Page 91 - BFSI CHRONICLE 10 th Issue (2nd Annual Issue ) .indd

BFSI Chronicle, 2 Annual Issue, 10 Edition July 2022
nd
th
A. Section 41 of the Insurance Act deals of payment of premium or the amount of
with “Prohibition of Rebates”. Section insurance cover and such proposed rebates
41reads:”[1] No person shall allow or are notified in the product features filed with
offer to allow, either directly or indirectly, the Regulator and such rebates in premium
as an inducement to any person to take rates are not hit by this section as can be seen
or renew or continue an insurance in from the Proviso to Section 41[1]. Further, if
respect of any kind of risk relating to lives an Insurance Agent insures his own life and is
or property in India, any rebate of the entitled to commission like any other insurance
whole or part of the commission payable policy, such payment of commission to the
or any rebate of the premium shown on insurance agent is also not hit by this section.
the policy, nor shall any person taking
B. Section 38 of the Act deals with
out or renewing or continuing a policy
accept any rebate, except such rebate as Assignment and transfer of insurance
may be allowed in accordance with the policies and these provisions have been
amended in 2015 Amendment.
published prospectuses or tables of the
insurer” 38. (1) A transfer or assignment of a policy of
insurance, wholly or in part, whether with or
Provided that acceptance by an insurance agent without consideration, may be made only by
of commission in connection with a policy of an endorsement upon the policy itself or by a
life insurance taken out by himself on his own separate instrument, signed in either case by
life shall not be deemed to be acceptance of a the transferor or by the assignor or his duly
rebate of premium within the meaning of this authorised agent and attested by at least one
sub-section if at the time of such acceptance witness, specifically setting forth the fact of

the insurance agent satisfies the prescribed transfer or assignment and the reasons thereof,
conditions establishing that he is a bona fide the antecedents of the assignee and the terms
insurance agent employed by the insurer.
on which the assignment is made.
(2) Any person making default in complying
with the provisions of this section shall be Prior to the amendment, there was no
provision for assignment for a part of the
punishable with fine which may extend to five
hundred rupees.” policy. The Assignment used to be absolute.
Another notable feature of the amendment
Under the Insurance Laws [Amendment Act], is that the antecedents of the assignee have
2015, this provision has been amended as "(2) to be given which was not there in the past.
Any person making default in complying with The Insurer may accept or decline to act upon
the provisions of this section shall be liable any endorsement made under sub-section (1),
for a penalty which may extend to ten lakh where it has sufficient reason to believe that
rupees.". such transfer or assignment is not bona fide or
is not in the interest of the policyholder or in
Thus, it is obvious that offering of rebates or
public interest or is for the purpose of trading
acceptance of rebates will attract a penalty of insurance policy. The provision enabling
which may extend to Ten Lakh Rupees. The
the insurer to accept or decline to act on any
Insurance Companies offer certain rebates endorsement of assignment was not there prior
in premium rates depending on the mode
to the amendment. In case the Insurer declines

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