Life Insurance Corporation (Amendment) Act, 20111
| [Act 8 of 2012] | [12th January, 2012] |
[Repealed by Act 19 of 2015*]
An Act further to amend the Life Insurance Corporation Act, 1956
Be it enacted by Parliament in the Sixty-second Year of the Republic of India as follows-
1. Received the assent of the President on January 12, 2012 and published in the Gazette of India, Extra., Part II, Section 1, dated 13th January, 2012, pp. 1–3, No. 8
* Ed.: Act 8 of 2012 repealed by Act 19 of 2015, S. 2 & Sch. I. See also S. 4 of the Repealing and Amending Act, 2015:
"4. Savings.- The repeal by this Act of any enactment shall not affect any Act in which such enactment has been applied, incorporated or referred to;
and this Act shall not affect the validity, invalidity, effect or consequences of anything already done or suffered, or any right, title, obligation or liability already acquired, accrued or incurred, or any remedy or proceeding in respect thereof, or any release or discharge of or from any debt, penalty, obligation, liability, claim or demand, or any indemnity already granted, or the proof of any past act or thing;
nor shall this Act affect any principle or rule of law, or established jurisdiction, form or course of pleading, practice or procedure, or existing usage, custom, privilege, restriction, exemption, office or appointment, notwithstanding that the same respectively may have been in any manner affirmed, recognised or derived by, in or from any enactment hereby repealed;
nor shall the repeal by this Act of any enactment provide or restore any jurisdiction, office, custom, liability, right, title, privilege, restriction, exemption, usage, practice, procedure or other matter or thing not now existing or in force."
Prefatory Note-Statement of Objects and Reasons.-The Life Insurance Corporation Act, 1956 (the LIC Act) nationalised the life insurance business in India by transferring all life insurance business to a Corporation, namely, the Life Insurance Corporation of India (LIC), established for the purpose. This Act also provided for the regulation and control of the business of the LIC. The Insurance Act, 1938, however, remained as the principal law to regulate and exercise supervision over all entities transacting insurance business in India. With the enactment of the Insurance Regulatory and Development Authority Act, 1999, the insurance business was opened up to private sector, as a result of which, in addition to LIC, twenty-one private sector companies have started transacting life insurance business in the country.
2. The Insurance Regulatory and Development Authority (IRDA) while recommending amendments to the Insurance Act, 1938, the Insurance Regulatory and Development Authority Act, 1999 and the General Insurance Business (Nationalisation) Act, 1972 also made recommendations for amending the LIC Act in order to bring this Act in consonance with the Insurance Act, 1938. The Government thereafter also consulted LIC and finalised amendments to LIC Act, 1956.
3. The Life Insurance Corporation (Amendment) Bill, 2008 was introduced on the 22nd December, 2008 in the 14th Lok Sabha which lapsed due to dissolution of the 14th Lok Sabha.
4. The Central Government has decided to introduce the Life Insurance Corporation (Amendment) Bill, 2009, on the lines of the Life Insurance Corporation (Amendment) Bill, 2008 introduced in the 14th Lok Sabha proposing to amend the Life Insurance Corporation Act, 1956, inter alia, to-
(i) provide for raising of minimum capital of the Life Insurance Corporation of India from five crore of rupees to hundred crore of rupees which can further be enhanced to such amount as the Central Government may, by notification, determine;
(ii) provide sovereign guarantee to the policies of the Life Insurance Corporation to the extent to be determined by order, by the Central Government from time to time;
(iii) allocate ninety per cent or more of such surplus, as the Central Government may approve, for the life insurance policy-holders of the Life Insurance Corporation and to credit such percentage of remaining surplus as the Central Government may approve to a separate account maintained by the Life Insurance Corporation, to be utilised for such purpose as the Central Government may determine, and pay the remainder as dividend;
(iv) empower Life Insurance Corporation to make regulations in respect of terms and conditions of the agents.
5. The Bill seeks to achieve the above objectives.
1. Short title and commencement.-(1) This Act may be called the Life Insurance Corporation (Amendment) Act, 2011.
(2) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.
2. Substitution of new section for Section 5.-In the Life Insurance Corporation Act, 1956 (31 of 1956) (hereinafter referred to as the principal Act), for Section 5, the following section shall be substituted, namely-
"5. Capital of Corporation.-(1) The paid-up equity capital of the Corporation shall be one hundred crore of rupees provided by the Central Government after due appropriation made by Parliament by law for the purpose.
(2) The Corporation may issue and sell bonds and debentures or such other prescribed instruments carrying interest for the purpose of raising its working capital to such amount as may be prescribed.".
3. Amendment of Section 18.-In Section 18 of the principal Act, for sub-section (4), the following sub-section shall be substituted, namely-
"(4) There may be established as many divisional offices and branches in each zone as may be decided by the Corporation in accordance with the guidelines issued by the Insurance Regulatory and Development Authority established under the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999) in this regard.".
4. Amendment of Section 26.-In Section 26 of the principal Act, for the words "once at least in every two years", the words "every year" shall be substituted.
5. Substitution of new section for Section 28.-For Section 28 of the principal Act, the following section shall be substituted, namely-
"28. Surplus from life insurance business, how to be utilised.-(1) If as a result of any investigation undertaken by the Corporation under Section 26, any surplus emerges-
(a) ninety per cent or more such surplus, as the Central Government may approve, shall be allocated to or reserved for the life insurance policyholders of the Corporation;
(b) such percentage of remaining surplus as the Central Government may approve shall be credited to separate account maintained by the Corporation; and
(c) the remainder shall be paid as dividend.
(2) The funds available in the account maintained by the Corporation under clause (b) of sub-section (1) shall be utilised for such purpose and in such manner as the Central Government may determine.".
6. Amendment of Section 37.-In Section 37 of the principal Act, the following proviso shall be inserted, namely-
"Provided that the Corporation shall endeavour that its funds are invested in the attractive schemes formulated by it to ensure increased bonus to policyholders while having least investment risk so as to enable the Corporation to play a greater role in economic enrichment of the masses while maintaining its position as a leading player in the market.".
7. Amendment of Section 44.-In Section 44 of the principal Act, in clause (b), the following proviso shall be inserted, namely-
"Provided that nothing contained in this clause shall apply on and from the date on which the provisions contained in Section 2-E of the Insurance Act, 1938 (4 of 1938) shall cease to operate.".
8. Amendment of Section 48.-In Section 48 of the principal Act, in sub-section (2)-
(i) after clause (a), the following clause shall be inserted, namely-
"(aa) the instruments which may be issued and the amount of working capital under sub-section (2) of Section 5;";
(ii) in clause (cc), the words "and agents" occurring at both the places, shall be omitted.
9. Amendment of Section 49.-In Section 49 of the principal Act, in sub-section (2)-
(i) for clause (b), the following clause shall be substituted, namely-
"(b) the method of recruitment of employees and agents of the Corporation and the terms and conditions of the agents;";
(ii) clause (j) shall be omitted.