CONTROL OF INSURANCE

(1) Subject to the provisions of subsection (2), nothing in this Act shall apply to or be deemed or construed to prohibit or restrict the carrying on of insurance business by-

(2) The Minister may, by notification published in the Gazette, declare that any provision or provisions of this Act shall apply to any association referred to in the preceding provisions of this section.

(1) No company shall be registered under this Act as being authorized to carry on insurance business in Sri Lanka unless such company

(2) Notwithstanding anything in subsection (1), any company which is incorporated in Sri Lanka under the Companies Act, No. 17 of 1982 and which is not a private company as defined in section 30 of that Act and the paid up share Capital of which is –

may be registered under this Act, as being authorized to carryon insurance business subject to the condition that such Company does not issue any policy of insurance for an amount exceeding three times the value of its paid up share capital.

(1) Every application for the registration of an insurer under this Act shall be made to the Controller in such form as may be provided for the purpose by the Controller and be accompanied by-

(3) Every application under this section shall be verified by a declaration signed by the person making the application that the statements accompanying the application are true and accurate. Every such declaration shall be free of stamp duty.

“(4) Every application for registration under this section shall be accompanied by-

(1) Where the Controller is satisfied that any company making an application for registration under this Act has complied with the provisions of sections 5 and 6, the Controller shall register such company as a person authorized to carry on insurance business in Sri Lanka and shall specify the class or classes of insurance business which such company is authorized to carryon.

Provided that the Controller shall refuse to register any foreign insurance company if he is satisfied-

(2) Upon the registration of an insurer as hereinbefore provided, the Controller shall issue to the insurer a certificate of registration which shall be kept at all times at the principal office or place of business in Sri Lanka of the insurer and be made available for inspection by the Controller or any other person authorized by him for the purpose.

(3) Every certificate of registration issued under subsection (2) of this section shall be valid for a period of one year and subject to the provisions of this Act, may be renewed annually on the payment of a fee of five thousand rupees.

(1) The Controller-

(2) Where in any case referred to in sub- paragraph (ii) or sub-paragraph (iii) of paragraph (a) of subsection (1), the default or the transfer or amalgamation or reinsurance of the business or the return of the deposit relates only to one or more, but not all, of the classes of insurance business carried on by the insurer, the Controller may, upon the cancellation of the registration of the insurer under that paragraph, register the insurer afresh in respect of any other class of insurance business and issue a fresh certificate in respect of that class of insurance business in accordance with the provisions of section 7.

(3) In any case where a registered insurer ceases to carry on insurance business of any class or proposes to carry on insurance business of any other class not previously carried on by the insurer, the Controller may alter the registration of the insurer in such manner as may be necessary, and may alter the certificate of registration issued to that insurer or cancel such certificate and issue a fresh certificate of registration under section 7, as the circumstances of the case may require:

Provided, however, that the insurer shall not by any such alteration be authorized to carry on any new class of insurance business unless-

(4) In any case where the Controller is satisfied,-

(5) Notice of any order made under subsection (4) shall be served on the insurer, and the order shall take effect upon the expiration of a period of two months after the date of the service of the notice unless an appeal as hereinafter provided is preferred against the order.

(6) The insurer in respect of whom or which an order is made under subsection (4) may, before the expiry of a period of two months after the date of the service of notice of the order on the insurer, appeal to the District Court against the order;

and such Court may, if it is satisfied that the insurer has not contravened the provisions of section 19, revoke the order of the Controller.

(7) The order of the District Court on any appeal under this section shall be subject to an appeal to the Court of Appeal and such appeal shall be preferred in like manner as though it were an appeal against a final order of the District Court made in a civil action.

(1) The following provisions shall apply in the case of any insurer who or which had prior to the appointed date carried on in Sri Lanka insurance business of any class:-

(2) Such provisions of this Act as are not inapplicable shall apply to any insurer who or which had prior to the appointed date carried on in Sri Lanka insurance business of any class so long as any liability of the insurer upon any policy or contract of insurance of any class remains unpaid or undischarged.

(3) Where the registration of any insurer is cancelled as provided in this Act, then, notwithstanding such cancellation-

(1) Every insurer applying for registration under this Act shall, keep deposited with the Deputy Secretary to the Treasury, for and on behalf of the Government of Sri Lanka, a sum of fifty thousand rupees in respect of each class of insurance business proposed to be carried on by that insurer in Sri Lanka:

Provided that the maximum amount of the deposit shall, subject to the provisions of section 44, be two hundred thousand rupees.

(2) A deposit made under this Act may consist of cash or of Government securities or of Government guaranteed securities, and the value of any securities so deposited shall be taken to be their market value at the date of deposit.

(3) A deposit made in cash shall be held by the Deputy Secretary to the Treasury to the credit of the insurer and shall be returnable to the insurer in cash in the circumstances and in the manner in which under the provisions of this Act a deposit is to be returned, and any interest accruing due on securities deposited under this section by any insurer shall, when it is collected, be paid by the Deputy Secretary to the Treasury to the insurer.

(4) An insurer may at any time substitute for the securities deposited with the Deputy Secretary to the Treasury under this section other Government securities or Government guaranteed securities of equal value assessed at the market rate prevailing at the time of substitution, and the Deputy Secretary to the Treasury shall, on the written application of any insurer who or which has made a deposit, invest in Government securities or Government guaranteed securities the whole or any part of the cash received by the Deputy Secretary to the Treasury on the redemption of any securities deposited by the insurer under this Act.

(5) The Deputy Secretary to the Treasury shall, if so requested by the insurer, sell any securities deposited with him and either hold the cash realized by such sale as deposit or invest in such Government securities or Government guaranteed securities as may be specified by the insurer the whole or any part of the cash received by him and hold the securities in which investment is so made as deposit.

(6) The amount of any deposit made under the provisions of Part II of the Motor Traffic (Third Party Risks) Regulations, 1951, by an insurer seeking registration under this Act shall be deemed to have been returned to such insurer under regulation 5 (3) of Part II of the aforesaid regulations and thereafter to have been paid by such insurer as a deposit in terms of subsection (1) of this section:

Provided, however, that so much of that amount as may not be required to be kept deposited in terms of subsection (1) of this section shall be returned to the insurer by the Deputy Secretary to the Treasury.

(a) be capable of being transferred or assigned or of being encumbered with any mortgage or other charge by the insurer or be liable to seizure in execution of any decree; or

(b) be available for the discharge of any liability of the insurer except for the discharge, in the event of the winding up of the insurer, of liabilities arising out of policies of insurance business issued by the insurer and remaining undischarged.

(a) a register or record of policies, in which shall be entered in respect of every policy issued by the insurer, the name and address of the policy holder, the date when the policy was effected, and particulars of any transfer, assignment or nomination of which the insurer has notice; and

(b) a register or record of claims in which shall be entered every claim presented to the insurer together with the date of the claim and the name and address of the claimant, the date of settlement of the claim, and where a claim is repudiated the date of repudiation and the grounds therefor.

(1) No insurer shall grant to any person who holds the position of manager, managing agent, actuary, auditor, or officer of such insurer, and, if such insurer is a company, to any person who holds the position of director of such company, or to any company in which such a person holds any such position, any loan, other than a mortgage of a policy of life assurance issued by that insurer, except with the prior approval of the Controller who shall grant such approval only if he is satisfied that sufficient security is being given for the repayment of the loan.

(2) In respect of any loan granted by an insurer to any person referred to in subsection (I) and outstanding on the appointed date, the Controller shall have the power, notwithstanding anything to the contrary in any agreement or contract, to examine the adequacy of the security given by such person for the repayment of the loan and, if the Controller considers it necessary so to do, to require that the loan be repaid or that additional security be given, on or before a specified date. If such person fails to repay the loan, or to give additional security, on or before the specified date, he shall cease to hold office on the expiry of a period of one year from that date.

“(1)

(2) The Controller may by a notice in writing require any insurer carrying on reinsurance to furnish him with such information as he may deem necessary to ascertain whether such insurer has the necessary funds to satisfy any claim that may be made on such insurer and it shall be the duty of such insurer to comply with the requirements of such notice,”.

(3) The Controller may from time to time, by order published in the Gazette or by special order addressed to any insurer, prohibit all insurers or any specified insurer, as the case may be, from reinsuring with any specified insurer outside Sri Lanka risks upon policies or contracts of insurance issued or effected in respect of insurance business transacted in Sri Lanka:

Provided, however, that before making any order under this subsection the Controller shall inform the insurer or insurers of his intention to make such order and shall consider any representations made by the insurer or insurers with reference to his intention.

(a) possessing the qualification of Associate of the Chartered Insurance Institute or an equivalent qualification; or

(b) possessing- the qualification of Fellow of the Chartered Insurance Institute or an equivalent ,qualification, and having at least five years post qualification experience,

(a) the insured in respect of whom a contract or policy of insurance is effected or issued;

(b) another insurer in respect of reinsurance;

(c) an insurance agent: or

(d) an insurance broker registered under this Act.

(a) the full premia due under such contract or policy on the date on which such amount becomes payable has been paid; or

(b) a bank guarantee for the payment of such premia has been furnished by the insured on the date on which such amount became payable and the insured pays such premia within thirty days of such date. “.

(1) The Controller may from time to time fix and notify the maximum or minimum rates of premia, or both such rates, to be charged by insurers in respect of policies of insurance to be issued by them.

(2) No insurer shall accept as premia under a contract or policy of insurance effected or issued by him in respite of any class of insurance, an amount which is

(1) The Controller may by a notice in writing require any insurer to furnish him with copies of policy forms issued by such insurer and it shall be the duty of such insurer to comply with the requirements of such notice.

(2) The Controller may having regard to the need to ensure that the terms of the contract of insurance covered by such policy form are fair and equitable suggest amendments to any policy form furnished to him under subsection (1) of this section and it shall be the duty of the insurer furnishing such forms to give effect to such amendments.

(1) Every insurer who or which has transacted life assurance business in Sri Lanka prior to the first day of January, 1962, and who or which has issued any policies of life assurance under which liabilities have not been discharged by such insurer on the appointed date shall maintain in Sri Lanka assets of such value as will be sufficient to discharge the liabilities under such policies determined in the prescribed manner.

(2) At least half of the assets which an insurer is required to have in Sri Lanka for the purposes of subsection (1) shall consist of investments in Government securities and the remainder of such assets shall be of such kind as are notified to, and approved in writing by, the Controller.

(3) An insurer shall comply with the provisions of subsection (1) before the expiry of a period of five years after the appointed date:

Provided that the insurer shall at the end of the first year after the appointed date have in Sri Lanka not less than one-fifth of the assets required for the purposes of subsection (1) and shall thereafter before the end of each subsequent year increase such assets by at least one-fifth so that there shall be all the assets required for the purposes of subsection (1) at the end of five years after the appointed date.

(4) Every insurer to whom subsection (1) applies shall not later than January thirty-first in each year furnish to the Controller a return, in the prescribed form and certified in the prescribed manner, of the assets and liabilities of such insurer in Sri Lanka on the last day of December in the previous year;

and such insurer shall furnish a similar return to the Controller in respect of each period of three months ending on March thirty-first, June thirtieth and September thirtieth in each year, the return in respect of each such period being furnished not later than one month after the date of termination of such period :

Provided that the Controller may, upon an application being made by an insurer, grant an extension of time not exceeding one month to furnish such return.

(5) The Controller may cause such investigation as he may consider necessary for the purpose of verifying the particulars contained in any return furnished by an insurer under subsection (4), and such insurer shall upon being requested to do so by notice in writing by the Controller, furnish on or before the date specified in the notice such information or explanation as the Controller may require for such investigation.

(1) Every insurer who or which carries on the business of life assurance in Sri Lanka, whether solely or in addition to any other business, shall-

(2) The life assurance fund maintained by an insurer under subsection (1) shall not be liable for any contracts of the insurer for which it would not have been liable had the business of the insurer been only that of life assurance, and shall not be applied directly or indirectly for any purposes other than those of the life assurance business carried on by that insurer.

(3) For the purpose of verifying whether an insurer complies with the provisions of subsection (1), the Controller may-

(1) A transfer of an assignment of a policy of a life assurance, whether with or without consideration, may be made only by an endorsement upon the policy itself or by a separate instrument signed in either case by the transferor or by the assignor or his duly authorized agent and attested by at least one witness, and specifically setting forth the fact of transfer or assignment.

(2) No transfer or assignment of a policy of life assurance shall be of any effect as against the insurer unless it is made in accordance with subsection (1), or until a notice in writing of the transfer or assignment, together with the instrument or endorsement of a copy thereof which is certified by or on behalf of the parties to the transfer or assignment to be correct, is served on the insurer at his or its principal place of business in Sri Lanka,

(3) The date on which the notice referred to in subsection (2) is served on the insurer shall regulate the priority of all claims under a transfer or an assignment of a policy of life assurance as between persons interested in the policy; and where there is more than one instrument of transfer or assignment, the priority of the claims under such instruments shall be governed by the order in which the notices referred to in subsection (2) are served.

(4). Upon the receipt of the notice referred to in subsection (2), the insurer shall record the fact of such transfer or assignment together with the date thereof and the name of the transferee or the assignee and shall, on the request of the person by whom the notice was given, or of the transferee or assignee, on payment of a fee not exceeding one rupee, grant a written acknowledgment of the receipt of such notice, and any such acknowledgment shall be conclusive evidence against the insurer that he has duly received the notice to which such acknowledgment relates.

(5) Subject to the terms and conditions of the transfer or assignment, the insurer shall, from the date of the receipt of the notice referred to in subsection (2), recognize the transferee or assignee named in the notice as the only person entitled to benefit under the policy, and such person shall be subject to all liabilities and equities to which the transferor or assignor was subject at the date of the transfer or assignment and may institute any proceedings in relation to the policy without obtaining the consent of the transferor or assignor or making him a party to such proceedings.

(6) Any rights and remedies of an assignee or transferee of a policy of life assurance under an assignment or transfer effected prior to the appointed date shall not be affected by the provisions of this section.

(7) Notwithstanding any law or custom having the force of law to the contrary, an assignment in favour of a person made with the condition that it shall be inoperative or that the interest shall pass to some other person on the happening of a specified event during the lifetime of the person whose life is insured, and an assignment in favour of survivor or survivors of a number of persons, shall be valid.

(1) Where, in terms of a policy of life assurance, the policy is to mature upon death or upon survival to a fixed date or on earlier death, and the policy is subject to payment of premiums at an uniform rate for a fixed term or until earlier death, and all premiums have been paid for three consecutive years, the policy shall be deemed to acquire a surrender value, and, notwithstanding any contract to the contrary, shall not lapse by reason of nonpayment of further premium but shall, notwithstanding such non-payment, be kept alive to the extent of its paid-up value. For the purposes of this subsection, the paid-up value of a policy under which premiums are payable at a minimum rate for a fixed term or until earlier death shall be an amount bearing to the total sum assured by the policy the same proportion as the total of the premiums already paid on the policy bears to the total of the premiums payable under the policy.

(2) Where a debt owing to an insurer is secured by a policy of life assurance issued by the insurer and, under subsection (1), the policy is kept alive to the extent of its paid- up value, the insurer-

(3) This section shall not apply in any case where-

(1) Where any premium in respect of a policy of life assurance is not paid on the date on which it is payable, notice of the options available to the policy holder shall be given to him by the insurer before the expiry of a period of three months from the said date, unless such options are set out in the policy:

Provided that where two or more premiums in respect of the same policy are due and unpaid, nothing in this subsection shall apply to the case of the failure.

(2) Every notice under subsection (1) shall be deemed to have been duly given to the policy holder if it is sent to him to such address as may be specified in the policy or, where the address is not so specified, to the address to which a renewal premium notice or receipt was last sent by the insurer to the policy holder.

(3) Upon application made to an insurer in that behalf, and on payment of a fee of two rupees, the insurer shall supply to the policy holder or to his legal representative or to an assignee of the policy, a certified copy of the proposal for the policy and of the personal statement made to the medical officer by the proposer, unless copies thereof are attached to the policy.

(1) The holder of a policy of life assurance may, when effecting the policy or at any time before the policy matures for payment, nominate the person or persons to whom the money secured by the policy shall be paid in the event of his death:

Provided that, where any nominee is a minor, it shall be lawful for the policy holder to appoint in the prescribed manner any person to receive the money secured by the policy in the event of his death during the minority of the nominee.

(2) A nomination under subsection (1) shall, unless it is incorporated in the text of the policy itself, be made by an endorsement on the policy and such endorsement shall by notice in writing be communicated to the insurer who shall register such endorsement in the record or register relating to that policy. Any such nomination may at any time before the policy matures for payment be cancelled or changed by another endorsement or a will of the policy holder, as the case may be, and unless notice in writing of any such cancellation or change has been given by the policy holder to the insurer, the insurer shall not be liable for any payment under the policy made bona fide by him to a nominee mentioned in the text of the policy or registered in records of the insurer.

(3) The insurer shall furnish to the policy holder a written acknowledgment of having registered a nomination or a cancellation or change thereof, and may charge a fee not exceeding one rupee for registering such cancellation or change.

(4) A transfer or assignment of a policy made in accordance with section 24 shall have the effect of cancelling a nomination: Provided that the assignment of a policy to an insurer who bears the risk on the policy at the time of the assignment, in consideration of a loan granted by that insurer on the security of the policy within its surrender value, or its reassignment on repayment of the loan, shall not cancel a nomination, but shall affect the rights of the nominee only to the extent of the insurer’s interest in the policy.

(5) Where the policy matures for payment during the lifetime of the person whose life is assured or where the nominee or, if there are more nominees than one, all the nominees die before the policy matures for payment, the amount secured by the policy shall be payable to the policy holder or his heirs or legal representatives, as the case may be.

(6) Where the nominee or, if there are more nominees than one, one or more of such nominees survive the person whose life is assured, the amount secured by the shall be payable to such survivor or survivors.

(1) Notwithstanding anything contained in any contract between any insurer and an insurance agent, who either has effected business for the insurer to the value of fifty thousand rupees or more, or has had three years of service under the insurer and whose name appears in the books of the insurer on the first day of August, 1960, as to the forfeiture of commission on renewal premiums or the cessation of payment of such commission to the insurance agent, no such insurer shall, in respect of life assurance business transacted in Sri Lanka, refuse payment, or be entitled to refuse payment, to such insurance agent of commission on renewal premiums due to him under the agreement by reason only of the termination of his agreement on any ground other than fraud.

(2) In any case where the commission on renewal premiums is in terms of any contract between such insurer and such insurance agent payable to the widow or other dependants of the agent after his death, then the restrictions set out in subsection (1) shall, in the event of the death of the agent, after the termination of his agreement, apply in relation to the payment of commission to such widow or dependants.

(3) Nothing in the preceding provisions of this section shall be deemed to render unlawful any agreement between an insurer and an insurance agent or the widow or dependants of the agent, as the case may be, for the commutation of the liability to make the payments referred to in those provisions.

(4) The provisions of this section shall apply to and in relation to contracts between insurers and insurance agents notwithstanding that such contracts may have been entered into prior to the appointed date.

(1) Subject to the provisions of the Insurance Corporation Act, an insurer who has prior to the appointed date transacted life assurance business in Sri Lanka shall not transfer the assets and liabilities relating to his life assurance business to any person other than to such an institution as may be declared by the Minister by notification published in the Gazette or amalgamate such assets and liabilities with the assets and liabilities of the life assurance business of any insurer other than such an institution.

(2) A transfer or an amalgamation permissible under subsection (1) shall not be valid unless the Commissioner-General of Inland Revenue has issued a certificate of tax clearance under his hand indicating that he is satisfied that the revenue of the Government of Sri Lanka will not be prejudiced by such transfer or amalgamation and that an appropriate sum has been paid by the insurer in commutation of his prospective liability to Sri Lanka income tax.

(1) Notwithstanding anything in the Companies Ordinance* or in the articles of association of an insurer, or in any contract or agreement, no insurer shall after the expiry of six months after the appointed date be directed or managed by, or employ as manager or officer in any capacity, any person whose remuneration or any part thereof takes the form of commission or bonus or a share in the valuation surplus in respect of the life assurance business of the insurer:

Provided that nothing in this subsection shall be deemed to prohibit-

(2) Notwithstanding anything in the Companies Ordinance* or in the articles of association of an insurer, or in any contract or agreement, no manager, managing director or any other person concerned in the management of an insurer’s business shall be entitled to nominate a successor to his office, and no person so nominated, whether before or after the appointed date, shall be entitled to hold or to continue to hold such office,

(3) If, in the case of any insurance company, provision is made by the articles of association of the company or by an agreement entered into between any person and the company for empowering a director or manager or other officer of the company to assign his office to any other person, any assignment of office made in pursuance of the said provision, shall, notwithstanding anything contained in the said provision or in the Companies Ordinance*, be void,

(4) No person shall have any right, whether in contract or otherwise, to any compensation for any loss incurred by reason of the operation of any provision of this section.

(a) employ on its staff at least one person with over ten years experience in life assurance at managerial level;

(b) employ, or retain on a permanent basis, an actuary to investigate the financial condition of such business.

(1) Subject to subsection (4), every insurer carrying on life assurance business shall invest fifty per centum of his reserve funds including capital in Government securities and the balance in approved investments.

(2) Subject to subsection (4) every insurer carrying on insurance business other than life assurance business shall invest thirty per centum of his reserve funds including capital in government securities and the balance in approved investments.

(3) For the purpose of this section “an approved investment” means-

(4) No insurer shall invest-

Every insurer in respect of all insurance business transacted by such insurer, shall at the expiration of each calendar year prepare with reference to that year

Provided that in the case of life assurance business transacted by any such insurer, such insurer shall prepare only such statements of accounts as may be prescribed.

(2) The accounts and statements referred to in subsection (1) shall be signed in the case of a company by the officers or persons required by the Companies Act, No. 17 of 1982, to sign such accounts and statements and in any other case by the insurer and shall be accompanied by a statement containing the names and descriptions of each of the persons in charge of the management of the business during the period to which such accounts and statements relate and by a report by such persons on the affairs of the business during that period.

(1) The annual balance sheet, profit and loss account, profit and loss appropriation account and revenue account prepared by each insurer under section 35 shall, unless they are subject to audit under the Companies Ordinance*, be audited by an auditor.

(2) For the purposes of the audit of any accounts under this section, an auditor shall have the same powers, exercise the same functions and discharge the same duties as an auditor of companies under the provisions of section 132 of the Companies Ordinance*.

(1) Every insurer shall, in respect of all life assurance business transacted by the insurer, cause an investigation to be made by an actuary once at least in every three years into the financial condition of such life assurance business, including a valuation of its liabilities in respect of that business, and shall cause an abstract to be made in accordance with the regulations contained in Part I of the Fourth Schedule and in conformity with the requirements of Part II of that Schedule :

Provided that where an insurer is unable to establish to the satisfaction of the Controller that an investigation has been made by an actuary into the financial condition of the insurer’s life assurance business in Sri Lanka as at a date not earlier than the thirty-first day of December, 1958, an investigation shall be made as at a date not later than the thirty-first day of December, 1961.

(2) The provisions of subsection (1) regarding the making of an abstract shall apply whenever at any other time an investigation into the financial condition of the insurer is made with a view to the distribution of surplus or an investigation is made the results of which are made public.

(3) There shall be appended to every abstract required by subsection (1) or subsection (2) a certificate signed by the officer of the insurer, or where the insurer is a company, the director or principal officer of the company, that full and accurate particulars of every policy under which there is a liability either actual or contingent have been furnished to the actuary for the purposes of the investigation.

(4) There shall be appended to every abstract required by subsection (1) or subsection (2) a statement prepared in accordance with the regulations contained in Part I of the Fifth Schedule and in conformity with the requirements of Part II of that Schedule of the life assurance business subsisting at the date to which the accounts of the insurer are made up for the purposes of such abstract.

(5) Where an investigation into the financial condition of an insurer is made at a date other than the last date of the year of account, the accounts for the period elapsing after the end of the preceding year of account, and the balance sheet as at the date at which investigation is made, shall be prepared and audited in the manner provided for in this Act.

Repealed by[§ 19,42 of 1986]

(1) Provided that the Controller may extend the period allowed for furnishing returns by a period not exceeding three months.

Provided that in the case of any foreign insurer or of a Sri Lanka insurer carrying on business outside Sri Lanka, the period allowed for furnishing such printed returns shall be nine months;

(2) One of the four copies furnished under subsection (1) shall be signed by the Directors.

(1) Where an insurance company incorporated in Sri Lanka furnishes in any year the accounts and balance sheets in accordance with the provisions of section 35, the company may at the same time send to the Registrar of Companies a copy of such accounts and balance sheet;

and where such a copy is so sent it shall not be necessary for the company to file a balance sheet with the Registrar of Companies as required by section 121 (2) of the Companies Ordinance*, and the copy of the accounts and balance sheet so sent shall be chargeable with the same fees and shall be dealt with by the Registrar of Companies in all respects as if they were filed in accordance with that section.

(2) Where an insurance company which transacts motor vehicle insurance business in any year furnishes revenue and profit and loss accounts and a balance sheet in accordance with the provisions of section 35 of this Act such insurer shall be deemed to have complied with the provisions of regulation 4 of Part II of the Motor Traffic (Third Party Risks) Regulations, 1951.

(1) If it appears to the Controller that any return furnished to him under the provisions of this Act is inaccurate or defective in any respect, he may-

and if the Controller declines to accept any such return, the insurer shall be deemed to have failed to comply with the provisions of section 38 relating to the furnishing of returns.

(2) The District Court may, on the application of an insurer and after hearing the Controller, direct the acceptance of any return which the Controller has declined to accept, if the insurer satisfies the Court that the action of the Controller was in the circumstances unreasonable:

Provided that no application under this subsection shall be entertained by the District Court unless it is made before the expiration of two months after the date on which the Controller made the order or declined to accept the return.

(3) The decision of the District Court in any application under this section shall be final and shall not be subject to any appeal.

(1) If it appears to the Controller that an investigation or valuation made under section 37 does not properly indicate the condition of the affairs of the insurer by reason of what appears to him to be a faulty basis adopted in the valuation, the Controller may after giving the insurer reasonable notice and an opportunity to be heard cause an investigation and valuation as at such date as he may specify to be made at the expense of the insurer by an actuary appointed by the insurer for that purpose and approved by the Controller, and the insurer shall place at the disposal of such actuary all the material required by such actuary for the purposes of the investigation and valuation within such period, not being less than three months, as the Controller may specify.

(2) The provisions of subsections (1) and (4) of section 37 relating to the making of abstracts and the provisions of section 38 relating to the printing of statements shall apply in relation to any investigation and valuation to be made under this section :

Provided that the abstract and statements prepared as the result of such investigation and valuation shall be furnished on or before such date as the Controller may specify.

(1) Where the Controller-

Provided that an auditor or actuary appointed for the purpose by the Controller shall not be an auditor or actuary in the employ of the insurer.

(2) The Controller may, as a condition precedent to the ordering of an investigation upon a requisition being sent therefor either by policy holders or by shareholders of an insurance company as provided in subsection (1), require the persons making the requisition to furnish security in such amount as he may deem sufficient to meet the cost to the insurer of the investigations.

(3) For the purpose of determining whether or not an order should be made under subsection (1), the Controller may exercise the powers conferred by paragraph (b) of section 42(1).

(4) The results of any investigation made under this section shall be recorded in writing by the auditor or actuary appointed, as the case may be, and copies of the record shall be supplied to the Controller and to the insurer, and to the shareholders of an insurance company or to the policy holders who have sent a requisition for such investigation.

(5) The Controller may by written notice require the insurer to comply within such time as may be specified therein (not being less than fifteen days from the receipt of the notice by the insurer) with such directions (including a direction that the insurer shall have sufficient funds to meet the liabilities under the policies of life assurance issued by him) as may in the opinion of the Controller be necessary for remedying the defects disclosed by any investigation made under this section.

(6) If, as a result of any investigation made under this section, the Controller is of opinion that it is necessary in the interests of the policy holders that the business of the insurer should be wound up, or if the insurer fails to comply with any directions issued under subsection (5), the Controller may, after giving the insurer reasonable notice and an opportunity to be heard, apply to the District Court or a Winding-up Tribunal for an order for the winding up of the business of the insurer.

(7) Where the investigation discloses that the requisition., if any, made therefor was made without reasonable cause, the Controller may order that the whole or any part of the amount deposited as security as a condition of the ordering of the investigation shall be forfeited and paid to the insurer in order to defray the costs incurred by the insurer in connexion with the investigation.

(8) The Minister may at any time by order in writing direct the Controller or any other person specified in the order to investigate the affairs of any insurer and to report to him on any investigation made by him:

Provided that the Controller or the other person may, wherever necessary, employ an auditor or actuary or both for the purpose of assisting him in any investigation under this subsection.

(a) furnish such information in regard to the affairs of such company and produce such books, accounts or documents in his custody as the Controller or such other person may require;

(b) attend at such place and on such date and at such time as may be specified in such notice to be examined by the Controller or such other person in regard to any matter relating to the working and financial condition of such company.

(1) Every return furnished to the Controller under this Act or a certified copy thereof shall be kept at the office of the Controller and shall be open for inspection by any person with the approval of the Controller at such hours as he may specify.

(2) A person may obtain a copy of any such return or any part thereof, on payment of a fee calculated at the rate of twenty-five cents for every hundred words or part thereof required to be copied, any five figures being deemed for this purpose to be equivalent to one word.

(1) If at any time the Controller has from information available to him from any source whatsoever reason to believe that an insurer, who is carrying on the business of life assurance, or the business of life assurance in conjunction with any other class of insurance business, has acted in a manner prejudicial to the interests of holders of insurance policies or is acting in a manner likely to be prejudicial to the interests of holders of insurance policies, he may, after giving such opportunity to the insurer to be heard as he thinks fit, make a report thereon to the Minister.

(2) The Minister, if he is of opinion after considering the report that it is necessary and proper to do so, may appoint an administrator to manage the business of the insurer under the direction and control of the Controller.

(3) An administrator appointed under subsection (2) shall receive such remuneration as the Minister may direct, and such remuneration shall be payable out of the funds of the business which is managed by the administrator.

(4) The management of the business of an insurer shall, on and after the date of appointment of an administrator under subsection (2), vest in such administrator:

Provided however that, except with the approval of the Controller, an administrator shall not issue any new policies of insurance.

(5) The Minister may at any time revoke the appointment of any person as administrator and appoint some other person as administrator, and thereupon the first-mentioned person shall be divested of the management of the affairs of the insurer.

(6) The Controller may issue such directions to the administrator as to his powers and duties as he deems desirable in the circumstances of the case, and the administrator may apply to the Controller at any time for instructions as to the management of the business of the insurer or in relation to any matter arising in the course of such management.

(1) The administrator shall conduct the management of the business of the insurer with the greatest economy compatible with efficiency and shall, as soon as may be possible, file with the Controller a report stating which of the following courses is in the circumstances most advantageous to the general interests of the holders of life assurance polices, namely :-

(2) On the filing of the report with the Controller, the Controller may take such action as he thinks fit for protecting and promoting the interests of the holders of insurance policies in general.

[§ 22,42 of 1986]

(3) Any act done by the Controller in pursuance of the powers vested in him under subsection (2) shall have effect notwithstanding anything in the memorandum or articles of association of the insurer.

(1) An insurer shall be deemed for the purposes of section 254 of the companies Act, No. 17 of 1982, to be unable to pay its debts, if the value of the assets relating to the insurance business carried on by him does not exceed the amount of the liabilities relating to such business by the amount of the deposit for the time being required to be maintained by such company under section 12 of this Act or one-tenth of the general premium income for the preceding financial year, whichever is the greater, and the provisions of this Act shall apply accordingly.

(2) For the purposes of this section-

(1) There may be appointed, for the purposes of this Act, one or more Winding-up Tribunals. Each such Tribunal shall consist of three members, of whom one shall be a person who is or has been a Judge of a District Court, and such person shall be the Chairman of the Tribunal-

(2) A Winding-up Tribunal may choose one or more persons possessing special knowledge of any matter relating to any case under inquiry to assist the Tribunal in determining any question which has to be decided by it under this Act.

(3) Every Winding-up Tribunal shall have such powers of a civil court under the Civil Procedure Code as may be prescribed.

(4) Every Winding-up Tribunal may review any of its decisions in the event of there being a mistake on the face of the record or correct any arithmetical or clerical mistake therein.

(1) The District Court or a Winding-up Tribunal may order the winding up of any insurance company in accordance with the Companies Ordinance* and the provisions of that Ordinance shall, subject to the provisions of this Part of this Act, apply accordingly.

(2) The District Court or a Winding-up Tribunal may order the winding up of an insurer-

(3) Where any petition under paragraph (a) of subsection (2) is found to have been made frivolously or vexatiously, the District Court or Winding-up Tribunal may make order for the payment by the petitioners of the costs and expenses actually and reasonably incurred by the insurer in consequence of the petition and in the proceedings thereon.

(1) In the winding up of an insurer, the value of the assets and liabilities of the insurer shall be ascertained in such manner and upon such basis as the liquidator thinks fit, subject, as far as practicable, to the regulation contained in the Sixth Schedule to this Act and to any directions which may be given by the District Court or Winding- up Tribunal, as the case may be.

(2) For the purposes of any reduction by the District Court or Winding-up Tribunal of the amounts of the contracts of an insurer, the value of the assets and liabilities of the insurer and all claims in respect of policies issued by the insurer shall be ascertained in such manner and upon such basis as the Court or Winding-up Tribunal thinks proper having regard to the regulation in the Sixth Schedule to this Act.

(1) In the winding up of an insurer, the value of the assets and the liabilities of the insurer in respect of life assurance business shall be ascertained separately from the value of any other assets and liabilities of the insurer, and the first-mentioned assets shall not be applied for the discharge of any liabilities other than those in respect of life assurance business except in so far as the first-mentioned assets exceed the liabilities in respect of life assurance business.

(2) Where in the winding up of any insurer carrying on the business of life assurance it is found that when the assets and liabilities of the insurer are ascertained there is a surplus of assets over liabilities (hereinafter referred to as a ” prima facie surplus “) and that any part of the surplus had, at any time during the ten years preceding the commencement of the winding up, been allocated to life policy holders, the following provisions shall have effect:-

(1) If at any time it appears to be expedient that the affairs of an insurer in respect of any class of insurance business comprised in the undertaking of the insurer should be wound up but that any other class of insurance business comprised in the undertaking should continue to be carried on by the insurer or be transferred to such an institution as may be declared by the Minister by notification published in the Gazette a scheme for such purpose may be prepared and submitted for confirmation of the District Court or a Winding-up Tribunal in accordance with the provisions of this Act.

(2) Any scheme prepared under this section shall provide for the allocation and distribution of the assets and liabilities of the insurer between any classes of insurance business effected (including the allocation of any surplus assets which may arise on the proposed winding up), for any future rights of every class of policy holders in respect of their policies and for the manner of winding up of any of the affairs of the insurer which are proposed to be wound up, and may, if such insurer is a company, contain provisions for altering the memorandum of the insurance company with respect to its objects and such further provisions as may be expedient for giving effect to the scheme.

(3) The provisions of this Act relating to the valuation of liabilities of insurers in liquidation and to the applications of surplus assets of the life assurance fund in liquidation shall apply to the winding up of any part of the affairs of an insurer in accordance with the scheme under this section in like manner as they apply in the winding up of an insurer, and any scheme under this section in relation to a company may apply with the necessary modifications to any of the provisions of the Companies Ordinance* relating to the winding up of companies.

(4) An order of the District Court or a Winding-up Tribunal confirming a scheme under this section whereby, if the insurer is a company, the memorandum of that company is altered with respect to its object shall as respects the alteration have effect as if it were an order confirmed under section 6 of the Companies Ordinance*, and the provisions of that section shall apply accordingly,

(5) When making an order confirming a scheme under this section, the District Court or a Winding-up Tribunal may make such orders as it considers necessary for the disposal of so much of the deposit made by the insurer under section 12 or section 44 as does not relate to the classes of insurance business, if any, which the insurer continues to carry on.

(1) Where an insurer is in liquidation, the District Court or Winding- up Tribunal may make an order reducing the amounts payable in respect of the insurance contracts of the insurer upon such terms and subject to such conditions as the District Court or Winding-up Tribunal thinks just.

(2) Where an insurer carrying on the business of life assurance has been proved to be insolvent, the District Court or Winding- up Tribunal may, if it thinks fit, in place of making a winding-up order reduce the amounts payable in respect of the insurance contracts of the insurer upon such terms and subject to such conditions as the District Court or Winding-up Tribunal thinks Just.

(3) Application for an order under this section may be made either by the liquidator or by or on behalf of the insurer or by a policy holder or by the Controller ;

and the Controller and any person whom the District Court or Winding-up Tribunal thinks likely to be affected shall be entitled to be heard on any such application.

(a) carries on any insurance business, or commences any insurance business, without being duly registered under this Act, or

(b) carries on any class of insurance business which he is not authorized under this Act to carry on, shall be guilty of an offence and shall, on conviction after summary trial before a Magistrate, be liable to a fine not exceeding one thousand rupees or to imprisonment of either description for a term not exceeding one year or to both such fine and imprisonment.

(a) refuses or fails, without such cause as is in the opinion of the Controller or other person authorized by the Controller reasonable, to furnish such information or to produce such book, account or document as is required by such notice, or

(b) fails, without such cause as is in the opinion of the Controller or other person authorized by the Controller reasonable, to appear on the date and at the time and place mentioned in such notice, or having appeared refuses or fails, without such cause as is in the opinion of the Controller or other person authorized by the Controller reasonable, to answer any question put to him relating to the matters under inquiry, he shall be guilty of an offence and shall, on conviction after summary trial before a Magistrate, be liable to a fine not exceeding one thousand rupees or to imprisonment of either description for a term not exceeding six months or to both such fine and imprisonment.

(1) Without prejudice to the provisions of section 58 or section 71 or section 72 by which a special penalty is prescribed for an offence, any person who contravenes or fails to comply with any provision of this Act shall be guilty of an offence and shall, on conviction after summary trial before a Magistrate, be liable to a fine not exceeding five hundred rupees and in the case of a continuing offence to a further fine not exceeding two hundred rupees for each day on which the offence is so continued after the conviction.

(2) Where an offence under this Act is committed by an insurer every director of the insurer shall also be guilty of the same offence and be liable to the same punishment, unless he proves that the offence was committed without his knowledge or consent and that he had taken all reasonable steps to prevent the commission of the offence.

(1) A prosecution for any offence under this Act may be instituted by the Controller or by any other officer acting under the written authority of the Controller.

(2) No prosecution for any offence under this Act shall be instituted by any person other than the Controller or an officer acting under his authority, except with the prior written sanction of the Attorney-General.

(1) No person shall commence to carryon business as an insurance broker unless he is registered under this Part as being authorized to carryon such business.

(2) No person shall be registered as an insurance broker under this Act-

(3) No person shall be registered under this Part as an insurance broker except upon the payment by such person to the Controller of a fee of one thousand rupees,

(4) Every person registered under this Part, as an insurance broker, shall be subject to the terms and conditions set out in the Seventh Schedule,

(5) Where any person is registered under this Part as an insurance broker’ and such person acts in violation of any of the terms and conditions set out in the Seventh Schedule the Controller may, by order suspend for any period specified in such order, or cancel, such registration.

(1) The certificate of registration issued under this Part shall-

(2) The certificate of registration issued under this Part, shall authorize the holder to carry on business as an insurance broker in respect of life assurance business of any other class or classes of insurance business not being life assurance business. Every broker intending to carryon business as an insurance broker in respect of life assurance business and any other class or classes of insurance not being life assurance business, shall apply for two certificates of registration.

(a) shall be transferable to any other person, and accordingly any such transfer shall be null and void;

(b) shall be used for the benefit of an, other person.

(1) If the Controller is of the opinion that any person to whom a certificate of registration has been issued is unfit to carry on such business for the reason that

(2) No order under subsection (1) shall be made against a person carrying on business as an insurance broker except after notice in writing to him to show cause within such period as may be specified in the notice, why such order should not be made, and except on his failing to show cause within such period or on his not showing sufficient cause.

(3) Any person carrying on business as an insurance broker against whom au order is made under subsection (1) may prefer an appeal in writing to the Secretary to the Ministry of the Minister before the expiry of ten days after the date on which such order is communicated to that person by or on behalf of the Controller by whom such order was made, and the Secretary may, in dealing with any appeal preferred to him, affirm, vary or annul the order against which the appeal has been preferred.

(4) An order under subsection (1) suspending or cancelling a certificate of registration issued to a person to carryon business as an insurance broker shall come into force on the date on which such order is communicate to that person by or on behalf of the Controller, and shall continue to be in force notwithstanding that an appeal against such order has been preferred to tile Secretary.

(5) Any notice required to be given, or any order required to be communicated under the proceeding provisions of this section, to any person shall be deemed to have been served or communicated on or to him after the expiry of a period of two days reckoned after the date of despatch of such notice or order by letter sent by registered post to his usual place of business or residence.

(a) the mode and manner in which applications for registration as an insurance broker may be made and disposed of ;

(b) the furnishing of all such statements and declarations relating to the business carried on by an insurance broker as may be necessary for ensuring that the provisions of this Act of any regulations made thereunder are complied with;

(c) the maximum commission to be charged by an insurance broker in respect of life assurance business and any other class of insurance business other than life assurance business.

(a) a person competent in insurance work, by name or by office, to be or to act as the Controller of Insurance,

(b) a person competent in insurance work, by name or by office, to be or to act as the Deputy Controller of Insurance, and

(c) such other officer, consultants and servants as may from time to time be required for the purposes of this Act.

(1) There shall be a Committee, which shall be called the Insurance Advisory Committee (hereinafter referred to as the “Advisory Committee”) consisting of four persons appointed by the Minister. from and amongst persons who have distinguished themselves in the field of insurance.

(2) The Minister shall appoint one of the members of the Committee to be the Chairman of the Committee.

(3) Every member of the Committee shall, unless he earlier vacates office by death, resignation or removal, hold office for a period of three year. Any member of the Committee who vacates office by affluxion of time shall be eligible for re-appointment.

(4) Any member of the Committee may resign from the office of member by letter addressed by him to the Minister.

(5) Any member of the Committee may be removed from office by the Minister without assigning any reason therefor.

(6) The quorum for any meeting of the Committee shall be two members.

(1) Any notice or other document required or authorized by or under this Act to be served on any insurer shall be served 011 any director or .manager or officer thereof in accordance” with the provisions in that behalf contained in the Companies Act, No. 17 of 1982, and if so served shall be deemed for the purposes of this Act to have been duly served.

(2) Any notice required to be served on any person under section 46A may be served on such person-

(1) Where a dispute relating to the settlement of a claim on a policy of life assurance, by which the sum assured does not exceed two thousand rupees (exclusive of any profit or bonus not being a guaranteed profit or bonus) and which was issued by an insurer in respect of insurance business transacted by the insurer in Sri Lanka, arises between a claimant under the policy and the insurer who issued the policy or has otherwise assumed liability in respect thereof, the dispute may, at the option of the claimant, be referred to the Controller for his decision, and the Controller may, after giving an opportunity to the parties to be heard and after making such further inquiries as he may think fit, make his order on the dispute.

(2) The order of the Controller under this section shall be final and shall not be called in question in any court of law, and may, on application made by the Controller to the court in which, if the dispute had not been referred to the Controller, action would have been instituted in respect of the dispute, be executed by that court as if it were a decree entered by that court.

(3) The Controller shall be entitled to levy from the claimant such amount as may be prescribed as his fees for the duties performed by him under this section. Such amount may be recovered in the prescribed manner from the claimant and shall on recovery be paid into the Consolidated Fund.

(1) The Minister may make regulations for the purpose of carrying out or giving effect to the principles and provisions of this Act or of amending any Schedule to this Act, and in particular in respect of matters required by this Act to be prescribed or in respect of which regulations are authorized to be made.

(2) No regulation made by the Minister shall have effect until it is approved by Parliament and notification of such approval is published in the Gazette.

(1) Where the Controller or an administrator appointed under section 53 or any policy holder or member of an insurer which is a company incorporated under any law for the time being in force or the liquidator of any such insurance company in liquidation is of the opinion-

(2) Every application under subsection (1) shall be made, and shall be disposed of, by way of summary procedure in accordance with the provisions of Chapter XXIV of the Civil Procedure Code.

(3) The provisions of Chapter XXII of the Civil Procedure Code relating to execution shall be applicable to any order of a District Court for the payment of any money, or for the restoration of property in any application made under subsection (1), and for the purposes of the application of such provisions the Controller or other person making such application shall be deemed to be the judgment-creditor and the person liable to pay the money or restore the property in accordance with the order of the District Court shall be deemed to be the judgment-debtor.

(4) Where in any proceedings in any District Court arising out of an application under subsection (1) the Court is satisfied that any money or other property of the insurance company has disappeared or has been lost, the Court shall presume that every person in charge of, or having a disposing power over, such money or other property, whether such person is a director, manager, or other officer or employee of such company, is accountable for such money or other property unless such person proves-

(1) Any insurer who is registered under the provisions of this Act to carry on motor vehicle insurance business shall be deemed to be an authorized insurer for the purposes of Part VI of the Motor Traffic Act.

(2) Any insurer who is registered under the provisions of this Act to carry on employers’ liability Insurance business shall be deemed to have been granted a licence under the provisions of section 45 (1) of the Workmen’s Compensation Ordinance to undertake insurance against liabilities to workmen which may be incurred by employers under that Ordinance.

(i) invested any moneys forming part of the assets relating to his life assurance business in investments other than in approved securities ;

(ii) given loans of such moneys which are not in accordance with the provisions of this Act;

(iii) in any manner whatsoever alienated such assets or any part thereof, such act shall be deemed to be null and void, and it shall be the duty of such insurer, notwithstanding anything in any other law, to recover such moneys or assets by the institution of legal proceedings in a competent court;

(1) In this Act, unless the context otherwise requires-

” actuary” means a person possessing such qualifications as may be prescribed;

” appointed date ” means the 1st day of November 1962;

“approved project* ” shall have the same meaning as

” approved project” in section 47A (1) of the Income Tax Ordinance;

” approved securities ” means-

” auditor” means a person possessing such qualifications as may be prescribed;

” certified ” in relation to any statement, account or return, or to any copy or translation of a document required to be furnished by or on behalf of an insurer, means that a certificate to the effect that such a statement, account or return is true and correct or that the copy is a true copy or that the translation is a correct translation, has been endorsed thereon or attached thereto by the insurer or the principal officer of the insurer authorized in that behalf, as the case may be;

” Controller” means the Controller of Insurance appointed for the purposes of this Act and includes the Deputy Controller of Insurance;

” District Court” means the District Court of the district in which the head office or principal place of business in Sri Lanka of an insurer is situated .

“Government guaranteed securities” includes any security in respect of a loan the repayment of which together with interest thereto is guaranteed by the Government of Sri Lanka;

” Government securities ” means promissory notes (including treasury bills), stock, bearer bonds, and any other security issued by or on behalf of the Government of Sri Lanka in respect of any loan raised either before or after the appointed date and shall be deemed to include deposits in the National Savings Bank established under the National Savings Bank Act, No. 30 of 1971, but does not include a currency note;

” insurance agents ” means an individual who receives or agrees to receive payment from an insurer by way of commission or other remuneration in consideration for his soliciting or procuring insurance business including business relating to the continuance, renewal or revival of policies of insurance;

” insurance business ” means any of the following classes of business :-

” insurer” means any company incorporated under any law for the time being in force in Sri Lanka and registered for the time being under this Act as being authorized to carry on insurance business and shall be deemed to include an individual, any body corporate or unincorporated body who or which has, prior to the appointed date carried on or transacted insurance business, liability in respect of which remains unpaid or undischarged on the appointed date;

and shall be deemed to include an individual, any body corporate, or unincorporated body of individuals who or which has prior to the appointed date carried on or transacted insurance business, liability in respect of which remains unpaid or undischarged on the appointed date;

” local authority securities ” means any security that may be issued, in accordance with the law in force for the time being by any local authority in Sri Lanka;

“long-term business” means insurance business of all or any of the following classes, namely, life assurance business and bond investment business, and includes in relation to any insurer, insurance business carried on by the insurer as incidental only to any such class of business;

” manager ” means a person who, subject to the control and supervision of the insurer, or if the insurer is a company, of the directors, has the management of the whole of the affairs of an insurer, and includes any other person occupying the position of a manager, by whatever name called, and whether under a contract of service or not ;

” officer ” or ” principal officer ” includes any director, managing director, manager or secretary of an insurer;

” National Insurance Corporation” means the National Insurance Corporation established by Order made under section 3 of the Insurance (Special Provisions) Act, No. 22 of 1979 ;

” policy holder” includes a person to whom the whole of the interest of the policy holder in the policy is assigned once and for all, but does not include an assignee thereof whose interest in the policy is defensible or is for the time being subject to any condition;

” principal agent” means a person who, not being a salaried employee of an insurer, in consideration of any commission-

” prescribed ” means prescribed by regulation made under this Act;

“reinsurance” means the transfer of an insurer’s liability, incurred under any contract or policy of insurance, to another insurer or insurers;

“Winding-up Tribunal” means a Tribunal appointed under section 62 of this Act.

(2) For the purposes of this Act, a person shall be deemed to carry on or transact insurance business of any class in Sri Lanka if such person-