Insurance Law

,Hello Counsel provides legal advice and representation in a wide variety of Insurance Claim Cases- life insurance claim, general liability claims- medical insurance claim, fire insurance claim, theft insurance claim, bodily injury claim, employment-related claim, product liability claim, etc.

Insurance may be described as a social device to reduce or eliminate risk of life and property. Under the plan of insurance, a large number of people associate themselves by sharing risk, attached to individual. The risk, which can be insured against include fire, the peril of sea, death, incident, & burglary. Any risk contingent upon these may be insured against at a premium commensurate with the risk involved.

Insurance acts as an important tool in providing a sense of security to the society on a whole. In case the bread earner of a family dies, the family suffers from direct financial loss as family's income ceases. Life insurance is one alternate arrangement that offers some respite to the family from financial distress. The basic need of insurance arises as risks are uncertain and unpredictable in nature. Getting insurance for an asset does not mean that the asset is protected against risks or its exposure to risk is reduced, but it actually implies that in case the asset suffers any loss in value due to such risk, the insurance company bears the loss and compensates the insured by making payment to him. Insurance acts as a useful instrument in promoting savings and investments, particularly within the lower income and middle income families. These savings are used as investments to fuel economic growth.

Insurance business is divided into following types of business namely: (i) Life Insurance, (ii) General Insurance- Fire insurance, Motor vehicle insurance & Other Miscellaneous insurance, and (iii) Reinsurance.

Insurance law is the name given to practices of law surrounding insurance, including insurance policies and claims. Insurance regulation that governs the business of insurance is typically aimed at assuring the solvency of insurance companies. It can be broadly broken into three categories - regulation of the business of insurance; regulation of the content of insurance policies, especially with regard to consumer policies; and regulation of claim handling. Multiple regulations governs capitalization, reserve policies, rates and various other "back office" processes.

Lately, present central dispensation has been able to muster support for the Insurance Laws (Amendment) Bill, 2015, which got passed by both houses of parliament. The highlights of the changes proposed in the new legislation are as follows: (i) FDI cap has been increased from 26% to 49%, (ii) Foreign re-insurers that intend to open branches in India must now register with the Insurance Development & Regulatory Authority (IRDA)—India’s insurance regulatory body— if they possess a minimum net-owned fund of Rs5,000 crore, (iii) the Bill permits public companies to raise their funds by issuing both equity shares of single fixed denomination or value and other forms of securities, as specified by the IRDA, (iv) compliances hassle has been considerably cut down, (v) the Bill empowers the IRDA, ensuring greater consumer protection.

Section 2 (7A) of the Insurance Act, 1938 [As amended vide the Insurance Laws (Amendment) Act, 2015] stipulates that shareholding by a foreign company (direct and indirect) should not exceed 49% of paid-up capital of an Indian insurance company. It makes this cap inclusive of foreign portfolio investments and states that the companies should be Indian owned and controlled. Vide Section 2 (8A) of the Insurance Act, minimum paid-up capital requirement for a person exclusively in the health insurance business has been increased from 50 crore to 100 crore. Section 3 of Insurance Act empowers the IRDA to withhold a registration of a foreign insurer, in addition to the power of cancelling it, if they have been debarred by law or practice of his country to carry on insurance business. This provision also includes any foreign company engaged in re-insurance business through a branch established in India. Section 4 of the Insurance Act also empowers the IRDA to suspend or cancel registration wholly or in part, when the transfer or amalgamation has happened without the approval of the authority.

Section 25 of the General Insurance Business (Nationalization) Act, 1972 has been omitted vide the Insurance Laws (Amendment) Act, 2015, which restrained foreign insurers from issuing insurance policies in India without prior government permission.

Hello Counsel deals in insurance and financial institutions regulations. We provide legal advice and representation related to Insurance Laws as well as address insurance and reinsurance coverage issues arising out of a wide variety of claims, including bad faith claims, environmental related claims, construction defect claims, construction bodily injury claims, personal injury claims, employment-related claims, product liability claims, professional liability claims, general liability claims and claims related to storm, fire, water losses, etc. Our finance practice includes representing of lenders, underwriters, arrangers, borrowers and other clients in their various roles in financing transactions and provide reasoned and timely advice concerning mergers and acquisitions, leveraged buyouts, tender offer financings, joint ventures, and other credit transactions. We also deal in obtaining licensing and regulatory approvals for unit trusts and investment companies.

Legislations Governing Insurance Laws In India

General Insurance Business (Nationalization) Act, 1972 [GIBNA].
Insurance Act, 1938
Insurance Regulatory and Development Authority Act, 1999 [IRDA].
Life Insurance Corporation Act, 1956
Marine Insurance Act, 1963.
Motor Vehicles Act, 1988.

Regulations framed under the Insurance Regulatory and Development Authority (IRDA) Act, 1999

IRDA (Appointment of Insurance Advisory Committee) Regulations, 2000
IRDA (Appointed Actuary ) Regulations, 2000
IRDA (Actuarial Report and Abstract) Regulations, 2000
IRDA (Assets, Liabilities and Solvency Margin of Insurers) Regulations, 2000
IRDA (Conditions of Service of Officers and other Employees) Regulations, 2000
IRDA (Distribution of Surplus) Regulations, 2002
IRDA (General Insurance-Reinsurance) Regulations, 2000
IRDA (Insurance Brokers) Regulations, 2002
IRDA (Insurance Advertisements and Disclosure) Regulations, 2000
IRDA (Insurance Advisory Committee) (Meeting) Regulations, 2000
IRDA(Issuance of Capital by Life Insurance Companies) Regulations, 2011.
IRDA (Investment) Regulations, 2000
IRDA (Insurance Surveyors and Loss Assessors (Licensing, Professional Requirements and Code of Conduct)) Regulations, 2000
IRDA (Licensing of Corporate Agents) Regulations, 2002
IRDA (Licensing of Insurance Agents) Regulations, 2000
IRDA (Life Insurance - Reinsurance) Regulations, 2000
IRDA (Meetings) Regulations, 2000
IRDA (Manner of Receipt of Premium) Regulations, 2002
IRDA (Member of Insurance Advisory Committee) Regulations, 2000
IRDA (Micro-Insurance) Regulations, 2005
IRDA (Maternity Leave) Regulations, 2005
IRDA (Obligations of Insurers to Rural and Social Sectors) Regulations, 2002
IRDA (Preparation of Financial Statements and Auditor‘s Report of Insurance Companies) Regulations, 2002
IRDA (Protection of Policyholders‘ Interests) Regulations, 2002
IRDA (Qualification of Actuary) Regulations, 2004
IRDA (Re-Insurance Advisory Committee) Regulations, 2001
IRDA (Registration of Indian Insurance Companies) Regulations, 2000
IRDA (Reinsurance Cessions) Notification
IRDA (Sharing of Database for Distribution of Insurance Products) Regulations, 2010
IRDA (Scheme for Amalgamation and Transfer of General Insurance Business) Regulations 2011.
IRDA (Treatment of Discontinued Linked Insurance Policies) Regulations, 2010.
IRDA (Third Party Administrators - Health Services) Regulations, 2001.

Guidelines applicable to Insurance Companies

Anti-Money Laundering (AML) guidelines (30/IRDA/AML/CIR/AUG-09).
Guidelines on- Advertisement, Promotion & Publicity of Insurance Companies and insurance intermediaries (007/IRDA/ CIR/ADV/MAY-07).
Corporate Governance Guidelines for insurance companies (IRDA/F&A/CIR/025/2009-10)
Guidelines on- Determination of required solvency margin under General Insurance Business. (39/IRDA/ACTL/RSM-NL/2005-06).
Guidelines on- Estimation of IBNR claims provision under General Insurance Business (11/IRDA/ACTL/IBNR/2005-06)
Guidelines on- File and Use Requirements for General Insurance Product ( 021/IRDA/F&U/SEP-06).
Guidelines on- Group Insurance Policies. (015/IRDA/Life/Circular/GI Guidelines/2005).
Grievance Redressal Guidelines (3/CA/GRV/YPB/10-11).
Guidelines on- Health plus Life Combi Products‘. (IRDA/ LIFE /GDL/MISC/087/12/2009).
Guidelines on- Insurance and Reinsurance of General Insurance Risks. (020/NL/IRDA/06).
Guidelines on- Insurance repositories and electronic issuance of insurance policies (IRDA/ ADMN/ GDL/ GLD/ 080/ 04/ 2011).
Guidelines for- Marine Hull Insurance and Insurance of War risk Insurance of Marine Hulls.
Guidelines on- Outsourcing of Activities by Insurance Companies (IRDA/Life/CIR/GLD/013/02/2011).
Guidelines for- Opening of representative/liaison offices overseas by an Indian Insurance company registered with the IRDA. (IRDA/ 34/ For Office/ 08-09).
Public Disclosures by Insurers (IRDA/F&I/CIR/F&A/012/01/2010).
Guidelines on- Periodic disclosures; Guidelines on licensing of corporate agents. (IRDA/ CAGTS/CIR/LCE/039/03/2010).
Guidelines for- Unit Linked Life Insurance Products. (032/IRDA/Actl/Dec-2005).

Judgments: Insurance Law

Citations: Insurance Cover-Note

United India Insurance Co. Ltd. Versus M/s Orient Treasures Pvt. Ltd., Civil Appeal No.2140 OF 2007, Judgment Dated: 13.01.2016, Bench: J. Chelameswar, & Abhay Manohar Sapre, JJ, Supreme Court of India [Full PDF Judgment]- Supreme Court set aside a National Consumer Disputes Redressal Forum order against an Insurance company holding that “cover note”s conditions form part of the insurance contract and therefore binds the insured.

Citations: Insurance Policy

Suraj Mal Ram Niwas Oil Mills (P) Ltd. v. United India Insurance Co. Ltd. & Anr., (2010) 10 SCC 567, Hon’ble Supreme Court held. “Before embarking on an examination of the correctness of the grounds of repudiation of the policy, it would be apposite to examine the nature of a contract of insurance. It is trite that in a contract of insurance, the rights and obligations are governed by the terms of the said contract. Therefore, the terms of a contract of insurance law have to be strictly construed and no exception can be made on the ground of equity. Thus, it needs little emphasis that in construing the terms of a contract of insurance important, and it is not open for the court to add, delete or substitute any words. It is also well settled that since upon issuance of an insurance policy, the insurer undertakes to indemnify the loss suffered by the insured on account of risk covered by the policy, its terms have to be strictly construed to determine the extent of liability of the insurer. Therefore, the endeavour of the court should always be to interpret the words in which the contract is expressed by the parties.”

Judgments & Citations: Motor Vehicles Act, 1988

Ashvinbhai Jayantilal Modi v. Ramkaran Ramchandra Sharma[Bench Strength 2], Civil Appeal Nos. 8131-8132/2014, Judgment- 25/09/2014, Bench: V. Gopala Gowda, J. & Adarsh Kumar Goel, J.- Citation: 2015(2) SCC 180: 2014(11) SCALE 427: 2014(8) Supreme 60: 2014(8) SLT 364- Motor Vehicles Act, 1988- Section 166- Funeral expenses- Compensation towards, grant of- Held, Tribunal and High Court failed in awarding only Rs.5,000/- towards funeral expenses instead of Rs.25,000/- according to principles laid down by this Court in Rajesh & Ors. case- Hence, Rs.25,000/- awarded towards the same.- Rajesh & Ors. v. Rajbir Singh & Ors., (2013) 9 SCC 54, Relied on (Para 12)- Motor Vehicles Act, 1988- Sections 166 & 173- Love and affection- Compensation towards loss of, enhancement of- Held, Tribunal and High Court erred in not following principles laid down by this Court in M. Mansoor & Anr case, in awarding a meagre sum of just Rs.15,000/- under heads of loss of love and affection- Accordingly, Rs.1,00,000/- awarded to appellant towards the same.- M. Mansoor & Anr v. United India Insurance Co. Ltd., 2013 (12) SCALE 324, Relied on (Para 10).
B.V. Nagaraju v. Oriental Insurance Co. Ltd Divisional Officer, Hassan, (1996) 4 SCC 647 -SC Court held that the mere factum of carrying more passengers than the permitted seating capacity in the goods carrying vehicle by the insured does not amount to a fundamental breach of the terms and conditions of the policy so as to allow the insurer to eschew its liability towards the damage caused to the vehicle. The SC Court in the said case has held as under:- “It is plain from the terms of the Insurance Policy that the insured vehicle was entitled to carry six workmen, excluding the driver. If those six workmen when travelling in the vehicle, are assumed not to have increased risk from the point of view of the Insurance Company on occurring of an accident, how could those added persons be said to have contributed to the causing of it is the pose, keeping apart the load it was carrying. In the present case the driver of the vehicle was not responsible for the accident. Merely by lifting a person or two, or even three, by the driver or the cleaner of the vehicle, without the knowledge of the owner, cannot be said to be such a fundamental breach that the owner should, in all events, be denied indemnification. The misuse of the vehicle was somewhat irregular though, but not so fundamental in nature so as to put an end to the contract, unless some factors existed which by themselves, had gone to contribute to the causing of the accident.”
Lakhmi Chand Versus. Reliance General Insurance, Civil Appeal Nos.49-50 Of 2016, Judgment Dated: 07.01.2016, T.S. Thakur, CJI & V. Gopala Gowda, J, Supreme Court Of India. [Full PDF Judgment]- Insurance Company rejected the claim for the reason that the loss did not fall within the scope and purview of the insurance policy, the same being violative of the terms and conditions of the policy, as five passengers were travelling in the goods-carrying vehicle at the time of accident, whereas the permitted seating capacity of the vehicle was only 1+1.- Rejection challenged before the District Consumer Disputes Redressal Forum under Section 12 of the Consumer Protection Act, 1986, submitting that rejection of the claim amounts to deficiency in service on the part of the Insurance Company- District Forum allowed the Claim- State Commission Disallowed- State Commission Order was challenged before the National Commission by way of filing Revision Petition under Section 21(b) of the Consumer Protection Act, 1986 questioning the correctness of the same by urging various tenable grounds.- National Commission concurred with the State Commission- SC however set aside the order of the two Commissions, and restored the order of the District Forum, holding that If the number of persons travelling in the vehicle at the time of the accident did not have a bearing on the cause of accident, then the mere factum of the presence of more persons in the vehicle would not disentitle the insured claimant from claiming compensation under the policy towards the repair charges of the vehicle paid by the appellant.
Mukund Dewangan Versus Oriental Insurance Co. Ltd. etc., Civil Appeal No.5826 OF 2011, Judgment Dated: 11.02.2016, Bench: Kurian Joseph & Arun Mishra, JJ, Supreme Court Of India [Full PDF Judgment]- Substantial questions of law, what is the meaning to be given to the definition of “light motor vehicle” as defined in section 2(21) of the MV Act ? Whether transport vehicles are excluded from it ?; whether ‘transport vehicle’ and ‘omnibus’ the “gross vehicle weight” of either of which does not exceed 7500 kgs. would be a “light motor vehicle” and also motor-car or tractor or a road roller, “unladen weight” of which does not exceed 7500 kgs. and holder of licence to drive class of “light motor vehicle” as provided in section 10(2)(d) would be competent to drive a transport vehicle or omnibus, the “gross vehicle weight” of which does not exceed 7500 kgs. or a motor-car or tractor or road roller, the “unladen weight” of which does not exceed 7500 kgs.; what is the effect of the amendment made by virtue of Act No.54 of 1994 w.e.f. 14.11.1994 while substituting clauses (e) to (h) of section 10(2) which contained “medium goods vehicle”, “medium passenger motor vehicle”, “heavy goods vehicle” and “heavy passenger motor vehicle” by “transport vehicle”?; whether insertion of expression ‘transport vehicle’ under section 10(2)(e) is related to said substituted classes only or it also excluded transport vehicle of light motor vehicle class from purview of Sections 10(2)(d) and 2(41) of the Act?; what is the effect of amendment of the Form 4 as to operation of the provisions contained in section 10 as amended in the year 1994 and whether procedure to obtain driving licence for transport vehicle of class of “Light Motor Vehicle” has been changed ?- The Case referred to the larger bench.
National Insurance Company Ltd. v. Swaran Singh & Ors., (2004) 3 SCC 297- A three judge bench of this Court held as under:- ”49. Such a breach on the part of the insured must be established by the insurer to show that not only the insured used or caused or permitted to be used the vehicle in breach of the Act but also that the damage he suffered flowed from the breach. XXXXX. 52. In Narvinva’s case (supra) a Division Bench of this Court observed: “The insurance company complains of breach of a term of contract which would permit it to disown its liability under the contract of insurance. If a breach of a term of contract permits a party to the contract complaints of breach to prove that the breach has been committed by the other party to the contract. The test in such a situation would be who would fail if no evidence is led. 69. The proposition of law is no longer resintegra that the person who alleges breach must prove the same. The insurance company is, thus, required to establish the said breach by cogent evident. In the event the insurance company fails to prove that there has been breach of conditions of policy on the part of the insured, the insurance company cannot be absolved of its liability.”.
Oriental Insurance Company Ltd. v. Meena Variyal, (2007) 5 SCC 428- National Insurance Company Ltd. v. Swaran Singh in this case, holding, “We shall now examine the decision in Swaran Singh on which practically the whole of the arguments on behalf of the claimants were rested. On examining the facts, it is found that, that was a case which related to a claim by a third party. In claims by a third party, there cannot be much doubt that once the liability of the owner is found, the insurance company is liable to indemnify the owner, subject of course, to any defence that may be available to it under Section 149(2) of the Act. In case where the liability is satisfied by the insurance company in the first instance, it may have recourse to the owner in respect of a claim available in that behalf, it may have recourse to the owner in respect of a claim available that behalf. Swaran Singh was a case where the insurance company raised a defence that the owner had permitted the vehicle to be driven by a driver who really had no licence and the driving licence produced by him was a fake one. There Lordships discussed the position and held ultimately that a defence under Section 149(2)(a)(ii) of the Act was available to an insurer when a claim is filed either under Section 163-A or under Section 166 of the Act. The breach of a policy condition has to be proved to have been committed by the insured for avoiding liability by the insurer. Mere absence of or production of fake or invalid driving licence or disqualification of the driver for driving at the relevant time, are not in themselves defences available to the insurer against either the insured or the third party. The insurance company to avoid liability, must not only establish the available defence raised in the proceeding concerned but must also establish breach on the part of the owner of the vehicle for which the burden of proof would rest with the insurance company. Whether such a burden had been discharged, would depend upon the facts breach on the part of the insured concerning a policy condition, the insurer would not be allowed to avoid its liability towards the insured unless the said breach of condition is so fundamental as to be found to have contributed to the cause of the accident.”.
Shrikant Madhav Karve Versus The Secretary (Parivahan IV), Public Interest Litigation No.28 Of 2013, Judgment Dated: 18.02.2016, Bench: A.S. Oka & V.L. Achliya, JJ, Bombay High Court [Full PDF Judgment]- Motor Vehicles Act, 1988 [MV Act]- Issue, mainly about the “transport vehicles” as defined under Subsection (47) of Section 2 of the MV Act.- The main issue raised in this Public Interest Litigation is as regards the manner in which the transport vehicles are checked for the purposes of issuing fitness certificates under Subsection (47) of Section 2.- The Court passed multiple directions.- Directed the Central Government to consider amending of Section 192 of the MV Act, providing for stringent penalty which will be deterrent.

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