer and by a report by such persons on the affairs of the business during that period.

Audit12. The balance-sheet, profit and loss account, revenue account and profit and loss appropriation account of every insurer, in the case of an insurer specified in sub-clause (a)(ii) or sub-clause (b) of clause (9) of section 2 in respect of all insurance business transacted by him, and in the case of any other insurer in respect of the insurance business transacted by him in Bangladesh, shall, unless they are subject to audit under the Companies Act, 1913, be audited annually by an auditor, and the auditor shall in the audit of all such accounts have the powers of, exercise the functions vested in, and discharge the duties and be subject to the liabilities and penalties imposed on, auditors of companies by section 145 of the Companies Act, 1913.

Special audit40[12A. (1) The books and records of every insurer, in the case of an insurer specified in sub-clause (a) (ii) or sub-clause (b) of clause (9) of section 2 in respect of all insurance business transacted by him, and in the case of any other insurer in respect of the insurance business transacted by him in Bangladesh, shall be audited annually by an auditor or auditors to be appointed every year by the Chief Controller of Insurance for making such investigation and submitting such reports as may be prescribed:

Provided that the auditor or any of the auditors appointed under this section for any year of account shall not be the auditor or auditors employed by the insurer for an audit under the Companies Act, 1913 or under section 12 of this Act for that year of account.

(2) An auditor appointed under this section shall have a right of access to all such books of account, registers, vouchers, correspondence and other documents of the insurer, and shall be entitled to require from the directors and officers of the insurer such information and explanation, as may be necessary for the performance of his function and duties under this section.

(3) Every report prepared by an auditor or auditors appointed under this section shall be submitted in quadruplicate to the Chief Controller who may take such action thereon in accordance with the provisions of this Act as he deems fit.

(4) An auditor appointed under this section shall be paid by the insurer such fees as may be prescribed and in prescribing such fees regard shall be had to the size of the insurer and the class or classes of business transacted by him.

(5) The fee payable by an insurer under sub-section (4) shall be paid to the auditor within such time as may be specified by the Chief Controller.]

Actuarial report and abstract13. (1) Every insurer carrying on life insurance business shall, in respect of the life insurance business transacted by him in Bangladesh, and also in the case of an insurer specified in sub-clause (a) (ii) or sub-clause (b) of clause (9) of section 2 in respect of all life insurance business transacted by him, once at least in every 41[two] years cause an investigation to be made by an actuary into the financial condition of the life insurance business carried on by him, including a violation of his liabilities in respect thereto and shall cause an abstract of the report of such actuary to be made in accordance with the regulations contained in Part I of the Fourth Schedule and in conformity with the requirements of Part II of that Schedule.

(1A) and (1B) [Omitted by section 7 of the Insurance (Amendment) Ordinance, 1984 (Ordinance No. L of 1984).]

(2) The provisions of sub-section (1) regarding the making of an abstract shall apply whenever at any other time an investigation into the financial condition of the insurer is made with a view to the distribution of profits or an investigation is made of which the results are made public.

(3) There shall be appended to every such abstract as is referred to in sub-section (1) or sub-section (2) a certificate

signed by the principal officer of the insurer that full and accurate particulars of every policy under which there is a liability either actual or contingent have been furnished to the actuary for the purpose of the investigation.

(4) There shall be appended to every such abstract a statement, in conformity with the requirements of Part II of the Fifth Schedule and prepared in accordance with the regulations contained in Part I of that Schedule, of the life insurance business in force at the date which the accounts of the insurer are made up for the purposes of such abstract:

Provided that, if the investigation, referred to in sub-sections (1) and (2) is made annually by any insurer, the statement need not be appended every year but shall be appended at least once in every three years.

(5) Where an investigation into the financial condition of an insurer is made as at a date other than the expiration of the year of account, the accounts for the period since the expiration of the last year of account and the balance-sheet as at the date at which the investigation is made shall be prepared and audited in the manner provided by this Act.

(6) The provisions of this section relating to life insurance business shall apply also to any such sub-class of miscellaneous insurance business as may be prescribed in this behalf:

Provided that no sub-class of miscellaneous insurance business shall be prescribed under this sub-section if the insurance business comprised in the sub-class consists of insurance contracts which are terminable by the insurer at intervals not exceeding twelve months and under which if a claim arises, the insurer’s liability to pay benefit ceases within one year of the date on which the claim arose:

Provided further that the Chief Controller of Insurance may authorise such modifications and variations of the regulations contained in Part I of the Fourth and Fifth Schedules and of the requirements of Part II of those Schedules as may be necessary to facilitate their application to any such sub-class of miscellaneous insurance business:

Provided also that if the Chief Controller of Insurance is satisfied that the number and amount of the transactions carried out by an insurer in any such sub-class of miscellaneous insurance business is so small as to render periodical valuation unnecessary, he may exempt that insurer from the operation of this sub-section in respect of that sub-class.

(7) The valuation of liabilities under sub-section (1) shall be carried out in such a manner and on such basis that the actuarial reserves calculated in that manner and on that basis are not less than the actuarial reserves calculated in the manner and on the basis laid down by the Chief Controller of Insurance in this behalf.

Register of policies and register of claims14. Every insurer, in the case of an insurer specified in sub-clause (a) (ii) or sub-clause (b) of clause (9) of section 2 in respect of all business transacted by him, and in the case of any other insurer in respect of the insurance business transacted by him in Bangladesh, shall maintain-

(a) a register or record of policies, in which shall be entered, in respect of every policy issued by the insurer, the name and address of the policy-holder, the date when the policy was effected and a record of any transfer, assignment or nomination of which the insurer has notice, and

(b) a register or record of claims, in which shall be entered every claim made together with the date of the claim, the name and address of the claimant and the date on which the claim was discharged, or, in the case of a claim which is rejected, the date of rejection and the grounds therefore.

Submission of returns15. (1) The audited accounts and statements referred to in section 11 or sub-section (5) of section 13 and the abstract and statement referred to in section 13 shall be printed, and four copies thereof shall be furnished as returns to the Chief Controller of Insurance in the case of the accounts and statements referred to in section 11 or sub-section (5) of section 13 within six months and in the case of the abstract and statement referred to in section 13 within nine months from the end of the period to which they refer:

Provided that the said period of six months shall in the case of insurers having their principal place of business or domicile outside Bangladesh and in the case of insurers constituted, incorporated or domiciled in Bangladesh but also carrying on business outside Bangladesh be extended by three months, and provided further that the Chief Controller may in any case extend the time allowed by this sub-section for the furnishing of such returns by a further period not exceeding one month.

(2) Of the four copies so furnished one shall be signed in the case of a company by the Chairman and two directors and by the principal officer of the company and, if the company has a managing director by that director in the case of a firm, by two partners of the firm, and, in the case of an insurer being an individual, by the insurer himself and one shall be signed by the auditor who made the audit or the actuary who made the valuation, as the case may be.

(3) Where the insurer’s principal place of business or domicile is outside Bangladesh, he shall forward to the Chief Controller of Insurance, along with the documents referred to in section 11, the balance-sheet, profit and loss account and revenue account and the valuation reports and valuation statements, if any, which the insurer is required to file with the public authority of the country in which the insurer is constituted, incorporated or domiciled, or, where such documents are not required to be filed, a certified statement showing the total assets and liabilities of the insurer at the close of the period covered by the said documents and his total income and expenditure during that period.

[Omitted.]16. [Returns by insurers established outside the Provinces etc.- Omitted by section 16 of the Insurance (Amendment) Act, 1958 (Act No. XXVII of 1958).]

Exemption from certain provisions of the Companies Act, 191317. Where an insurer, being a company incorporated under the Companies Act, 1913 or under the Indian Companies Act, 1882, or under the Indian Companies Act, 1866, or under any Act repealed thereby, in any year furnishes his balance sheet and accounts in accordance with the provisions of section 15, he may at the same time send to the Registrar of Companies copies of such balance-sheet and accounts; and where such copies are so sent it shall not be necessary for the company to file copies of the balance-sheet and accounts with the Registrar as required by sub-section (1) of section 134 of the first mentioned Act and such copies so sent shall be chargeable with the same fees and shall be dealt with in all respects as if they were filed in accordance with that section.

[Omitted.]17A. [This Act not to apply to preparation of accounts, etc. for periods prior to this Act coming into force.- Omitted by section 17 of the Insurance (Amendment) Act, 1958 (Act No. XXVII of 1958). ]

Furnishing reports18. Every insurer shall furnish to the Chief Controller of Insurance a certified copy of every report on the affairs of the concern which is submitted to the members or policy-holders of the insurer immediately after its submission to the members or policy-holders as the case may be.

Abstract of proceedings of general meetings19. Every insurer, being a company or body incorporated under any law for the time being in force in Bangladesh, shall furnish to the Chief Controller of Insurance a certified copy of the minutes of the proceedings of every general meeting as entered in the Minutes Book of the insurer within thirty days from the holding of the meeting to which it relates.

Custody and inspection of documents and supply of copies20. (1) Every return furnished to the Chief Controller of Insurance or a certified copy thereof shall be kept by the Chief Controller and shall be open to inspection; and any person may procure a copy of any such return, or of any part thereof, on payment of a fee of 42[two Taka] for every hundred words or fractional part thereof required to be copied, any five figures being deemed equivalent to one word.

(2) A printed or certified copy of the accounts, statements and abstract furnished in accordance with the provisions of section 15 shall, on the application of any shareholder or policy-holder made at any time within two years from the date on which the document was so furnished, be supplied to him by the insurer within fourteen days when the insurer is constituted, incorporated or domiciled in Bangladesh and in any other case within one month of such application.

(3) A copy of the memorandum and Articles of Association of the insurer, if a company, shall on the application of any policy-holder, be supplied to him by the insurer on payment of one Taka.

Powers of Chief Controller of Insurance regarding returns21. (1) If it appears to the Chief Controller of Insurance that any return furnished to him under the provisions of this Act is inaccurate or defective in any respect, he may-

(a) require from the insurer such further information, certified if he so directs by an auditor or actuary, as he may consider necessary to correct or supplement such return;

(b) call upon the insurer to submit for his examination at the principal place of business of the insurer in Bangladesh any book of account, register or other document or to supply any statement which he may specify in a notice served on the insurer for the purpose;

(c) examine any officer of the insurer on oath in relation to the return;

(d) decline to accept any such return unless the inaccuracy has been corrected or the deficiency has been supplied before the expiry of one month from the date on which the requisition asking for correction of the inaccuracy or supply of the deficiency was delivered to the insurer and if he declines to accept any such return, the insurer shall be deemed to have failed to comply with the provisions of section 15 or section 28 relating to the furnishing of returns.

(2) [Omitted by section 11 of the Insurance (Amendment) Ordinance, 1970 (Ordinance No. XXV of 1970).]

Power of Chief Controller of Insurance to order revaluation 23. Evidence of documents22. (1) If it appears to the Chief Controller of Insurance that an investigation or valuation to which section 13 refers does not properly indicate the condition of the affairs of the insurer by reason of the faulty basis adopted in the valuation, he may, after giving notice to the insurer and giving him an opportunity to be heard, cause an investigation and valuation as at such date as the Chief Controller of Insurance may specify to be made at the expense of the insurer by an actuary appointed by the insurer for this purpose and approved by the Chief Controller of Insurance and the insurer shall place at the disposal of the actuary so appointed and approved all the material required by

the actuary for the purposes of the investigation and valuation within such period, not being less than three months, as the Chief Controller of Insurance may specify.

(2) The provisions of sub-sections (1) and (4) of section 13, and of sub-sections (1) and (2) of section 15 shall apply in relation to an investigation and valuation under this section:

Provided that the abstract and statement prepared as the result of such investigation and valuation shall be furnished by such date as the Chief Controller of Insurance may specify.

Evidence of documents23. (1) Every return furnished to the Chief Controller of Insurance, which has been certified by the Chief Controller to be a return so furnished, shall be deemed to be a return so furnished.

(2) Every document, purporting to be certified by the Chief Controller of Insurance, to be a copy of a return so furnished, shall be deemed to be a copy of that return and shall be received in evidence as if it were the original return, unless some variation between it and the original return is proved.

[Omitted.]24. [Summary of returns to be published.- Omitted by section 16 of the Insurance (Amendment) Act, 1941 (Act No. XIII of 1941).]

Returns to be published in statutory forms25. (1) No insurer shall,-

(a) make, issue, circulate or cause to be made, issued or circulated, any estimate, illustration, circular or statement misrepresenting the terms of any policy issued or to be issued or the benefits or advantages promised thereby or the bonuses, shareholders’ dividends or share of the surplus to be received thereon, or make any false or misleading statement as to be bonuses, shareholders’ dividends or share of surplus previously paid on similar policies or make any misleading representation or any misrepresentation as to the financial condition of any insurer or use any name or title of any policy or class of policies misrepresenting the true nature thereof or make any misrepresentation to any policy-holder insured in any company for the purpose of inducing or tending to induce such policy-holder to lapse, forfeit or surrender his insurance; and(b) make, publish, disseminate, circulate or place before the public, or cause, directly or indirectly, to be made, published, disseminated, circulated or placed before the public in a newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster or in any other manner an advertisement, announcement or statement containing any assertion, representation or statement with respect to the business of insurance, or the financial position of any insurer or with respect to any person in the conduct of his insurance business, which is false, untrue, deceptive, misleading or calculated to injure any person engaged in the business of insurance:

Provided that nothing contained in this section shall prevent an insurer from publishing any return in a form in which it has been furnished to the Chief Controller of Insurance or a true and accurate abstract from such returns or any other factual statement for the purposes of publicity.

Alterations in the particulars furnished with application for registration to be reported26. Whenever any alteration occurs or is made which affects any of the matters which are required under the provisions of sub-section (2) of section 3 to accompany an application by an insurer for registration, the insurer shall forthwith furnish to the Chief Controller of Insurance full particulars of such alteration.

All such particulars shall be authenticated in the manner required by that sub-section for the authentication of the matters therein referred to, and, where the alteration affects the assured rates, advantages, terms and conditions offered in connection with life insurance policies, the actuarial certificate referred to in clause (f) of the said sub-section shall accompany the particulars of the alteration.