04/18/23

Code of Conduct of Insurance Agents

Every person holding a licence, shall adhere to the code of conductspecified below:-

(i)Every insurance agent shall---

(a)identify himself and the insurance company of whom he is an insurance agent;

(b) disclose his licence to the prospect on demand;

(c) disseminate the requisite information in respect of insurance products offered for sale by his insurer and take into account the needs of the prospect while recommending a specific insurance plan;

(d) disclose the scales of commission in respect of the insurance product offered for sale, if asked by the prospect;

(e) indicate the premium to be charged by the insurer for the insurance product offered for sale;

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(f) explain to the prospect the nature of information required in the proposal form by the insurer,and also the importance of disclosure of material information in the purchase of an insurancecontract;

(g) bring to the notice of the insurer any adverse habits or income inconsistency of the prospect, in the form of a report (called “Insurance Agent’s Confidential Report”) along with every proposal submitted to the insurer, and any material fact that may adversely affect the underwriting decision of the insurer as regards acceptance of the proposal, by making all reasonable enquiries about the prospect;

(h) inform promptly the prospect about the acceptance or rejection of the proposal by the insurer;

(i) obtain the requisite documents at the time of filing the proposal form with the insurer; and other documents subsequently asked for by the insurer for completion of the proposal;

(j) render necessary assistance to the policyholders or claimants or beneficiaries in complyingwith the requirements for settlement of claims by the insurer;

(k) advise every individual policyholder to effect nomination or assignment or change of address or exercise of options, as the case may be, and offer necessary assistance in this behalf, wherever necessary;

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(ii) No insurance agent shall----

(a)solicit or procure insurance business without holding a valid licence;

(b) induce the prospect to omit any material information in the proposal form;

(c) induce the prospect to submit wrong information in the proposal form or documents submitted to the insurer for acceptance of the proposal; 2

(d) behave in a discourteous manner with the prospect;

(e) interfere with any proposal introduced by any other insurance agent;

(f) offer different rates, advantages, terms and conditions other than those offered by his insurer;

(g) demand or receive a share of proceeds from the beneficiary under an insurance contract;

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(h) force a policyholder to terminate the existing policy and to effect a new proposal from him within three years from the date of such termination;

(i) have, in case of a corporate agent, a portfolio of insurance business under which the premium is in excess of fifty percent of total premium procured, in any year, from one person (who is not an individual) or one organization or one group of organizations;

(j) apply for fresh licence to act as an insurance agent, if his licence was earlier cancelled by the designated person, and a period of five years has not elapsed from the date of such cancellation;

(k) become or remain a director of any insurance company;

(iii) Every insurance agent shall, with a view to conserve the insurance business already procured through him, make every attempt to ensure remittance of the premiums by the policyholders within the stipulated time, by giving notice to the policyholder orally and in writing;

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Central Government

Powers

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POWER OF CENTRAL GOVERNMENT TO ISSUE DIRECTIONS.—

(1) Without prejudice to the foregoing provisions of this Act, the Authority shall, in exercise of its powers or the performance of its functions under this Act, be bound by such directions on questions of policy, other than those relating to technical and administrative matters, as the Central Government may give in writing to it from time to time.PROVIDED that the Authority shall, as far as practicable, be given an opportunity to express its views before any direction is given under this sub-section.

(2) The decision of the Central Government, whether a question is one of policy or not, shall be final.

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POWER OF CENTRAL GOVERNMENT TO SUPERSEDE AUTHORITY.—

(1)If at any time the Central Government is of the opinion-

         (a) that, on account of circumstances beyond the control of the Authority, it is unable to discharge the functions or perform the duties imposed on it by or under the provisions of this Act, or

          (b) that the Authority has persistently defaulted in complying with any direction given by the Central Government under this Act or in the discharge of the functions or performance of the duties imposed on it by or under the provisions of this Act and as a result of such default the financial position of the Authority or the administration of the Authority has suffered; or

          (c) that circumstances exist which render it necessary in the public interest so to do, the Central Government may, be notification and for reasons to be specified therein, supersede the Authority for such period, not exceeding six months, as may be specified in the notification and appoint a person to be the Controller of Insurance under section 2B of the Insurance Act, 1938 (4 of 1938), if not already done :

Provided that before issuing any such notification, the Central Government shall give a reasonable opportunity to the Authority to make representations, if any, of the Authority.

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(2)   Upon the publication of a notification under sub-section(1) superseding the Authority, -

         (a) the Chairperson and other members shall, as from the date of supersession, vacate their offices as such;

         (b) all the powers, functions and duties which may, by or under the provisions of this Act, be exercised or discharged by or on behalf of the Authority shall, until the Authority is reconstituted under sub-section(3), be exercised and discharged by the Controller of Insurance; and

         (c) all properties owned or controlled by the Authority shall, until the Authority is reconstituted under sub-section(3), vest in the Central Government.

(3)  On or before the expiration of the period of supersession specified in the notification issued under sub-section(1), the Central Government shall reconstitute the Authority by a fresh appointment of its Chairperson and other members and in such case any person who had vacated his office under clause(a) of sub-section(2) shall not be deemed to be disqualified

for reappointment.

(4) The Central Government shall cause a copy of the notification issued under sub-section(1) and a full report to any action to be laid before each House of Parliament at the earliest.