Professional Documents
Culture Documents
Ministry of Finance
A contract of insurance
A contract of insurance is a contract between two parties whereby, one party is called the
insurer , agrees to pay to the other party a certain sum of money on happening of a
specified contingency, or agrees to indemnify the other party from losses arising from
certain specific events. The other party to the contract is called the insured, pays and
agrees to pay some of money, called the premium, as consideration.
Sec-4: Prohibition of insurance business:
Registration of insurance business is prohibited unless it is a:
1. Public limited Company under the CA 1994;
2. Co-operative Society which is an existing insurer;
3. Insurance Institution registered outside Bangladesh not being a Pvt. Limited
Company or subsidiary thereof;
Mutual Insurance Company shall not deal in Non-life Insurance Business.
Sec-5 Classification of insurance:
Life and Non-life.
MOA, AOA, Names and addresses and TIN numbers of the Directors;
Address of registered Office;
Names, Addresses, TIN of all members if it is a co-operative Society;
Certificate from Bangladesh Bank for in compliance with section 23
e) A certificate from the Auditor and a affidavit regarding its adequate paid-up
capital in compliance with section 21
f) Receipts of payment of fees
g) Others as prescribed by the rules
Sec-9: Issuance Registration Certificate, etc.
The Authority may issue a certificate of registration for Life Insurance or NonLife insurance on satisfactory receipt of the application.
The authority may decline to issue the Certificate of registration giving an
opportunity of being heard to the applicant. The aggrieved person may appeal to
the authority within 30 days of communication for reconsideration.
Sec-10: Suspension /Cancellation of Registration:
Registration of insurance can be cancelled or suspended if the insurer:
a)
b)
c)
d)
e)
f)
g)
h)
i)
The authority by giving a show cause notice of 30 days may suspend the registration for a
maximum term of 30 days for any of the above causes.
After receiving the reply the authority may withdraw the suspension or extend the
suspension period of 2 months more or cancel the registration as it feels justified.
The aggrieved person may appeal to the government against the order of the authority u/s
9, 10 and 11
Sec-11: Renewal of Registration:
The registration is renewable and is to be renewed in each year. The insurer shall apply
for renewal of the registration by 30th November in each year for the next year and pay
required fees.
Section-23: Deposit:
Every insurer shall maintain deposit with Bangladesh Bank as required by Schedule-1 of
this Act.
Section: 26: Separate Accounts (of each class or sub-class of business) and fund:
Separate Income Account for each class or sub-class of business of insurer is to be
maintained. For life insurance business, a separate fund named life insurance fund is to
be maintained. Accounts is to be sent to the authority having duly audited within 6
months of each calendar year.
Section 27: Accounts and Balance Sheet:
Each insurer shall prepare following Statements after closing of each calendar year:
a)
b)
c)
d)
e)
Section-28: Accounts and statements are to be audited as per section 213 of CA-1994
Section-29: Special Audit:
The Authority may time to time appoint auditor/auditors for auditing of accounts of the
insurer. Auditors fees will be paid by the insurer.
Section- 31 Registers are to be maintained:
-
Register of policy
Register of claims
Indemnity:
Life insurance is a contingent contract. The money is payable on the happening of a
contingency (viz. death).
Other forms of insurance (e.g. fire or marine) are contracts of indemnity. The insurer in
these cases promises to indemnify the insured person against the consequence of fire,
accident or some mischance and misfortune. The contract of insurance contained in a
marine or fire policy is a contract of indemnity and of indemnity only, and that this
contract means that the assured, in case of a loss against which the policy has been made,
shall be fully indemnified but shall never be more than fully indemnified.
Insurable interest:
In every contract of insurance the policy holder must possess an interest on the subject
matter of the insurance is known as insurable interest. Insurable interest means
proprietary or monetary interest on the subject matter of the insurance. The main object
of the insurance is to protect the insurable interest. If there is no insurable interest there
can be no insurance. A cannot insure Bs house. But if A has any interest on Bs house
under any way such as by way of mortgage then A can insure B house to protect
insurable interest of A.
Insurable interest in case of Life Insurance:
Insurable interest must exist at the time of commencement of policy. The policy holder
needs no insurable interest after the policy is affected.
Insurable interest in case of fire insurance:
The insurable interest must exist at the time of incident. Insurable interest is not needed at
the time of commencement of the policy.
Insurable interest in case of marine Insurance:
In case of marine insurance, insurable interest must exist at the time of commencement of
policy as well as at the time of incident.
A contract of insurance entered into without any insurable interest is a wagering
agreement and is void.
Double Insurance vs. Re-Insurance:
1. If the same risk and the same subject are insured to other insurer by the policyholder
it is called double insurance. Re-insurance means the transfer of the part of the risk by
the insurer.
2. If there is a double insurance, the loss will be shared by all the insurers
proportionately. In case of life insurance all the insurers are liable. In re-insurance,
the re-insurer is entitled to get a proportionate part of the premium and will be liable
for a proportion of part of the loss.
3. The re-insurer is liable only to the first insurer. In double insurance each insurer is
liable directly to the policy holder.
4. Double insurance is a method of assuring the benefit of insurance. In case of Life
insurance the insurer may have any number of policies and for any amount. Reinsurance is a method of reducing of the risk of the insurer.
uberrimae fide
A contract of insurance is a contract uberrimae fide (based on good faith). It is the duty of
the insured to disclose all material facts concerning the subject matter of insurance. The
disclosure must be full and fair. If a material fact is not disclosed, if there is a
misrepresentation or fraud, the insurer can avoid the contract.
ii. Principle of subrogation:
It is a principle for Fire or marine insurance that if the insurer indemnify the insured in
full, the insurer will be the owner of the remaining part of the damaged goods/assets, etc.
Section-103: Compulsory winding up by court:
As per Companies Act. More causes are:
-upon receipt of an statements from the 10% shareholders or holders of 10% paid up
capital, 500 life insurance policy holders
- the Insurer fails to keep deposit (as per section 23 and 119)
- Fails to maintain solvency margin
-Continuation of the Company will be detrimental to the interest of policy holders or of
Public.
Section-105: Voluntary winding up
Voluntary winding up of any insurer is prohibited except Amalgamation, Reconstruction,
inability to run business of insurer with huge liability or cancellation of licenses of
insurer.
Section-116: a) Mutual Insurance Company (Company which does not have capital)
b) Co-operative Insurance Society (Existing insurer registered under cooperative societies Act)
Insurance Development and Regulatory Authority Act 2010
(Act XII of 2010)
A statutory body with a common seal having authority to hold or dispose off property and
sue and be sued.
Section-5: Composition of the Authority:
A chairman and four members and they will be appointed by the government.
Section-6: Tenure of the Chairman and the members:
They will be appointed for a term of 3 years and will be eligible for re-appointment for
another term only. They can resign giving a notice of 3months and shall continue till the
resignation is accepted by the Government.
Section-7: Qualification or disqualification of the Chairman and members
20 years of experiences on Insurance, Finance, Banking, Marketing, Statistics,
Accounting, Management, Admin, law etc. It can be relaxed in necessary. Following
persons are not eligible for the posts:
a) If she/he is not a citizen of BD
b) Any Director, Officer of any Company (Govt. or private) or of any organization
regulated by the authority or others
c) A Disabled person
d) An Insolvent
e) A loan defaulter
f) If s/he is punished at least for a term of 6 months for any activity of moral turpitude
g) his/her age reached to 67 years
Section-15: Duties and Functions of the Authority
a) to regulate the insurance institutions
b) to Encouraging insurance industries and consulting to the Govt. for its Dev.
c) To train for development of insurance service
d) To hold Seminar, Workshop, Meeting for public awareness
e) Registration, renew of registration, cancellation of registration etc to the insurer.
f) Fixation of fees, penalties having prior approval of the Govt. for meeting the
object of this law
g) Issuance of format for Accounts, Information and Statements.
h) Preparation of Format of Actuarial report
i) Submission of annual reporting to the Govt.
j) Etc.