In force · As amended up to 2026-08
41. Prohibition of rebates.— (1) No person shall allow or offer to allow, either directly or indirectly, as an inducement to any person to[2] [take out or renew or continue] an insurance in respect of any kind of risk relating to lives or property in India, any rebate of the whole or part of the commission payable or any rebate of the premium shown on the policy, nor shall any person taking out or renewing[3] [or continuing] a policy accept any rebate, except such rebate as may be allowed in accordance with the published prospectuses or tables of the insurer:
2[Provided that acceptance by an insurance agent of commission in connection with a policy of life insurance taken out by himself on his own life shall not be deemed to be acceptance of a rebate of premium within the meaning of this sub-section if at the time of such acceptance the insurance agent satisfies the prescribed conditions establishing that he is a bona fide insurance agent employed by the insurer.]
4[(2) Any person making default in complying with the provisions of this section shall be liable for a penalty which may extend to ten lakh rupees.]
5[42. Appointment of insurance agents.— (1) An insurer may appoint any person to act as insurance agent for the purpose of soliciting and procuring insurance business:
Provided that such person does not suffer from any of the disqualifications mentioned in sub-section (3).
(2) No person shall act as an insurance agent for more than one life insurer, one general insurer, one health insurer and one of each of the other mono-line insurers:
Provided that the Authority shall, while framing regulations, ensure that no conflict of interest is allowed to arise for any agent in representing two or more insurers for whom he may be an agent.
(3) The disqualifications referred to in the proviso to sub-section (1) shall be the following: —
(a) that the person is a minor;
(b) that he is found to be of unsound mind by a court of competent jurisdiction;
(c) that he has been found guilty of criminal misappropriation or criminal breach of trust or cheating or forgery or an abetment of or attempt to commit any such offence by a court of competent jurisdiction:
1. Subs. by Act 5 of 2015, s. 47, for sections 40B and 40C (w.e.f. 26-12-2014).
2. Subs. by Act 13 of 1941, s. 27, for "effect or renew" (w.e.f. 8-4-1941).
3. Ins. by s. 27, ibid , (w.e.f. 8-4-1941).
4. Subs. by Act 5 of 2015, s. 48, for sub-section (2) (w.e.f. 26-12-2014).
5. Subs. by s. 49, ibid ., for section 42 (w.e.f. 26-12-2014).
Provided that where at least five years have elapsed since the completion of the sentence imposed on any person in respect of any such offence, the Authority shall ordinarily declare in respect of such person that his conviction shall cease to operate as a disqualification under this clause;
(d) that in the course of any judicial proceeding relating to any policy of insurance or the winding up of an insurer or in the course of an investigation of the affairs of an insurer it has been found that he has been guilty of or has knowingly participated in or connived at any fraud, dishonesty or misrepresentation against an insurer or insured;
(e) that in the case of an individual, who does not possess the requisite qualifications or practical training or passed the examination, as may be specified by the regulations;
(f) that in the case of a company or firm making, a director or a partner or one or more of its officers or other employees so designated by it and in the case of any other person the chief executive, by whatever name called, or one or more of his employees designated by him, do not possess the requisite qualifications or practical training and have not passed such an examination as required under clauses (e) and (g);
(g) that he has not passed such examination as may be specified by the regulations;
(h) that he has violated the code of conduct as may be specified by the regulations.
(4) Any person who acts as an insurance agent in contravention of the provision of this Act, shall be liable to a penalty which may extend to ten thousand rupees and any insurer or any person acting on behalf of an insurer, who appoints any person as an insurance agent not permitted to act as such or transacts any insurance business in India through any such person shall be liable to penalty which may extend to one crore rupees.
(5) The insurer shall be responsible for all the acts and omissions of its agents including violation of code of conduct specified under clause (h) of sub-section (3) and liable to a penalty which may extend to one crore rupees.]
1[42A. Prohibition of insurance business through principal agent, special agent and multilevel marketing. — (1) No insurer shall, on or after the commencement of the Insurance Laws (Amendment) Act, 2015 (5 of 2015), appoint any principal agent, chief agent, and special agent and transact any insurance business in India through them.
(2) No person shall allow or offer to allow, either directly or indirectly, as an inducement to any person to take out or renew or continue an insurance policy through multilevel marketing scheme.
(3) The Authority may, through an officer authorised in this behalf, make a complaint to the appropriate police authorities against the entity or persons involved in the multilevel marketing scheme.
Explanation . — For the purpose of this section "multilevel marketing scheme" means any scheme or programme or arrangement or plan (by whatever name called) for the purpose of soliciting and procuring insurance business through persons not authorised for the said purpose with or without consideration of whole or part of commission or remuneration earned through such solicitation and procurement and includes enrolment of persons into a multilevel chain for the said purpose either directly or indirectly.]
1. Subs. by Act 5 of 2015, s. 50, for sections 42A, 42B and 42C (w.e.f. 26-12-2014).
[1] [42D. Issue of[2] [registration] to intermediary or insurance intermediary. — (1) The Authority or an officer authorised by it in this behalf shall, in the manner determined by the regulations made by the Authority and on payment of the fees determined by the regulations made by the Authority, issue to any person making an application in the manner determined by the regulations, and not suffering from any of the disqualifications herein mentioned, a[2] [registration] to act as an intermediary or an insurance intermediary under this Act:
Provided that—
(a) in the case of an individual, he does not suffer from any of the disqualifications mentioned in[3] [sub-section (3)] of section 42, or
(b) in the case of a company, or firm, any of its directors of partners does not suffer from any of the said disqualifications.
(2) A[4] [registration made] under this section shall entitle the holder thereof to act as an intermediary or insurance intermediary .
(3) A[4] [registration made] under this section shall remain in force for a period of three years only from the date of issue, but shall, if the applicant, being an individual does not, or being a company or firm any of its directors or partners[5] [or one or more of its officers or other employees so designated by it and in the case of any other person, the chief executive by whatever name called, or one or more of his employees designated by him] does not suffer from any of the disqualifications mentioned[6] [in clauses (b), (c), (d), (e) and (g) of sub-section (3) of section 42] and the application for renewal of[2] [registration] reaches the issuing authority at least thirty days before the date on which the[2] [registration] ceases to remain in force, be renewed for a period of three years at any one time on payment of the fee, determined by the regulations, made by the Authority and additional fee for an amount determined by the regulations, not exceeding one hundred rupees by way of penalty, if the application for renewal of the[2] [registration] does not reach the issuing authority at least thirty days before the date on which the[2] [registration] ceases to remain in force.
(4) No application for the renewal of a[2] [registration] under this section shall be entertained if the application does not reach the issuing authority before the[2] [registration] ceases to remain in force:
Provided that the Authority may, if satisfied that undue hardship would be caused otherwise, accept any application in contravention of this sub-section on payment by the application of a penalty of seven hundred and fifty rupees.
(5) The disqualifications above referred to shall be the following: —
(a) that the person is a minor;
(b) that he is found to be of unsound mind by a Court of competent jurisdiction;
1. Ins. by Act 41 of 1999, s. 30 and the First Schedule (w.e.f. 19-4-2000).
2. Subs. by Act 5 of 2015, s. 51, for "licence" (w.e.f. 26-12-2014).
3. Subs. by s. 51, ibid ., for "sub-section (4)" (w.e.f. 26-12-2014).
4. Subs. by s. 51, ibid ., for "licence issued" (w.e.f. 26-12-2014).
5. Ins. by s. 51, ibid. (w.e.f. 26-12-2014).
6. Subs. by s. 51, ibid ., for "in clauses (b), (c), (d), (e) and (f) of sub-section (4) of section 42" (w.e.f. 26-12-2014).
(c) that he has been found guilty of criminal misappropriation or criminal breach of trust or cheating or forgery or an abetment of or attempt to commit any such offence by a Court of competent jurisdiction:
Provided that, Where at least five years have elapsed since the completion of the sentence imposed on any person in respect of any such offence, the Authority shall ordinarily declare in respect of such person that his conviction shall cease to operate as a disqualification under this clause;
(d) that in the course of any judicial proceeding relating to any policy of insurance of the winding up of an insurance company or in the course of an investigation of the affairs of an insurer it has been found that he has been guilty of or has knowingly participated in or connived at any fraud dishonestly or misrepresentation against an insurer or an insured;
(e) that he does not possess the requisite qualifications and practical training for a period not exceeding twelve months, as may be specified by the regulations made by the Authority in this behalf;
(f) that he has not passed such examinations as may be specified by the regulations made by the Authority in this behalf;
(g) that he violates the code of conduct as may be specified by the regulations made by the Authority.
(6) If it be found that an intermediary or an insurance intermediary suffers from any of the foregoing is qualifications , without prejudice to any other penalty to which he may be liable, the Authority shall, and if the intermediary or an insurance intermediary has knowingly contravened any provision of this Act may cancel the[1] [registration made] to the intermediary or insurance intermediary under this section .
(7) The Authority may issue a duplicate[2] [registration] to replace a[2] [registration] lost, destroyed or mutilated, on payment of such fee, as may be determined by the regulations made by the Authority.
3[(8) Any person who acts as an intermediary or an insurance intermediary without being registered under this section to act as such, shall be liable to a penalty which may extend to ten lakh rupees and any person who appoints as an intermediary or an insurance intermediary or any person not registered to act as such or transacts any insurance business in India through any such person, shall be liable to a penalty which may extend to one crore rupees.
(9) Where the person contravening sub-section (8) is a company or a firm, then, without prejudice to any other proceedings which may be taken against the company or firm, every director, manager, secretary or other officer of the company, and every partner of the firm who is knowingly a party to such contravention shall be liable to a penalty which may extend to ten lakh rupees.]
4 [42E. Condition for intermediary or insurance intermediary. —Without prejudice to the provisions contained in this Act, the Authority may, by regulations made in this behalf, specify the requirements of capital, form of business and other conditions, to act as an intermediary or an insurance intermediary.]
1. Subs. by Act 5 of 2015, s. 51, for "licence issued" (w.e.f. 26-12-2014).
2. Subs. by s. 51, ibid ., for "licence" (w.e.f. 26-12-2014).
3. Subs. by s. 51, ibid ., for sub-sections (8) and (9) (w.e.f. 26-12-2014).
4. Subs. by s. 51, ibid ., for section 42E (w.e.f. 26-12-2014).
1[43. Record of insurance agents. —(1) Every insurer and every person who, acting on behalf of an insurer employs insurance agents shall maintain a record showing the name and address of every insurance agent appointed by him and the date on which his appointment began and the date, if any, on which his appointment ceased.
(2) The record prepared by the insurer under sub-section (1), shall be maintained as long as the insurance agent is in service and for a period of five years after the cessation of appointment.]
— 44. [ Prohibition of cessation of payments of commission .] omitted by the Insurance Laws (Amendment) Act , 2015 (5 of 2015) s. 54 ( w.e.f. 26-12-2014).
2 [44A. Power to call for information. —For the purposes of ensuring compliance with the provisions of sections 40, 40B and 40C, the Authority may, by notice—
(a) require from an insurer such information, certified if so required by an auditor or actuary, as it may consider necessary;
(b) require an insurer to submit for its examination at the principal place of business of the insurer in India, any books of account, register or other document, or to supply any statement which may be specified in the notice;
(c) examine any officer of an insurer on oath, in relation to any such information, book, register, document or statement and the insurer, shall comply with any such requirement within such time as may be specified in the notice.
SPECIAL PROVISIONS OF LAW
Source: India Code