Insurance Act, 2022

A copy of the report so prepared shall also be sent to the Authority. Chapter-19

Proceedings, Offenses and Penalties

134. Regulatory action: (1) If any insurer is found to have violated this Act or any rule, regulation, direction or order made under this Act, or is found to have submitted false statements or data to the Authority, the Authority may take the following actions against such insurer or any of its directors, officers, chief executive, or employees, or insurance intermediary or other insurance service provider:-
 (a) issue a written caution or warning,
 (b) obtain an undertaking for improvement or order to make any improvement within a specified period,
 (c) take control of the property or accounts of the insurer,
 (d) prohibit the distribution or issuance of dividends, bonus shares or rights shares to shareholders,
 (e) suspend the director, officer, chief executive or employee of the insurer and the insurance intermediary, or order the insurer to suspend them,
 (f) partially or completely prohibit the operation of insurance business,
 (g) file a petition with the concerned High Court to liquidate the licensed insurance company.

(2) If any founder, shareholder, director, chief executive or officer, employee or any concerned person of an insurer violates this Act or any rule, regulation, direction or order made under this Act, the Authority may, depending on the nature and gravity of the violation, take any one or more of the following actions:-
 (a) confiscate and freeze the shares held by such person in the concerned insurer, and sell or cause to be sold such shares to another person or entity,
 (b) withhold or suspend, or cause to be withheld or suspended, some or all facilities including meeting allowances and remuneration receivable by the board of directors, directors, officers and other employees of the insurer,
 (c) if, from the regulation, inspection or monitoring by the Authority, it is found that the insurer has not acted in the interest of the policyholders, shareholders and the insurer, remove the chairperson, director, chief executive or employee of the insurer by giving written notice,
 (d) if any person has taken or given salary, allowance and other facilities contrary to this Act or any rule, regulation, direction or order made under this Act, recover all such service facilities or the amount incurred therefor along with interest in accordance with prevailing law from the persons providing such service facilities,
 (e) order the concerned insurer to send a letter for action to the body with which the director, officer, chief executive or employee of the insurer is professionally associated.

(3) A person removed from office pursuant to clause (c) of subsection (2) shall not be entitled to any compensation or facility on retirement, and shall not be appointed to the service of any insurer for five years from such retirement.

(4) If an insurer has to pay any amount due to the negligence or bad faith of any director, officer, chief executive or employee, the Authority may order the recovery of such amount from such director, officer, chief executive or employee, or cause it to be recovered.

(5) Within thirty-five days from the date of knowledge of the order given pursuant to subsection (4), such director, officer, chief executive or employee shall personally pay such amount.

(6) If the amount under subsection (5) is not paid or delivered within the period specified by the Authority, it shall be recovered from the account in any bank or financial institution in the name of such director, officer, chief executive or employee or his/her immediate family, or from any movable or immovable property of such person or his/her immediate family, in the same manner as government dues.

(7) If the Authority conducts regulation, inspection, monitoring or any other action against any insurer or intermediary under this Act and publishes or broadcasts the notice thereof publicly, the insurer shall bear the expenses incurred in publishing or broadcasting such notice.