ACT, No. 03 OF 2011

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PARLIAMENT OF THE DEMOCRATIC
SOCIALIST REPUBLIC OF
SRI LANKA
REGULATION OF INSURANCE INDUSTRY
(AMENDMENT) ACT, No. 3 OF 2011
[Certified on 07th February, 2011]
Printed on the Order of Government
Published as a Supplement to Part II of the Gazette of the Democratic
Socialist Republic of Sri Lanka of February 11, 2011
PRINTEDAT THEDEPARTMENT OFGOVERNMENTPRINTING,SRILANKA
TO BEPURCHASED AT THEGOVERNMENT PUBLICATIONSBUREAU, COLOMBO 5
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Regulation of Insurance Industry (Amendment) 1
Act, No. 3 of 2011
[Certified on 07th February, 2011]
L.D.—O. 13/2010
ANACT TOAMEND THE REGULATION OF INSURANCE INDUSTRY
ACT, NO. 43 OF 2000
BE it enacted by the Parliament of the Democratic Socialist
Republic of Sri Lanka as follows:—
1. This Act may be cited as the Regulation of Insurance Short title.
Industry (Amendment) Act, No. 3 of 2011.
2. Section 4 of the Regulation of Insurance Industry Amendment of
section 4 of Act,
Act, No. 43 of 2000 (hereinafter referred to as the “principal
No. 43 of 2000.
enactment”) is hereby amended as follows:—
(1) in subsection (1) of that section, by the repeal of
paragraph (c) of that subsection and the substitution
therefor of the following paragraph:—
“(c) the Registrar-General of Companies ; ”; and
(2) in subsection (3) of that section, by the substitution
for the words “of the Schedule to this Act”, and for
the words “members its of the Board,”, of the words
“of the First Schedule to this Act” and of the words
“members of the Board,”, respectively.
3. Section 5 of the principal enactment is hereby Amendment of
amended as follows:— section 5 of the
principal
enactment.
(1) by the insertion immediately after paragraph (b) of
that section of the following new paragraph:—
“(bb) register persons as loss adjusters;”; and
2 Regulation of Insurance Industry (Amendment)
Act, No. 3 of 2011
(2) by the insertion immediately after paragraph (d) of
that section, of the following new paragraph:—
“(dd) enter into any bi-lateral or multi-lateral
memorandum of understanding pertaining to
the sharing of information, with any local or
foreign person;”.
Amendment of 4. Section 6 of the principal enactment is hereby
section 6 of the
amended in subsection (2) of that section, by the repeal of
principal
enactment. paragraph (b) of that subsection and the substitution therefor
of the following paragraph:—
“(b) all such sums of money as shall be paid as
registration fees under sections 14, 81, 83 and
89C of this Act;”.
Amendment of 5. Section 12 of the principal enactment is hereby
section 12 of the amended as follows :—
principal
enactment.
(1) by the insertion immediately after subsection (1)
thereof, of the following new subsection:—
“(1A). Notwithstanding the provisions contained
in subsection (1), the National Insurance Trust Fund
Board established by the National Insurance Trust
Fund Act, No. 28 of 2006 shall be deemed to be:—
(a) a person registered under this Act to carry on
insurance business in Sri Lanka ; and
(b) an Insurer registered under the provisions of
this Act to carry on insurance business from
the date of coming into operation of this
Act.”;
(2) in subsection (2) thereof, by the substitution for the
words “for long term insurance business or for both
general and long term insurance business.” of the
words “for long term insurance business.”;
Regulation of Insurance Industry (Amendment) 3
Act, No. 3 of 2011
(3) in subsection (3) thereof by the substitution for the
words and figures “the Social Security Board
established by the Social Security Board Act, No.
17 of 1996 and the National Insurance Trust Fund
Board established by the National Insurance Trust
Fund Act, No. 28 of 2006.” of the words and figures
“the Social Security Board established by the Social
Security Board Act, No. 17 of 1996.”.
6. Section 13 of the principal enactment is hereby Amendment of
amended in subsection (1) of that section, as follows:— section 13 of the
principal
enactment.
(1) in paragraph (b) thereof, by the substitution for the
words “less than the prescribed amount;”, of the
words “less than such amount as determined by the
Board by rules made in that behalf;”; and
(2) by the insertion immediately after paragraph (b)
thereof, of the following new paragraph:—
“(bb) has in its Board of Directors persons who are
not subject to any one or more of the
disqualifications specified in the Second
Schedule to this Act;”.
7. Section 14 of the principal enactment is hereby Amendment of
section 14 of the
amended in subsection (1) of that section, as follows:—
principal
enactment.
(1) in paragraph (h) thereof, by the substitution for the
words “section 13; and”, of the words “section 13;”;
(2) in paragraph (i) thereof, by the substitution for the
words “three years.”, of the words “three years; and”;
and
(3) by the addition immediately after paragraph (i)
thereof, of the following new paragraph:—
“(j) such other documents and information as may
be determined by the Board.”.
4 Regulation of Insurance Industry (Amendment)
Act, No. 3 of 2011
Insertion of new 8. The following new section is hereby inserted
section 15A in immediately after section 15 of the principal enactment and
the principal
enactment. shall have effect as section 15A of that enactment:—
“Insurer to 15A. Every insurer shall be required within
be listed on a three years of being issued with a licence under
licensed
section 15 of this Act, to have itself listed on a
stock
exchange. licensed stock exchange.”.
Repeal of
9. Section 17 of the principal enactment is hereby
section 17 of the
principal repealed.
enactment.
Amendment of 10. Section 18 of the principal enactment is hereby
section 18 of the
amended in subsection (1) of that section, as follows:—
principal
enactment.
(1) in paragraph (g) thereof, by the substitution for the
words “direction given by the Board”, of the words
“direction given or determination made by the
Board ”; and
(2) in paragrph (h) thereof, by the substitution for the
words “in its, application for registration;”, of the
words “in its application for registration or in any
information or document submitted to the Board;”.
Repeal of 11. Section 28 of the principal enactment is hereby
section 28 of the
repealed.
principal
enactment.
Insertion of new 12. The following new section is hereby inserted
section 31A in
immediately after section 31 of the principal enactment and
the principal
enactment. shall have effect as section 31A of that enactment:—
“No person 31A. A person shall not be appointed,
be appointed
elected or nominated as a director of an insurer
a director of
an insurer or or continue as a director of an insurer, if such
continue as a person is subject to any one or more of the
director in
disqualifications specified in the Second
certain
circumstances. Schedule to this Act.”.
Regulation of Insurance Industry (Amendment) 5
Act, No. 3 of 2011
13. Section 32 of the principal enactment is hereby Amendment of
section 32 of the
amended by the insertion immediately after subsection (1)
principal
of that section, of the following new subsection:— enactment.
“(1A) The disqualifications specified in the Second
Schedule to this Act, shall mutatis mutandis, apply to and
in relation to a person employed as a specified officer
under subsection (1).”.
14. The following new sections are hereby inserted Insertion of new
sections 33A,
immediately after section 33 of the principal enactment and
33B, 33C, 33D
shall have effect as sections 33A, 33B, 33C, 33D and 33E of and 33E of the
that enactment:— principal
enactment.
“Conditions 33A. (1) A director or an employee of an
relating to insurer shall not be appointed, elected or
the
nominated as a director of another insurer,
appointment
of directors except where such insurer is a subsidiary
of an insurer. company or an associate company of the first
mentioned insurer.
(2) An employee of an insurer may be
appointed, elected or nominated as a director
of that insurer, subject however to the condition
that the number of employees that may be so
appointed, elected or nominated as directors,
shall not exceed one-third of the total number
of members of the Board of Directors of that
insurer.
Insurer to 33B. (1) Every insurer shall submit to the
inform Board Board along with the Form required to be filed
of proposed
appointment, with the Registrar-General of Companies, a
nomination notice in such form and manner as shall be
or election of determined by the Board, giving information
directors. about each person sought to be appointed,
elected or nominated as a director of the insurer,
prior to the making of such appointment,
election or nomination, as the case may be,
and obtain the Boards approval for the same.
6 Regulation of Insurance Industry (Amendment)
Act, No. 3 of 2011
(2) Where the Board receives a notice from
an insurer under subsection (1) informing it of
a proposed appointment, election or
nomination of a person as a director of such
insurer, the Board shall within thirty days of
receipt of such notice and having regard to the
provisions of section 33A, and to the
disqualifications specified in the Second
Schedule to this Act, approve or refuse to
approve such appointment, election or
nomination, as the case may be, and inform the
insurer of its decision along with its reasons
for reaching such decision. It shall also be the
duty of the insurer to communicate to the person
concerned, who is sought to be appointed,
elected or nominated, as a director, the decision
of the Board.
(3) Any person aggrieved by a decision
given by the Board under subsection (2), may
submit an appeal against such decision to the
Board which shall be referred by the Board to a
Panel of Review, consisting of three persons
appointed by the Minister, from among persons
who have experience and shown capacity in
the field of insurance, financial management
or law. The Panel of Review shall having
considered the grounds on which the appeal is
being made and any other matters which in its
opinion merits consideration, make a decision
either confirming the refusal or approving the
appointment, election or nomination, as the
case may be, of such person as a director of the
insurer concerned.
Appointments, 33C. (1) An insurer shall not appoint, elect
elections or
nominations or nominate as a director of such insurer a
of directors person whose appointment, election or
of an insurer nomination has not been approved by the
to be
approved by Board under section 33B of this Act.
the Board .
Regulation of Insurance Industry (Amendment) 7
Act, No. 3 of 2011
(2) Notwithstanding the provisions of
subsection (1), a person whose name has been
submitted to the Board for approval under
subsection (1) of section 33B, may be appointed,
elected or nominated as a director of the insurer,
pending the receipt of the decision of the
Board. However, where the Board refuses to
grant approval and the insurer communicates
to the person concerned, the decision of the
Board, such person shall from the date of such
communication, cease to hold office as a
director of the insurer, subject to any decision
the Board may reach upon any objections that
may have been tendered by the person
concerned, under subsection (3) of section 33B,
against the decision of the Board refusing to
grant approval.
(3) It shall be the duty of an insurer to inform
the Board forthwith of every appointment,
election or nomination of a director, whose
appointment, election or nomination, as the
case may be, was approved by the Board.
Removal of a 33D. (1) An insurer shall, immediately
director who upon becoming aware that a director of such
is ineligible
insurer has become subject to any one or more
to hold office
as a director. of the disqualifications specified in the Second
Schedule to this Act or has become ineligible
to continue to hold office as a director of the
insurer, inform the Board of such fact.
(2) Where the Board receives any
information under subsection (1) about a
director or where the Board becomes aware at
any time that a person appointed, elected or
nominated as a director of an insurer has
thereafter become disqualified under any one
or more of the disqualifications specified in
the Second Schedule to this Act or has
otherwise become ineligible to continue to
8 Regulation of Insurance Industry (Amendment)
Act, No. 3 of 2011
hold office as a director of an insurer, the Board
shall—
(a) direct the insurer concerned, in writing,
to remove such person from the office
of a director within such period as may
be specified in such direction; and
(b) in writing, notify the person who is to
be removed of the fact of such removal,
with a copy of the direction issued to
the insurer regarding the same annexed
to such notification.
(3) The insurer to whom a direction is issued
under subsection (2) shall, within the period
specified in the direction—
(a) remove the person from the office of
director; and
(b) take such steps as are necessary to
inform the shareholders of the insurer
and the Registrar-General of
Companies of such removal.
(4) The removal of a director in accordance
with a direction issued under paragraph (a) of
subsection (2) shall, notwithstanding the
Articles of Association of the insurer, take effect
from the date of receipt by the director of the
notification of removal sent by the insurer.
(5) Any person who is aggrieved by the
removal of such person from the office of a
director under subsection (3) of this section,
may within fourteen days of being notified of
such removal, appeal therefrom to the Court of
Appeal. The Court of Appeal may on appeal
made under this section, confirm, revise, modify
or set aside the decision against which the
Regulation of Insurance Industry (Amendment) 9
Act, No. 3 of 2011
appeal is made and may make such order as the
interests of justice may require.
Failure to 33E. An insurer who fails to comply with
comply to be any direction given under paragraph (a) of
an offence.
subsection (2) of section 33D within the period
specified in such direction and a director who
has been served with a notice under paragraph
(b) of that subsection who continues to function
as a director thereafter, shall each be guilty of
an offence under this Act and shall be liable on
conviction after summary trial before a
Magistrate to a fine not exceeding five hundred
thousand rupees and shall in addition be
liable—
(a) in the case of the insurer, to a further fine
of one hundred thousand rupees, for each
day that the insurer continues to commit
such offence after conviction; and
(b) in the case of a director of the insurer,
to a further fine of rupees one hundred
thousand for each day such director
continues to function as director, after
conviction.”.
15. Section 35 of the principal enactment is hereby Repeal of
section 35 of the
repealed.
principal
enactment.
16. Section 37 of the principal enactment is hereby Amendment of
section 37 of the
amended by the repeal of subsection (1) of that section and
principal
the substitution therefor of the following subsection:— enactment.
“(1) For the purpose of examining whether the interests
of the policy holders are being adequately safeguarded
every insurer shall be required to file with the Board:—
(a) all policy forms to be issued by such insurer,
prior to its issue;
10 Regulation of Insurance Industry (Amendment)
Act, No. 3 of 2011
(b) any amendments to be made to any policy
forms already issued; and
(c) where required to do so by a notice in writing,
copies of any policy forms already issued.”.
Amendment of 17. Section 47 of the principal enactment is hereby
section 47 of the
principal amended as follows:—
enactment.
(1) in subsection (1) of that section, by the substitution
for the words “by the Board by rules made in that
behalf.”, of the words “by the Board.”; and
(2) in subsection (2) of that section, by the substitution
for the words “required by the rules made by the
Board in that behalf,” , of the words “required by
the Board,”.
Amendment of 18. Section 48 of the principal enactment is hereby
section 48 of the
amended in subsection (1) of that section, by the substitution,
principal
enactment. from all the words from “in accordance with rules” to the
words “as the Board may determine.”, of the words “in such
manner and within such period after the close of the financial
year, as the Board may determine.”.
Amendment of 19. Section 49 of the principal enactment is hereby
section 49 of the amended in paragraph (b) of that section, by the substitution
principle
enactment. for the words “return containing such information as may be
determined by the Board by rules made in that behalf.” of
the words “return containing such information and during
such periods of time, as may be determined by the Board.”.
Amendment of 20. Section 55 of the principal enactment is hereby
section 55 of the
amended by the substitution for the words “the provisions
principal
enactment. of section 162 of the Companies Act, No. 17 of 1982”, of the
words “the provisions of section 173 of the Companies Act,
No. 7 of 2007,”.
Regulation of Insurance Industry (Amendment) 11
Act, No. 3 of 2011
21. Section 56 of the principal enactment is hereby Amendment of
amended by the substitution for the words “abstracts as may section 56 of the
be determined by the Board by rules made in that behalf.”, principal
of the words “abstracts as may be determined by the Board enactment.
and within such period as the Board may determine.”.
22. Section 60 of the principal enactment is hereby Amendment of
amended in the proviso to that section, by the substitution section 60 of the
principal
for the words “any particular insurer, unless the insurer has”, enactment.
of the words “any particular insurer or broker, unless the
insurer or the broker has”.
23. Section 61 of the principal enactment is hereby Replacement of
repealed and the following section substituted therefor:— section 61 of the
principal
enactment.
“Publishing 61. An insurer may with the prior written
of returns approval of the Board, publish any return
submitted to
the Board. submitted to the Board under this Act or a true
and accurate abstract of such return, for purpose
of publicity.”.
24. Section 78 of the principal enactment is hereby Amendment of
amended as follows:— section 78 of the
principal
enactment.
(1) in subsection (1) of that section, by the substitution
for the words “an individual” and for the words “all
individuals”, of the words “any person” and of the
words “all persons”, respectively ; and
(2) in subsection (5) of that section, by the substitution
for the words “any individual”, of the words “any
person”.
25. Section 80 of the principal enactment is hereby Amendment of
section 80 of the
amended as follows:—
principal
enactment.
(1) in paragraph (c) of subsection (1) of that section, by
the substitution for the words “a policy or policies
of insurance”, of the words “policies of insurance”;
and
12 Regulation of Insurance Industry (Amendment)
Act, No. 3 of 2011
(2) in paragraph (b) of subsection (2) of that section—
(a) by the substitution in sub-paragraph (i) of
that paragraph, for the words “specified
officer”, of the words “the principal officer”;
and
(b) in sub-paragraph (ii) of that paragraph, for
the words “an associated or subsidiary
company”, of the words “an associate,
subsidiary or a holding company”.
Amendment of 26. Section 81 of the principal enactment is hereby
section 81 of the amended as follows:—
principal
enactment.
(1) in sub-paragraph (iii) of paragraph (c) of that section,
by the substitution for the words “paragraph (d) of
section 80;”, of the words “paragraph (d) of
subsection (1) of section 80;”; and
(2) in paragraph (h) of that section, by the substitution
for the words “a certified copy of the professional
indemnity insurance policy or policies issued”, of
the words “a certified copy each of the professional
indemnity policies of insurance issued”.
Amendment of 27. Section 83 of the principal enactment is hereby
section 83 of the amended as follows:—
principal
enactment.
(1) by the substitution for the words “on an application
being made in that behalf to the Board”, of the
words “on an application being made in that behalf
to the Board not more than three months but not
less than two months prior to the date of expiry of
its registration”;
(2) in paragraph (a) of that section, by the substitution
for the words “a professional indemnity policy of
insurance for the ensuing period”, of the words
Regulation of Insurance Industry (Amendment) 13
Act, No. 3 of 2011
“a certified copy each of the professional indemnity
policies of insurance for the ensuing period issued
by two or more insurers”; and
(3) in paragraph (d) of that section, by the substitution
for the words “such other documents”, of the words
“such other documents and information ”.
28. Section 84 of the principal enactment is hereby Amendment of
amended as follows :— section 84 of the
principal
enactment.
(1) in subsection (1) of that section—
(a) by the repeal of paragraph (b) of that
subsection, and the substitution therefor of
the following paragraph:
“(b) the broker has failed to comply with or
acted in contravention of any
directions issued by the Board under
this Act;”;
(b) by the insertion immediately after paragraph
(b) of that subsection, of the following new
paragraph:—
“(bb) the broker has ceased to be of good
financial standing;”;
(c) by the repeal of paragraph (c) of that
subsection, and the substitution therfor of the
following paragraph:—
“(c) (i) a director or the principal officer of
the broker; or
(ii) a director or the chief executive
officer of an associate, a subsidiary
14 Regulation of Insurance Industry (Amendment)
Act, No. 3 of 2011
or a holding company of such
broker,
becomes a director, a shareholder or an
employee of an insurer;
(d) by the insertion immediately after paragraph
(c) of that subsection, of the following new
paragraphs:—
“(cc) the broker becomes a shareholder of any
insurer;
(ccc) the broker has contravened any
provision of this Act or any regulation
or rule made or any condition imposed
by the Board, under this Act;”; and
(e) by the repeal of paragraph (e) of that
subsection, and the substitution therefor of
the following paragraph:—
“(e) the broker has furnished false,
misleading or inaccurate information
or has concealed or failed to disclose
material facts in the application for
registration or renewal of registration,
as the case may be, or in any statement
or document submitted to the Board.”;
and
(2) by the insertion immediately after subsection (1) of
that section, of the following new subsection:—
“(1A) The provisions of subsections (2), (3), (4),
(5), (6) and (7) of section 18 of this Act shall, mutatis
mutandis, apply to and in relation to the
cancellation or suspension of a registration under
this section.”; and
Regulation of Insurance Industry (Amendment) 15
Act, No. 3 of 2011
(3) in subsection (2) of that section, by the substitution
for the words “of this Act shall apply”, of the words
“of this Act shall, mutatis mutandis, apply”.
29. The following new section is hereby inserted Insertion of new
section 84A in
immediately after section 84 of the principal enactment and
the principal
shall have effect as section 84A of that enactment:— enactment.
“Board may 84A. Notwithstanding the provisions of
direct certain
section 84, the Board may in lieu of taking
measures to
be taken in any action under that section on any one or
lieu of acting more grounds referred to therein, and where
under section the nature of the act or omission is not of such
84. gravity as to warrant taking action under that
section, direct the broker to take such
measures that the Board may consider
appropriate, to—
(a) rectify and set right any consequence
resulting from such act or omission ;
and
(b) comply with the provisions of this Act
or any regulation or rule made
thereunder or any conditions imposed
or any directions given by the Board,
under this Act.”.
30. Section 85 of the principal enactment is hereby Amendment of
amended as follows:— section 85 of the
principal
enactment.
(1) in subsection (1) of that section, by the substitution
for the words “two or more registered insurers
approved by the Board”, of the words “two or more
insurers,” ;
(2) in subsection (2) of that section and in the proviso
to that subsection, by the substitution for the words
“such policy” and for the words “the policy”, of the
words “such policies” and of the words “the
policies” respectively ; and
16 Regulation of Insurance Industry (Amendment)
Act, No. 3 of 2011
(3) in subsection (3) of that section—
(a) by the substitution for the words “The policy
obtained” and for the words “in either-” of
the words “The policies obtained” and of the
word “of-”, respectively: and
(b) by the substitution in paragraph (b) of that
subsection, for the words “by the Board.”, of
the following words “by the Board,whichever
is higher.”
.
Amendment of 31. Section 86 of the principal enactment is hereby
section 86 of the
amended as follows: —
principal
enactment.
(1) by the repeal of subsection (3) of that section, and
the substitution therefor of the following
subsection:—
“(3) Every broker shall furnish to the Board,
returns, containing such information and within
such period of time as may be determined by the
Board.”; and
(2) by the addition at the end of that section, of the
following new subsection:—
“(6) Every broker shall submit to the Board
annually a certified copy each of the professional
indemnity policies of insurance issued by two or
more insurers as required by section 83 of this
Act.”.
Amendment of 32. Section 88 of the principal enactment is hereby
section 88 of the amended by the substitution for the words “paid by an insurer
principal
enactment. to a broker or insurance agent,”, of the words “paid by an
insurer to a broker or an insurance agent or by a broker to an
insurance agent,”.
Regulation of Insurance Industry (Amendment) 17
Act, No. 3 of 2011
33. The following new Part is hereby inserted Insertion of Part
immediately after section 89 of the principal enactment and VIIIA in the
principal
shall have effect as PART VIIIA of that enactment:— enactment.
“PART VIIIA
REGISTRATION OF LOSS ADJUSTERS
Prohibition 89A. (1) No person shall act or hold out as
against acting a loss adjuster to any insurer, unless such person
as a loss
is the holder of a Certificate of Registration as
adjuster
without a a loss adjuster, issued by the Board under this
Certificate of Act.
Registration.
(2) Notwithstanding the provisions of
subsection (1), a person who is not a resident
of Sri Lanka and who has obtained the
necessary legal recognition as a loss adjuster
from the relevant authority in the country
where such person is resident, is permitted to
function as a loss adjuster within Sri Lanka,
provided such function is being carried on with
a person in Sri Lanka who has been duly
registered as a loss adjuster under the provisions
of this Act.
Qualifications 89B. No person shall be eligible to be
for registered as a loss adjuster under this Act,
registration.
unless such person possesses such
qualifications and experience as may be
determined by the Board by rules made in that
behalf.
Application 89C. (1) An application for registration as
for a loss adjuster shall be made to the Board in
registration
such form as shall be provided for that purpose
and issue of
certificate. by the Board and be accompanied by such
documents, information and fee as shall be
determined by the Board by rules made in that
behalf.
18 Regulation of Insurance Industry (Amendment)
Act, No. 3 of 2011
(2) On receipt of an application under
subsection (1), the Board shall, having
considered the particulars stated therein and
where it deems necessary having given the
applicant an opportunity of being heard, inform
the applicant by written notice whether the
applicant is eligible to be registered as a loss
adjuster or not. Upon registration of any person
as a loss adjuster, such person shall be issued
with a Certificate of Registration and be subject
to such terms and conditions as shall be
specified in the certificate.
(3) A Certificate of Registration issued by
the Board shall authorize its holder to carry on
such activity as specified therein and a
Certificate issued shall not be transferred to
any other person nor be used for the benefit of
any other person.
(4) Any transfer or use of a Certificate of
Registration by the holder thereof in
contravention of the provisions of subsection
(3), shall be null and void, and the Board shall
have the power to revoke such registration with
immediate effect.
(5) The Board may at any time add to, vary
or revoke any term or condition specified in a
Certificate of Registration issued to a loss
adjuster or add any new terms or conditions
thereto.
Revocation 89D. (1) The Board may revoke a
of Certificate of Registration issued to a loss
registration.
adjuster, where the Board is satisfied that such
loss adjuster —
(a) has acted in contravention of any
provisions of this Part of this Act, or
any rules or regulations made
thereunder;
Regulation of Insurance Industry (Amendment) 19
Act, No. 3 of 2011
(b) has acted in breach of any term or
condition specified in the Certificate
of Registration issued by the Board
under this Act;
(c) has made any statement in any
application, account, written
information or document submitted
to the Board by such loss adjuster,
which was later found to be false,
inaccurate or misleading or it is
discovered that the loss adjuster has
concealed or failed to disclose some
material facts that would have affected
the decision of the Board in assessing
his suitability as a loss adjuster; or
(d) has since the grant of the Certificate
of Registration, been found to be
disqualified for the grant of such
registration.
(2) A loss adjuster who is aggrieved by the
decision of the Board under subsection (1) may
appeal therefrom to the Court of Appeal and
the provisions of section 19 of this Act shall
mutatis mutandis apply to and in relation to
such an appeal.
Board to 89E. (1) An application made under this
grant Act for registration as a loss adjuster shall not
opportunity
to show be rejected by the Board without giving notice
cause before in writing to the applicant to show cause within
a rejection. such period as shall be specified in such notice,
as to why such application should not be
rejected.
(2) Where any applicant for a registration—
(a) fails to show cause within the time
specified in the notice issued under
subsection (1); or
20 Regulation of Insurance Industry (Amendment)
Act, No. 3 of 2011
(b) fails to show sufficient cause
acceptable to the Board,
the application made shall be rejected by the
Board.”.
“Amendment of 34. Section 90 of the principal enactment is hereby
section 90 of the
principal amended by the substitution for the word “Company”
enactment. wherever such word appears in the section, of the word
“person”.
Insertion of a 35. The following new section is hereby inserted
new section 92A
in the principal immediately after section 92 of the principal enactment and
enactment. shall have effect as section 92A of that enactment:—
“Carrying on 92A. Any person who acts or holds out
the function
as a loss adjuster without being duly registered
of a loss
adjuster under this Act, shall be guilty of an offence
without and shall on conviction after summary trial
being duly
before a Magistrate, be liable to a fine not less
registered, to
be an than fifty thousand rupees or to imprisonment
offence. for a term not less than one year or to both such
fine and imprisonment.”.
Amendment of 36. Section 93 of the principal enactment is hereby
section 93 of the
principal amended by the substitution for the words “or any rule made
enactment. under this Act;”, of the words “or any regulation, rule or
order made under this Act or any conditions imposed or
determinations made by the Board under this Act,”.
Amendment of 37. Section 94 of the principal enactment is hereby
section 94 of
amended as follows:—
the principal
enactment.
(1) in subsection (1) of that section, by the substitution
for the words “and appoint as its principal officer”,
of the words “and with the approval of the Board,
appoint as its principal officer,”; and
Regulation of Insurance Industry (Amendment) 21
Act, No. 3 of 2011
(2) by the insertion immediately after subsection (1) of
that section, of the following new subsection:—
“(1A) The disqualifications specified in the
Second Schedule to this Act, shall mutatis mutandis
apply to and in regard to the disqualifications
applicable to a person employed as a principal
officer under subsection (1).”.
38. The following new section is hereby inserted Insertion of a
new section 94A
immediately after section 94 of the principal enactment and in the principal
shall have effect as section 94A of that enactment:— enactment.
“Board to be 94A. Where after the registration of any
informed of person as an insurer, broker or loss adjuster, as
any alteration
in the the case may be, any alteration or a change is
particulars made in the information or particulars
submitted contained in an application made by that
with an person under section 14, section 81 or section
application
for 89C of this Act, it shall be the duty of such
registration. insurer, broker or the loss adjuster, as the case
may be, to forthwith furnish to the Board a full
authenticated statement of such alteration or
change.”.
39. The following new section is hereby inserted Insertion of new
section 95A in
immediately after section 95 of the principal enactment and
the principal
shall have effect as section 95A of that enactment:— enactment.
“Board to 95A. The Board shall have the authority
require by rules made in that behalf, to require the paid
increase of
up share capital of insurers and brokers to be
paid-up share
capital. increased and it shall be the duty of all insurers
and brokers, as the case may be, to comply
with such requirement.”.
40. The following new sections are hereby inserted Insertion of new
sections 96A and
immediately after section 96 of the principal enactment and
96B in the
shall have effect as section 96A and section 96B of that principal
enactment:— enactment.
22 Regulation of Insurance Industry (Amendment)
Act, No. 3 of 2011
“Board to 96A. The Board may with a view to
give safeguarding the interests of policy holders
directions.
and potential policy holders, issue directions
to insurers, brokers and loss adjustors, as the
case may be, and it shall be the duty of every
such insurer, broker and loss adjustor, as the
case may be, to comply with any directions so
issued.
Determination 96B. Any determination of the Board
made to be which is not required to be made by rules made
communicated
forthwith. in that behalf and which relates to insurers,
brokers or loss adjustors, as the case may be,
shall immediately upon such determination
being made, be communicated to all such
insurers, brokers and loss adjustors, as the case
may be, to whom such determination relates.”.
Amendment of 41. Section 97 of the principal enactment is hereby
section 97 of the
amended by the substitution for the words “served on any
principal
enactment. insurer,”, of the words “served on any insurer or broker,”.
Amendment of 42. Section 98 of the principal enactment is hereby
section 98 of the
amended as follows:—
principal
enactment.
(1) by the substitution for the words “policy of long
term insurance business”, of the words “policy of
long term insurance business or general insurance
business”; and
(2) in the marginal note to that section, by the
substitution for the words “arising under long term
insurance business”, of the words “arising under
long term or general insurance business”.
Amendment of 43. Section 99 of the principal enactment is hereby
section 99 of the
amended as follows:—
principal
enactment.
(1) by the repeal of subsection (3) of that section ; and
Regulation of Insurance Industry (Amendment) 23
Act, No. 3 of 2011
(2) in subsection (4) of that section, by the substitution
for the words “means a document inviting” and for
the words “includes any document which contains
information”, of the words “means an invitation
appearing in any media, including by any
electronic means, inviting” and of the words
“includes any information”, respectively.
44. Section 100 of the principal enactment is hereby Replacement of
section 100 of
repealed and the following section is substituted therefor:—
the principal
enactment.
“Prohibition 100. No insurer or broker shall without the
against prior written approval of the Board, carry on
carrying on
any insurance business other than, in the case
business
other than of an insurer, the specified class or sub-class of
those for insurance business or in the case of a broker,
which a the class of insurance business, in respect of
licence or
which such insurer or broker has obtained from
registration is
issued. the Board under this Act a licence or
registration, as the case may be.”.
45. Section 102 of the principal enactment is hereby Amendment of
section 102 of
amended in subsection (3) of that section, by the substitution
the principal
for the words “in accordance with the guidelines issued” to enactment.
the end of that subsection, of the words “in accordance with
the rules pertaining to takeovers and mergers made under
the Securities and Exchange Commission of Sri Lanka Act,
No. 36 of 1987, wherever applicable.”.
46. Section 113 of the principal enactment is hereby Amendment of
section 113 of
amended in subsection (3) of that section, by the substitution
the principal
for the words “he or she shall,”, of the words “such insurer enactment.
shall,”.
47. Section 114 of the principal enactment is hereby Amendment of
amended as follows:— section 114 of
the principal
enactment.
(1) in the definition of the expression “insurance agent”,
by the substitution for the words “an individual”,
of the words “a person”;
24 Regulation of Insurance Industry (Amendment)
Act, No. 3 of 2011
(2) in the definition of the expression “insurer” by the
substitution for the words “company registered” in
that definition of the words “person registered”;
(3) by the insertion immediately after the definition of
the expression “licensed commercial bank”, of the
following new definition:—
“licensed stock exchange” means a stock exchange
licensed under the Securities and Exchange
Commission of Sri Lanka Act, No. 36 of 1987;”;
(4) by the insertion immediately after the definition of
the expression “local authority security”, of the
following new definition:—
“loss adjuster” means a person who has specialized
knowledge in investigating and who is assessing
losses arising from insurance claims and
registered as a loss adjuster under the provisions
of this Act.
(5) by the repeal of definition of the expression
“Registrar of Companies”, and the substitution
therefor of the following definition:—
“Registrar-General of Companies” means a person
by name or by office appointed to be or to act as
the Registrar-General of Companies under
section 471 of the Companies Act, No. 7 of 2007
and includes any Deputy-Registrar General or
Assistant Registrar-General appointed under that
section;”; and
(6) in the definition of the expression “Securities
Exchange Commission of Sri Lanka” by the
substitution for the words “Securities Exchange
Commission” wherever those words appear in that
definition, of the words “Securities and Exchange
Commission of Sri Lanka”.
Regulation of Insurance Industry (Amendment) 25
Act, No. 3 of 2011
48. The Schedule to the principal enactment is hereby Amendment of
amended by the re-numbering of that Schedule as the First the Schedule to
the principal
Schedule to that enactment.
enactment.
49. The following new Schedule is hereby added Addition of new
immediately after the re-numbered First Schedule to the Schedule to the
principal
principal enactment and shall have effect as the Second enactment.
Schedule to that enactment:—
“SECOND SCHEDULE [Section 31A]
DISQUALIFICATIONS FOR BEING ADIRECTOR OF AN INSURER
A person shall not be eligible to be appointed, elected or
nominated as a director of an insurer, if such person:—
(a) does not possess academic or professional
qualifications or have effective experience in
insurance, finance, business or of any other relevant
discipline;
(b) has served as a member or an employee of the Board
at any time during the period of three years prior
to being appointed, elected or nominated as a
director of the insurer;
(c) has been convicted by any competent court in Sri
Lanka or of any other country, for a crime committed
in connection with financial management or of any
offence involving moral turpitude;
(d) has been declared an undischarged insolvent or a
bankrupt under any law of Sri Lanka or of any other
country;
(e) has failed to satisfy any judgment or order given by
any competent court in Sri Lanka or of any other
country, pertaining to the repayment of a debt;
(f) has been declared by a competent court in Sri Lanka
or of any other country, to be of unsound mind;
26 Regulation of Insurance Industry (Amendment)
Act, No. 3 of 2011
(g) has been removed or suspended by an order of a
regulatory or supervisory authority from serving as
a director, chief executive officer or any other
position of authority in any insurance company,
broker, bank, financial institution or corporate
body, within or outside Sri Lanka; or
(h) has been a director, chief executive officer,
principal officer, specified officer or held any other
position of authority in any insurance company,
broker, bank, financial institution or corporate
body—
(i) whose licence or other authority granted for
operating as an insurance company or broker
or bank or financial institution, has been
suspended or cancelled ; or
(ii) which has been wound up or is being wound
up, or which is being compulsorily
liquidated.
within or outside Sri Lanka.”.
Sinhala text to 50. In the event of any inconsistency between the
prevail in case Sinhala and Tamil texts of this Act, the Sinhala text shall
of
prevail.
inconsistency.
Registered 51. Where on the date of the coming into operation of
brokers having a this Act, a director or the chief executive officer of a holding
director or the
company of any broker registered under section 82 of the
chief executive
officer of a principal enactment, is a director, shareholder or an employee
holding of an insurer, then, notwithstanding the amendment made to
company of section 84 of the principal enactment by section 28 of this
such broker as a Act, the registration of such broker shall not be suspended
director,
or cancelled nor a renewal of such registration be refused,
shareholder or
an employee of without the director or the chief executive officer concerned
an insurer. being granted by the Insurance Board of Sri Lanka, a
reasonable period of time within which to dispose of the
shares being held or relinquishing such directorship or
employment, as the case may be.
Regulation of Insurance Industry (Amendment) 27
Act, No. 3 of 2011
52. (1) Every insurer who on the date of the coming Insurers holding
into operation of this Act holds a valid licence issued under a licence to be
listed on a
section 15 of the principal enactment, shall be required within
licensed stock
five years from the date of the coming into operation of this exchange.
Act, to have itself listed on a stock exchange licensed under
the Securities and Exchange Commission of Sri Lanka Act,
No. 36 of 1987 after having where so required to fulfill the
segregation requirements specified in section 53 of this Act.
(2) It shall be the duty of an insurer upon obtaining a
listing on a stock exchange as required by subsection (1) of
this section, to forthwith inform the Insurance Board of Sri
Lanka of such fact by a written communication.
(3) A failure by an insurer to comply with the requirements
imposed by this section may, notwithstanding anything to
the contrary contained in any provisions of the principal
enactment, be a ground for the suspension or cancellation of
the licence issued to such insurer.
53. Where on the date of the coming into operation of Insurers to
this Act, an insurer is engaged in carrying on both long term segregate their
long term and
insurance business and general insurance business in terms
general
of a valid licence issued by the Insurance Board of Sri Lanka insurance
under the principal enactment, such insurer shall be required business.
within four years from the date of the coming into operation
of this Act, to segregate the long term insurance business
and the general insurance business being carried on by it,
into two seperate companies.

28 Regulation of Insurance Industry (Amendment)
Act, No. 3 of 2011
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