SPECIAL PROVISIONS OF LAW
Policy not to be called in question on ground of mis-statement after two years45. No policy of life insurance effected before the commencement of this Act shall after the expiry of two years from the date of commencement of this Act and no policy of life insurance effected after the coming into force of this Act shall, after the expiry of two years from the date on which it was effected, be called in question by an insurer on the ground that a statement made in the proposal for insurance or in any report of a medical officer, or referee, or friend of the insured, or in any other document leading to the issue of the policy, was inaccurate or false, unless the insurer shows that such statement was on a material matter or suppressed facts which it was material to disclose and that it was fraudulently made by the policy-holder and that the policy-holder knew at the time of making it that the statement was false or that it suppressed facts which it was material to disclose:
Provided that nothing in this section shall prevent the insurer from calling for proof of age at any time if he is entitled to do so, and no policy shall be deemed to be called in question merely because the terms of the policy are adjusted on subsequent proof that age of the life insured was incorrectly stated in the proposal.
Application of Bangladesh law to policies issued in Bangladesh46. The holder of a policy of insurance issued by an insurer in respect of insurance business transacted in Bangladesh after the commencement of this Act shall have the right, notwithstanding anything to the contrary contained in the policy or in any agreement relating thereto, to receive payment in Bangladesh, of any sum secured thereby and to sue for any relief in respect of the policy in any Court of competent jurisdiction in Bangladesh; and if the suit is brought in Bangladesh any question of law arising in connection with any such policy shall be determined according to the law in force in Bangladesh:
Provided that nothing in this section shall apply to a policy of marine insurance.
Payment of money into Court47. (1) Where in respect of any policy of life insurance maturing for payment an insurer is of opinion that by reason of conflicting claims to or insufficiency of proof of title to the amount secured thereby or for any other adequate reason it is impossible otherwise for the insurer to obtain a satisfactory discharge for the payment of such amount, the insurer may, before the expiry of nine months from the date of the maturing of the policy or, where the circumstances are such that the insurer cannot be immediately aware of such maturing, from the date on which notice of such maturing is given to the insurer, apply to pay the amount into the Court within the jurisdiction of which is situated the place at which such amount is payable under the terms of the policy or otherwise.
(2) A receipt granted by the Court for any such payment shall be a satisfactory discharge to the insurer for the payment of such amount.
(3) An application for permission to make a payment into Court under this section shall be made by a petition verified by an affidavit signed by a principal officer of the insurer setting forth the following particulars, namely:-
(a) the name of the insured person and his address;
(b) if the insured person is deceased, the date and place of his death;
(c) the nature of the policy and the amount secured by it;
(d) the name and address of each claimant so far as is known to the insurer with details of every notice of claim received;
(e) the reasons why in the opinion of the insurer a satisfactory discharge cannot be obtained for the payment of the amount; and
(f) the address at which the insurer may be served with notice of any proceedings relating to disposal of the amount paid into Court.
(4) An application under this section shall not be entertained by the Court if the application is made before the expiry of six months from the maturing of the policy by survival, or from the date of receipt of notice by the insurer of the death of the insured, as the case may be.
(5) If it appears to the Court that a satisfactory discharge for the payment of the amount cannot otherwise be obtained by the insurer it shall allow the amount to be paid into Court and shall invest the amount in Government securities pending its disposal.
(6) The insurer shall transmit to the Court every notice of claim received after the making of the application under sub-section (3), and any payment required by the Court as a costs of the proceedings or otherwise in connection with the disposal of the amount paid into Court shall as to the costs of the application under sub-section (3) be borne by the insurer and as to any other costs be in the discretion of the Court.
(7) The Court shall cause notice to be given to every ascertained claimant of the fact that the amount has been paid into Court, and shall cause notice at the cost of any claimant applying to withdraw the amount to be given to every other ascertained claimant.
(8) The Court shall decide all questions relating to the disposal of claims to the amount paid into Court.
Dispute over claims on life policies of small amount86[47A. (1) Any dispute arising under a policy of life insurance assuring a sum not exceeding five thousand Taka (exclusive of any profit or bonus not being a guaranteed profit or bonus) issued by an insurer in respect of insurance business transacted by him in Bangladesh, between the claimant and the insurer who issued the policy or has otherwise assumed the liabilities in respect thereof, may, at the option of the claimant, be referred to the Chief Controller of Insurance for settlement and the Chief Controller may, after hearing the parties and taking such evidence as he may, in his absolute discretion, consider necessary, settle the dispute.
(2) The decision of the Chief Controller under this section shall be final and shall not be called in question in any Court and shall be deemed to be a decree of a Court which would have been competent to decide the dispute and be executed accordingly.
(3) The Chief Controller shall, in respect of the duties performed by him for the purpose of this section, charge and collect such fees whether by way of percentage or otherwise as may be prescribed.]
Interest on late settlement of claims87[47B. (1) Where payment on a policy issued by an insurer becomes due and the person entitled thereto has complied with all the requirements, including the filing of complete papers, for claiming the payment, the insurer shall, if he fails to make the payment within a period of ninety days from the date on which the payment becomes due or the claimant complies with the requirements, whichever is later, pay interest as specified in sub-section (2) on the amount so payable unless he proves that such failure was due to circumstances beyond his control.
(2) The interest under sub-section (1) shall be payable for the period during which the failure continues and shall be calculated at monthly rates at the rate of five per cent higher than the prevailing bank rate.
Dispute over motor insurance claim47C. (1) Where any dispute arises under a policy insuring a motor vehicle or covering any liability of its owner arising out of the use of the vehicle, any party to the dispute may make an application for adjudication to the Claims Settlement Board constituted under sub-section (2).
(2) The Government shall for the purpose of adjudication of disputes referred to in sub-section (1) constitute a Claims Settlement Board consisting of such number of members, including a Chairman, as it may think fit.
(3) The Chairman and a member shall be appointed on such terms and conditions as the Government may determine and shall hold office for a term of three years and be eligible, on the expiry of his term, for re-appointment for a further like term or terms.
(4) Where a vacancy occurs in the office of a member during his term, the Government shall appoint another person to fill such vacancy and the person so appointed shall hold office for the un-expired period of the term of his predecessor.
(5) In this section and in sections 47D, 47E, 47F, 47G, 47H, 47I, 47J, 47K and 47L, unless the context otherwise requires,-
(a) “application” means an application made under sub-section (1);
(b) “Board” means the Claims Settlement Board constituted under sub-section (2) and includes a bench of the Board constituted under section 47F;
(c) “Chairman” means the Chairman of the Board; and
(d) “member” means a member of the Board.
Qualifications of Chairman, etc.47D. (1) The Chairman shall be a person who is, or has been, a District Judge, or is or has been, or is qualified to be, a judge of the 88[the Supreme Court].
(2) No person shall be appointed, or shall continue to be, a member of the Board if he is an undischarged insolvent, or is convicted of an offence which, in the opinion of the Government, involves moral turpitude.
Resignation and removal47E. (1) A member may, at any time before the expiry of his term, by letter addressed to the Government, resign his office.
(2) The Government may, by order in writing, remove any member if he-
(a) refuses or fails to discharge, or becomes, in the opinion of the Government, incapable of discharging, his responsibilities as a member; or
(b) has, in the opinion of the Government, abused his position as member.
Benches of the Board
47F. (1) The Chairman may, and, if so required by the Government, shall, constitute such number of benches of the Board as may be necessary for the expeditious disposal of the applications; and each such bench shall consist of not less than two members.
(2) A bench shall try such applications as the Chairman may refer to it and shall hold its sittings at such place or places as he may direct.
Fees for application47G. No application shall be received by the Board unless the application has paid such fee not exceeding one per cent of the amount of the claim in dispute and in such manner as may be prescribed.
Procedure and Powers of the Board47H. (1) The Board shall, for the purpose of the trial of an application, follow such procedure as may be prescribed, and have the same powers as are vested in a civil Court trying a suit under the Code of Civil Procedure, 1908 (Act V of 1908), in respect of-
(a) summoning and enforcing the attendance of any person and examining him on oath;
(b) requiring the discovery and production of documents and material objects;
(c) receiving evidence on affidavits; and
(d) issuing commissions for the examination of witnesses or documents.
(2) If, in the course of the trial of an application, any one of the members ceases to hold office, or is, for any reason, unable to attend the sittings of the Board, the trial shall continue before, and the decision may be given by, the remaining members.
(3) If upon any matter requiring the decision of the Board there is a difference of opinion amongst its members, the opinion of the majority shall prevail and the decision of the Board shall be expressed in terms of the view of the majority:
Provided that where the members are equally divided on any point it shall,-
(a) in the case of the full Board or of a bench of which the Chairman is a member, be decided in accordance with the views of the Chairman; and
(b) in the case of a bench of which the Chairman is not a member, be referred to the Chairman and decided in accordance with his views.
(4) The decision of the Board shall be given in writing and shall be signed,-
(a) if it is of the full Board or of a bench of which the Chairman is a member, by the Chairman; and
(b) if it is of a bench of which the Chairman is not a member, by such member of the bench as is designated by the Chairman to be its senior member.
(5) The Board shall give a copy of the decision to each party to the dispute and shall also forward a copy to the Chief Controller of Insurance.
(6) The board shall, upon an application made in this behalf by any party to a dispute adjudicated by it and on payment of such fee not exceeding one Taka for every one hundred words, and subject to such conditions, as may be prescribed, furnish certified copies of its proceedings or of any document submitted to or produced before it.
Appeal47I. (1) Except as provided in sub-section (2), the decision of the Board on an application shall be final and shall not be questioned in any Court or before any other authority.
(2) Any party aggrieved by a decision of the Board may, if the amount of the claim in dispute is not less than twenty thousand Taka, prefer an appeal to the High Court Division within a period of thirty days from the date of such decision.
Recovery of the claim as decided47J. Where an insurer fails to pay the amount of any claim in accordance with the decision on an application within a period of thirty days from the date of the decision, the decision shall be deemed to be a decree of a Court which would have been competent to decide the dispute and be executed accordingly.
Notice to and hearing of insurance companies47K. When application is made to the Board for the adjudication of a dispute, the Board shall, unless the insurer has himself made the application or has been made a party thereto, send to the insurer a copy of the application together with intimation of the date fixed for the hearing thereof and shall give him an opportunity of being heard.
Other Jurisdiction of Board47L. The Government may, by notification in the official Gazette, authorise the Board-
(a) to enquire into, and determine the causes and quantum of, and fix the responsibility for, any such loss or series of losses payable under a policy of insurance as may be specified in the notification and to suggest to the Government measures calculated to prevent such losses; and
(b) to adjudicate upon such class of disputes arising under a policy relating to a class of insurance business other than motor insurance as may be so specified,
and thereupon the provisions of sections 47C to 47K shall apply to such inquiry and to such class of disputes as they apply to a dispute arising under a policy insuring a motor vehicle.]
Directors of insurers being companies48. (1) Where the insurer is 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, and carries on the business of life insurance, not less than one-third of the directors of the company shall notwithstanding anything to the contrary in the Articles of Association of the company be elected in the prescribed manner by the holders of policies of life insurance issued by the company.
89[(1A) Where in the case of an insurer the number of directors required to be elected under sub-section (1) was, immediately before the commencement of the Insurance (Amendment) Ordinance, 1970, less than one-third of the directors, such insurer shall take such steps as may be necessary for complying with the provisions of sub-section (1) within a period of one year from such commencement; and no proceedings of the directors shall, during that period, be invalid or be questioned merely on the ground of non-compliance with those provisions.]
(2) Only and all persons holding otherwise than as assignees policies of life insurance issued by the company of such minimum amount and having been in force for such minimum period as may be prescribed shall unless disqualified under sub-section (2A) be eligible for election as directors under sub-section (1), and only and all persons holding policies of life insurance issued by the company and having been in force at the time of the election for not less than six months shall be eligible to vote at such elections:
Provided that the assignment of a policy to the person who took out the policy shall not disqualify that person for being eligible for election as a director under sub-section (1).
90[(2A) A person shall be ineligible for election as a director under sub-section (1) of any company if he is a director, officer, employee, or legal or technical adviser of that company, or of any other insurer, and shall cease to be a director under sub-section (1) if after election he acquires any disqualification specified in this sub-section or no longer holds the qualifications required by sub-section (2):
Provided that nothing in this sub-section shall disqualify a person who is an elected director under sub-section (1) and is not otherwise disqualified under this sub-section, from being re-elected.]
(3) The Government may, for such period, or to such extent and subject to such conditions as may be specified by it in this behalf, exempt from the operation of this section-
(a) any Mutual Insurance Company as defined in clause (a) of sub-section (1) of section 95, in respect of which the Chief Controller of Insurance certifies that in his opinion owing to the conditions governing membership of the company or to the nature of the insurance contracts undertaken by it the application of the provisions of this sub-section to the company is impracticable, or
(b) any company in respect of which the Chief Controller of Insurance certifies that in his opinion the company, having taken all reasonable steps to achieve compliance with the provisions of this section, has been unable to obtain the required number of directors with the required qualifications.
(4) This section shall not take effect, in respect of any company in existence at the commencement of this Act, until the expiry of one year therefrom, and in respect of any company incorporated after the commencement of this Act, until the expiry of two years from the date of registration to carry on life insurance business.
Restriction on the life insurance agents’ becoming directors of Life Insurance Companies91[48A. (1) No Insurance agent who solicits or procures life insurance business, and no employer of agents who procures life insurance business, shall be eligible to be or remain a director of any insurance company carrying on life insurance business unless he suspends such solicitation or procurement.
(2) Any insurance agent or employer of agents who contravenes the provisions of sub-section (1) shall cease to be a director and shall also be liable to the cancellation of his licence as insurance agent or, as the case may be, certificate as employer of agents.]
Restriction on becoming directors of insurers92[ 93[48B. Notwithstanding anything contained in any other law for the time being in force, a director of an insurer shall not be a director of another insurer registered for the same class of insurance business.]
Directors of insurers being public subscribers48BB. Where the insurer is a company incorporated under the Companies Act, 1913 (VII of 1913), not less than one-third of the total member of directors of the company, shall, notwithstanding anything to the contrary in the Articles of Association of the company, be elected, in the prescribed manner, by the shareholders who are public subscribers to the paid up capital or the company from amongst themselves.
Restriction on appointment of nominated director48BBB. Notwithstanding anything contained in any other law for the time being in force or in the Articles of Association of any insurer, no person other than a member of the Board of Directors of an insurer shall act as a director:
Provided that where a director is absent from Bangladesh for a period exceeding three months, a person qualified to be a director may be nominated by him to act as director in his place with the prior intimation to the Chief Controller of Insurance.
Chairman and Vice-Chairman48BBBB. Notwithstanding anything contained in the Articles of Association of an insurer, the Chairman or Vice-Chairman of the Board of Directors of an insurer shall be elected from amongst the directors.]
Appointment of Chief Executives of insurers94[48C. (1) No insurer shall carry on any insurance business without having appointed a chief executive officer for that purpose.
(2) No person shall be appointed as the chief executive officer of an insurer without the prior permission of the Chief Controller of Insurance and he shall not accord permission for such appointment unless the person proposed to be appointed has prescribed qualification and experience in the field of insurance.
(3) The chief executive officer shall not be removed, terminated or dismissed by the insurer without the prior approval of the Chief Controller of Insurance and he shall not give decision in such cases without hearing the concerned chief executive officer and the insurer or any person authorised by the insurer in this behalf.]
Advisers of insurers95[48CC. Notwithstanding anything contained in the Articles of Association of an insurer, no insurer shall appoint more than three advisers:
Provided that no share-holder or director of the concerned insurer or member of their families shall be an adviser under this section.]
Restriction on dividends and bonuses49. (1) No insurer, being an insurer specified in sub-clause (a) (ii) or sub-clause (b) of clause (9) of section 2, who carries on the business of life insurance or any other class or sub-class of insurance business to which section 13 applies shall for the purpose of declaring or paying any dividend to shareholders or any bonus to policy-holders or of making any payment in service of any debentures, utilise directly or indirectly any portion of the life insurance fund or of the fund of such other class or sub-class of insurance business, as the case may be, except a surplus shown in the valuation balance-sheet in Form I as set forth in the Fourth Schedule submitted to the Chief Controller of Insurance as part of the abstract referred to in section 15 as a result of an actuarial valuation of the assets and liabilities of the insurer; nor shall he increase such surplus by contributions out of any reserve fund or otherwise unless such contributions have been brought in as revenue through the revenue account applicable to that class or sub-class of insurance business on or before the date of the valuation aforesaid, when the reserve fund is made up solely of transfers from similar surpluses disclosed by valuations in respect of which returns have been submitted to the Chief Controller of Insurance under section 15 of this Act 96[* * *]:
Provided that payments made out of any such surplus in service of any debentures shall not exceed fifty per cent of such surplus including any payment by way of interest on the debentures, and interest paid on the debentures shall not exceed ten per cent of any such surplus except when the interest paid on the debentures is off-set against the interest credited to the fund or funds concerned in deciding the interest basis adopted in the valuation disclosing the aforesaid surplus.
(2) No insurer other than an insurer specified in sub-clause (a)(ii) or sub-clause (b) of clause (9) of section 2 who carries on the business of life insurance in Bangladesh shall for the purpose of declaring or paying any bonus to policy-holders in Bangladesh utilise directly or indirectly any portion of the life insurance fund except a surplus shown in the valuation balance-sheet in Form I as set forth in the Fourth Schedule submitted to the Chief Controller of Insurance as part of the abstract referred to in section 15 as a result of an actuarial valuation of the assets and liabilities of the insurer in Bangladesh; nor shall he increase such surplus by contributions out of any reserve fund or otherwise unless such contributions have been brought in as revenue through the revenue account applicable to life insurance business on or before the date of the valuation aforesaid, except when the reserve fund is made up solely of transfers from similar surpluses disclosed by valuations in respect of which returns have been submitted to the Chief Controller of Insurance under section 15 of this Act 97[* * *].
Distribution of profits on life insurance business among policy-holders98[49A. Notwithstanding anything contained to the contrary in its Memorandum or Articles of Association or any other documents, no insurer transacting life insurance business shall after the commencement of the Insurance (Amendment) Ordinance, 1970, allocate for the benefit of the policy-holders a sum less than such percentage of the surplus, being not less than 99[ninety] per cent or more than ninety-seven and one-half per cent, as may be prescribed:
Provided that in prescribing the percentage regard shall be had to the size of the insurer.
Explanation.- In this section, “Surplus” means the sum shown as surplus in Form I of the Fourth Schedule enhanced by any sum transferred to any reserve other than a reserve for depreciation in investment adjusted by an amount representing surplus disclosed at a previous valuation and already allocated.]
Notice of options available to the assured on the lapsing of a policy50. An insurer shall, before the expiry of three months from the date on which the premiums in respect of a policy of life insurance were payable but not paid, give notice to the policy-holder informing him of the options available to him unless these are set forth in the policy.
Special provision in respect of certain life insurance policies100[50A. (1) If, in respect of a policy of life insurance under which the whole of the benefits become payable either on, or at a fixed interval or intervals after, the occurrence of a contingency which is bound to occur, all the premiums have been paid for at least two consecutive years and the policy-holder does not, or is unable to, pay further premiums, any one of the following consequences according as the policy-holder has indicated his option in writing, shall ensue, namely:-
(a) the policy shall be paid up after advancing one year’s premium subject to the availability of the surrender value; or
(b) the surrender value of the policy shall be applied to the payment of the premium due until the surrender value is exhausted.
(2) The option under sub-section (1) may be indicated by the policy-holder either at the time of taking the policy or at any time thereafter before the cessation of the payment of premium; and any option so indicated may be modified at any time before such cessation.]
Supply of copies of proposals and medical reports51. Every insurer shall, on application by a policy-holder and on payment of a fee not exceeding one Taka, supply to the policy-holder certified copies of the questions put to him and his answers thereto contained in his proposal for insurance and in the medical report supplied in connection therewith.
Prohibition of business on dividing principle52. (1) No insurer shall after the commencement of this Act, begin, or after three years from that date continue to carry on, any business upon the dividing principle, that is to say, on the principle that the benefit secured by a policy is not fixed but depends either wholly or partly on the results of a distribution of certain sums amongst policies becoming claims within certain time-limits, or on the principle that the premiums payable by a policy-holder depend wholly or partly on the number of policies becoming claims within certain time-limits:
Provided that nothing in this section shall be deemed to prevent an insurer from allocating bonuses to holders of policies of life insurance as a result of a periodical actuarial valuation either as reversionary additions to the sums insured or as immediate cash bonuses or otherwise:
Provided further that an insurer who continues to carry on insurance business on the dividing principle after the commencement of this Act shall withhold from distribution a sum of not less than forty per cent of the premiums received during each year after the commencement of this Act, in which such business is continued so as to make up the amount required for investment under section 27.
(2) and (3) 101[Omitted by section 43 of the Insurance (Amendment) Act, 1958 (Act No. XXVII of 1958).]