Regulation of Insurance Industry (Amendment) Act 2011

This Act may be cited as the Regulation of Insurance

Industry (Amendment) Act, No. 3 of 2011.

Section 4 of the Regulation of Insurance Industry

Act, No. 43 of 2000 (hereinafter referred to as the “principal enactment”) is hereby amended as follows:—

in subsection (1) of that section, by the repeal of paragraph (c) of that subsection and the substitution therefor of the following paragraph:—

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

Section 5 of the principal enactment is hereby amended as follows:—

by the insertion immediately after paragraph (b) of that section of the following new paragraph:—

by the insertion immediately after paragraph (d) of that section, of the following new paragraph:—

Section 6 of the principal enactment is hereby amended in subsection (2) of that section, by the repeal of 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;”.

Section 12 of the principal enactment is hereby amended as follows :—

by the insertion immediately after subsection (1)

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.”;

in subsection (3) thereof by the substitution for the words and figures “the Social Security Board established by the Social Security Board Act, No.

Section 13 of the principal enactment is hereby amended in subsection (1) of that section, as follows:—

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

by the insertion immediately after paragraph (b)

Section 14 of the principal enactment is hereby amended in subsection (1) of that section, as follows:—

in paragraph (h) thereof, by the substitution for the words “section 13; and”, of the words “section 13;”;

in paragraph (i) thereof, by the substitution for the words “three years.”, of the words “three years; and”;

by the addition immediately after paragraph (i)

The following new section is hereby inserted immediately after section 15 of the principal enactment and shall have effect as section 15A of that enactment:—

15A. Every insurer shall be required within three years of being issued with a licence under section 15 of this Act, to have itself listed on a licensed stock exchange.”.

Section 17 of the principal enactment is hereby repealed.

Section 18 of the principal enactment is hereby amended in subsection (1) of that section, as follows:—

in paragraph (g) thereof, by the substitution for the words “direction given by the Board”, of the words

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;”.

Section 28 of the principal enactment is hereby repealed.

The following new section is hereby inserted immediately after section 31 of the principal enactment and shall have effect as section 31A of that enactment:—

31A. A person shall not be appointed, elected or nominated as a director of an insurer or continue as a director of an insurer, if such person is subject to any one or more of the disqualifications specified in the Second

Schedule to this Act.”.

“Insurer to be listed on a licensed stock exchange.

Act, No. 3 of 2011

“Conditions relating to the appointment of directors of an insurer.

Insurer to inform Board of proposed appointment, nomination or election of directors.

Section 32 of the principal enactment is hereby amended 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 relation to a person employed as a specified officer under subsection (1).”.

The following new sections are hereby inserted immediately after section 33 of the principal enactment and shall have effect as sections 33A, 33B, 33C, 33D and 33E of that enactment:—

33A. (1) A director or an employee of an insurer shall not be appointed, elected or nominated as a director of another insurer, except where such insurer is a subsidiary company or an associate company of the first mentioned insurer.

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.

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

Any person aggrieved by a decision given by the Board under subsection (2), may submit an appeal against such decision to the

An insurer shall not appoint, elect or nominate as a director of such insurer a person whose appointment, election or nomination has not been approved by the

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

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.

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

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

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.

The insurer to whom a direction is issued under subsection (2) shall, within the period specified in the direction—

remove the person from the office of director; and

take such steps as are necessary to inform the shareholders of the insurer and the

The removal of a director in accordance with a direction issued under paragraph (a) of subsection (2) shall, notwithstanding the

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

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

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.”.

Section 35 of the principal enactment is hereby repealed.

Section 37 of the principal enactment is hereby amended by the repeal of subsection (1) of that section and the substitution therefor of the following subsection:—

“(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:—

all policy forms to be issued by such insurer, prior to its issue;

any amendments to be made to any policy forms already issued; and

where required to do so by a notice in writing, copies of any policy forms already issued.”.

Section 47 of the principal enactment is hereby amended as follows:—

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

in subsection (2) of that section, by the substitution for the words “required by the rules made by the

Section 48 of the principal enactment is hereby amended in subsection (1) of that section, by the substitution, 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.”.

Section 49 of the principal enactment is hereby amended in paragraph (b) of that section, by the substitution 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.”.

Section 55 of the principal enactment is hereby amended by the substitution for the words “the provisions 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,”.

Act, No. 3 of 2011

“Publishing of returns submitted to the Board.

Section 56 of the principal enactment is hereby amended by the substitution for the words “abstracts as may be determined by the Board by rules made in that behalf.”, of the words “abstracts as may be determined by the Board and within such period as the Board may determine.”.

Section 60 of the principal enactment is hereby amended in the proviso to that section, by the substitution for the words “any particular insurer, unless the insurer has”, of the words “any particular insurer or broker, unless the insurer or the broker has”.

Section 61 of the principal enactment is hereby repealed and the following section substituted therefor:—

61. An insurer may with the prior written approval of the Board, publish any return submitted to the Board under this Act or a true and accurate abstract of such return, for purpose of publicity.”.

Section 78 of the principal enactment is hereby amended as follows:—

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

in subsection (5) of that section, by the substitution for the words “any individual”, of the words “any person”.

Section 80 of the principal enactment is hereby amended as follows:—

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”;

in paragraph (b) of subsection (2) of that section—

Section 81 of the principal enactment is hereby amended as follows:—

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

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”.

Section 83 of the principal enactment is hereby amended as follows:—

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”;

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

in paragraph (d) of that section, by the substitution for the words “such other documents”, of the words

Section 84 of the principal enactment is hereby amended as follows :—

in subsection (1) of that section—

by the insertion immediately after subsection (1) of that section, of the following new subsection:—

in subsection (2) of that section, by the substitution for the words “of this Act shall apply”, of the words

The following new section is hereby inserted immediately after section 84 of the principal enactment and shall have effect as section 84A of that enactment:—

84A. Notwithstanding the provisions of section 84, the Board may in lieu of taking any action under that section on any one or more grounds referred to therein, and where the nature of the act or omission is not of such gravity as to warrant taking action under that section, direct the broker to take such measures that the Board may consider appropriate, to—

rectify and set right any consequence resulting from such act or omission ;

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.”.

Section 85 of the principal enactment is hereby amended as follows:—

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,” ;

in subsection (2) of that section and in the proviso to that subsection, by the substitution for the words

in subsection (3) of that section—

Section 86 of the principal enactment is hereby amended as follows: —

by the repeal of subsection (3) of that section, and the substitution therefor of the following subsection:—

by the addition at the end of that section, of the following new subsection:—

Section 88 of the principal enactment is hereby amended by the substitution for the words “paid by an insurer 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,”.

Act, No. 3 of 2011

Prohibition against acting as a loss adjuster without a

Certificate of

Registration.

Qualifications for registration.

Application for registration and issue of certificate.

The following new Part is hereby inserted immediately after section 89 of the principal enactment and shall have effect as PART VIIIA of that enactment:—

“PART VIIIA

REGISTRATION OF LOSS ADJUSTERS

89A. (1) No person shall act or hold out as a loss adjuster to any insurer, unless such person is the holder of a Certificate of Registration as a loss adjuster, issued by the Board under this

Act.

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.

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.

A Certificate of Registration issued by the Board shall authorize its holder to carry on such activity as specified therein and a

Any transfer or use of a Certificate of

The Board may at any time add to, vary or revoke any term or condition specified in a

The Board may revoke a

has acted in contravention of any provisions of this Part of this Act, or any rules or regulations made thereunder;

has acted in breach of any term or condition specified in the Certificate of Registration issued by the Board under this Act;

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

has since the grant of the Certificate of Registration, been found to be disqualified for the grant of such registration.

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.

An application made under this

Where any applicant for a registration—

fails to show cause within the time specified in the notice issued under subsection (1); or

fails to show sufficient cause acceptable to the Board, the application made shall be rejected by the

Section 90 of the principal enactment is hereby amended by the substitution for the word “Company”

wherever such word appears in the section, of the word

“person”.