PART XI MARKET CONDUCT

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PART XI
MARKET CONDUCT

74. Application of this Part only to direct insurance business.- Theprovisions of this Part shall apply only to direct insurance business.

75. Duty of utmost good faith.-(1) A contract of insurance is a contract

based on the utmost good faith and there shall be implied in such a contract a provision requiring each party to it to act towards the other party, in respect of any matter arising under or in relation to it, with the utmost good faith.

(2) If reliance by a party to a contract of insurance on a provision of the contract would be to fail to act with the utmost good faith, the party may not rely on the provision.

(3) In deciding whether reliance by an insurer on a provision of the contract of insurance would be to fail to act with the utmost good faith, the Tribunal shall have regard to any notification of the provision that was given to the policy holder, whether or not the insurer was required by this Ordinance to give such notification.

(4) The effect of this section is not limited or restricted in any way by any other law, including the subsequent provisions of this Part, but this section does not have the effect of imposing on an policy holder, in relation to the disclosure of a matter to the insurer, a duty other than the duty of disclosure

76. Insurer not to engage in misleading or deceptive conduct.- (1) An

insurer shall not, in the course of its business as an insurer, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

(2) The inclusion in an insurance policy of unusual terms tending to limit the liability of the insurer, without the express acknowledgement of the policy holder, shall constitute misleading or deceptive conduct.

(3) Nothing contained in sub-section (2) shall be taken as limiting by implication the generality of sub-section (1).

(4) Where a policy holder has relied upon any representations by an insurer or by an agent of an insurer which are incorrect in any material particular, inasmuch as it has the effect of misleading or deceiving the policy holder in entering into a policy, the policy holder shall be entitled to obtain compensation from the insurer for any loss suffered.

(5) Notwithstanding the provisions of the foregoing sub-section, the Commission shall also have the power to levy a fine on the insurer which shall be equal to the lesser of twice the loss determined to be suffered by the policy holder under the foregoing sub-section and ten million rupees.

77. Construction of ambiguities in favour of policy holder.- (1) Any

ambiguity in a contract of insurance shall not be capable of being construed in a manner which is contrary to the interests of the policy holder.

(2) An insurer or an insurance intermediary shall:

(a) when drafting policy documentation, make reasonable efforts to use plain language; and

(b) when drafting proposal forms and claim forms, make reasonable efforts to ensure that it identifies in those documents the usual information the insurer ordinarily requires to be disclosed; and that those documents are in plain language and provide instructions where necessary on
how the questions should be answered; and comply with the law.

(3) Failure to comply with foregoing sub-sections shall be an absolute bar and shall preclude an insurer from refusing payment of a claim on grounds of non-compliance or non-disclosure by the policy holder, where it may reasonably be determined that the non-compliance or non disclosure resulted from inadequate understanding by the policy holder of the language of the policy, proposal or claim form as a result of such failure.

78. Exclusion of provisions of Ordinance void; an offence.- Where any

provision in a contract of insurance has the effect of modifying or excluding, to the prejudice of any person other than the insurer, any applicable provision of this Ordinance, any such provision shall be void and the insurer shall be liable to punishment for an offence under this Ordinance.

79. Remedies for non-disclosure or misrepresentation.- (1) This section

shall apply where the person who became the policy holder under a contract of insurance upon the contract being entered into:

(a) failed to comply with the duty of disclosure; or

(b) made a misrepresentation to the insurer before the contract was entered into.

(2) The insurer may not avoid a contract of insurance by reason only of the failure to comply with the duty of disclosure or the misrepresentation if:

(a) the insurer would have entered into the contract, for the same premium and on the same terms and conditions, even if the insured had not failed to comply with the duty of disclosure or had not made the misrepresentation before the contract was entered into; or

(b) the failure to comply with the duty of disclosure or the misrepresentation was not fraudulent:

Provided that in circumstances to which clause (b) refers, the insurer shall be entitled to be placed, in such manner, not otherwise inconsistent with this sub-section, as may be prescribed, in a position in which the insurer would have been if the failure had not occurred or the misrepresentation had not been made.

(3) Subject to sub-section (2), if the failure was fraudulent or the misrepresentation was made fraudulently, the insurer may avoid the contract.

(4) Nothing in this section shall affect any right of an insurer to recover damages from any person in respect of loss suffered by the insurer as a result of a fraudulent act by that person, or any criminal liability to which any person may be subject by reason of a fraudulent act by that person.

80. Policy not to be called in question on ground of mis-statement after

two years.-Notwithstanding anything in section 79, no policy of life insurance effected before the commencement date of this Ordinance shall after the expiry of two years from the commencement date of this Ordinance and no policy of life insurance effected after the commencement date shall, after the expiry of two years from the date on which it was effected, be called in question by an insurer on the ground that a statement made in the proposal for insurance or in any report of a medical officer, or referee, or friend of the policy holder, or in any other document leading to the issue of the policy, was inaccurate or false, unless the insurer shows that such statement was on a material matter or suppressed facts which it was material to disclose and that it was fraudulently made by the policy holder and that the policy holder knew at the time of making it that the statement was false or that it suppressed facts which it was material to disclose:

Provided that nothing in this section shall prevent the insurer from calling for proof of age at any time if he is entitled to do so, and no policy shall be deemed to be called in question merely because the benefits payable under the policy are adjusted on subsequent proof that the age of the life insured was incorrectly stated in the proposal.

81. Tribunal may disregard avoidance in certain circumstances.-(1) In

any proceedings by the policy holder in respect of a contract of insurance that has been avoided on the ground of fraudulent failure to comply with the duty of disclosure or fraudulent misrepresentation, the Tribunal may, if it would be harsh and unfair not to do so, but subject to this section, disregard the avoidance and, if it does so, shall allow the policy holder to recover the whole, or such part as the Tribunal thinks just and equitable in the circumstances, of the amount that would have been payable if the contract had not been avoided.

(2) The power conferred by sub-section (1) may be exercised only where the

Tribunal is of the opinion that, in respect of the loss that is the subject of the proceedings before the Tribunal, the insurer has not been prejudiced

by the failure or misrepresentation or, if the insurer has been so prejudiced, the prejudice is minimal or insignificant.

(3) In exercising the power conferred by sub-section (1), the Tribunal

(a) shall have regard to the need to deter fraudulent conduct in relation to insurance; and

(b) shall weigh the extent of the culpability of the policy holder in the fraudulent conduct against the magnitude of the loss that would be suffered by the policy holder if the avoidance were not disregarded, but may also have regard to any other relevant matter.

(4) The power conferred by sub-section (1) applies only in relation to the loss that is the subject of the proceedings before the Tribunal, and any disregard by the Tribunal of the avoidance does not otherwise operate to reinstate the contract.

82. Cancellation of a life insurance policy for fraudulent claim.- (1)

Notwithstanding anything to the contrary in this Ordinance, a policy of life insurance may be cancelled in accordance with this section by reason that a person having or purporting to have rights under the policy has made a claim under the policy which is fraudulent.

(2) A life insurer may apply to the Tribunal for consent to cancel a policy of life insurance in accordance with this section.

(3) The life insurer shall give written notice to the policy holder and to any person identified in the application for consent that an application for consent under sub-section (2) is to be made.

(4) Where the Tribunal is satisfied with respect to the matters contained in sub-section (1), the Tribunal shall give its consent and the insurer may at any time thereafter cancel the policy by written notice to the policy holder.

(5) Where a policy is cancelled under this section, the Tribunal may on the application of a person having an interest under the policy award to any person such amount as is just and equitable under the circumstances.

83. Power of the Commission to prescribe rules for market conduct.- (1)

The Commission may make rules, not inconsistent with this Part, to govern the conduct of insurers, policy holders and intermediaries in the insurance market in Pakistan.

(2) A provision of a Rule made under this section which applies to a contract

of insurance to which it is relevant and which is entered into after the commencement date of that Rule shall be deemed to constitute a condition of that contract.

84. Commission to have power to undertake compliance visits.- (1) The

Commission may, in accordance with procedures prescribed by rules, make visits to the offices and branches of insurers and inspect books, records and papers for the purpose of ensuring compliance with the provisions of this Part (Market Conduct) and Part XIII (Intermediaries).

85. Commission to have power to require a survey to be performed .- (1)

The Commission may make rules requiring that an independent survey be conducted, in accordance with the provisions of the Ordinance, in respect of such class or classes of insurance claims meeting such criteria as may be prescribed by the Commission.

(2) A survey conducted pursuant to rules made under sub-Rule (1) shall be conducted at the expense of the insurer and a copy of the report of the
surveyor shall be provided to the policy holder.

(3) The provisions of this section shall not operate to limit, curtail, diminish or extinguish any liability of the insurer to which the insurer would
otherwise have been subject.

86. Contractual stipulations for placing insurance with specific or named

insurers.- (1) In respect of any contract or arrangement under which one party to the contract or arrangement requires another party to the contract or arrangement to procure, effect and pay for or reimburse the costs of effecting insurance of any property, liability, life or anything connected with any thereof, it shall be unlawful to stipulate, expressly or impliedly, directly or indirectly, that the insurance which is to be procured and effected as a condition of the contract must be placed with any specific or named insurer or insurers, other than insurers specified generally as a class according to objective criteria based on financial strength.

(2) Any such stipulation in or arising out of or connected with any such contract or arrangement made after the commencement date shall be void and any such stipulation in or arising out of or connected with any such contract or arrangement made before the commencement of this Ordinance shall thereafter be subject to the provisions of this section.

(3) If there is any connection or association between a lender and the insurer it shall be disclosed to the policy holder together with any commissions received by the lender from the insurer in respect of the insurance contract. Disclosure shall in each case be made prior to the making of the contract.

(4) It shall be unlawful for insurance to be taken out by a lender without the knowledge and consent of the borrower or customer, unless the borrower or customer having undertaken to do so, has without good cause and for reasons beyond his control failed to comply with his obligations in this respect.

(5) Notwithstanding anything contained in this section, until 31 st December 2002 lenders may prescribe a listing of unacceptable insurers by name, provided that no insurer which complies with the paid-up capital requirements set out in section 28 of this Ordinance, excluding the provisos to sub-section (2) of that section, may be included on that list.

87. Provisions when not to constitute discrimination.- Notwithstanding

anything contained in any other law for the time being in force, provisions in respect of the terms and conditions of insurance policies, shall not constitute discrimination provided that differentiation contained therein is based on reasonable classification and:

(a) is based on actuarial and statistical data from a source on which it is reasonable to rely; and

(b) is reasonable having regard to the data and any other relevant factors.

The onus of proving that the insurer has complied with this section shall lie upon the insurer.

PART XII

SURRENDER, LAPSE AND FORFEITURE OF

CERTAIN LIFE INSURANCE POLICIES

88. Special definitions and interpretation for this Part.-(1) For the

purposes of this Part, a "relevant policy" is a policy of life insurance under which the whole of the benefits become payable either on, or at a fixed interval or intervals after, the occurrence of a contingency which is bound to occur.

(2) In this Part, an amount due under a relevant policy includes a premium due under that policy but unpaid.

89. Acquisition of surrender value.- (1) A relevant policy which has been

in force for not less than two years shall have a surrender value which shall be calculated in accordance with the terms of the policy.

(2) In the case of a policy issued before the commencement date and still in force immediately after the commencement date, the surrender value
shall not at any time be less than the surrender value of the policy immediately before the commencement date.

(3) Where under the terms of a policy the basis of calculation of the surrender value may be varied at the discretion of the insurer, the basis of calculation shall be furnished to the Commission and no variation shall be made therefrom unless the insurer has, not less than sixty days before the date of such variation, furnished to the Commission a statement of the proposed variation and the reasons for that variation, accompanied by a statement by the appointed actuary of his opinion as to the appropriateness of the proposed variation.

(4) When an insurer furnishes to the Commission the matters referred to in the preceding sub-section relating to a proposed variation, the Commission may within sixty days direct the insurer to make such changes in the proposed variation as it believes on reasonable grounds to be necessary for the protection of the interests of policy holders of the insurer, and the insurer shall comply with any such direction.

90. Surrender of policy at policy holder's option.-(1) The holder of a

relevant policy which has been in force for not less than two years may make, in writing, a request to the insurer to surrender the policy.

(2) Subject to sub-section (3) and sub-section (4), within one month of receiving a request under sub-section (1), such request not having been withdrawn by the policy holder, the insurer shall pay to the policy holder an amount equal to the surrender value of the policy less the amount of any debt owed to the insurer under, or secured by, the policy.

(3) If an insurer, within fifteen days of receiving a request under sub-section (1), communicates in writing with the policy holder to request the policy holder to consider the advantages of maintaining the policy and to seek professional advice if appropriate, the period of one month referred to in sub-section (2) shall be extended by fifteen days so far as concerns that request.

(4) The Tribunal may, on application by an insurer, issue a written order suspending or varying the insurer's obligation to make payments under sub-section (2), where the Tribunal is satisfied that such suspension or variation is necessary in order to avoid prejudice to:

(a) the financial stability of the insurer; or

(b) the interests of the policy holders of the insurer.

(5) An order issued under sub-section (3) shall:

(a) be valid for such period as the Tribunal may determine; and

(b) be subject to such conditions as the Tribunal may determine.

91. Surrender of policy at insurer's option.-(1) A policy which has

acquired a surrender value shall not be surrendered other than at the request of the policy holder except as set out in this section.

(2) Where the total amount of all debts owed to the insurer under, or secured
by, a relevant policy exceeds the surrender value of that policy, the
insurer may issue to the policy holder a written notice:

(a) setting out the amount owed to the insurer under, or secured by the policy at the date of the notice ('the debt');

(b) setting out the surrender value of the policy at the date of the notice; and

(c) stating that the policy will be surrendered at the end of 30 days after the notice was issued to the policy holder and the surrender value applied against the debt, if the excess of the debt over the surrender value is not paid to the insurer before the expiry of that period.

(3) Where at least 30 days have elapsed between the issue of a notice set out in sub-section (2) and the excess of the debt over the surrender value has not been paid to the insurer, the insurer may by written notice to the policyholder effect surrender of the policy and apply the surrender value against the debt, which shall to the extent of the surrender value be extinguished.

92. Paid-up policy at policy holder's option.- (1) An insurer shall, within

one month from receipt of an application in writing by the holder of a relevant policy which has been in force for not less than two consecutive

years, make the policy paid-up.

(2) If an insurer, within fifteen days of receiving an application under sub section (1), communicates in writing with the policy holder to request the policy holder to consider the advantages of maintaining the policy in full force and to seek professional advice if appropriate, the period of one month referred to in sub-section (1) shall be extended by fifteen days so far as concerns that application.

(3) A policy which is made paid-up shall have a paid-up sum insured, which, subject to clause (b) of sub-section (5),-

(a) shall include in full all subsisting reversionary bonuses that have already attached to the policy; and

(b) shall, where the policy is one on which the maximum number of premiums payable is fixed and the premiums are of uniform amount and paid at uniform intervals, be, before the inclusion of such bonuses not less than such amount as is prescribed.

(4) A policy made paid-up under this section shall not be entitled by virtue only of this section to participate in any surplus declared distributable after the conversion of the policy into a paid-up policy.

(5) If, when an application is made to an insurer under sub-section (1) to have a policy paid-up, the policy holder owes a debt to the insurer under the policy, or a debt owed by the policy holder to the insurer is secured by the policy, the insurer may either:

(a) treat the debt as a debt secured by the paid-up policy; or

(b) in calculating the paid-up sum insured, take the debt into account in such manner as is approved as equitable by the appointed actuary.

(6) If in calculating the paid-up sum insured, a debt is taken into account in accordance with clause (b) of sub-section (5), the debt is discharged.

93. Non-forfeiture.- (1) A relevant policy is not liable to be forfeited only because of the non-payment of a premium (the "overdue premium") if-

(a) the policy has been in force for at least two years; and

(b) the surrender value of the policy exceeds the total of:
(i) the amount of the overdue premium; and

(ii) the total of any other amounts owed to the insurer under, or secured by, the policy.

(2) For the purposes of clause (b) of sub-section (1), the surrender value of the policy shall be calculated as at the day on which the overdue premium falls due and shall be calculated as though the premium has been paid.

(3) When the holder of a policy to which this section applies fails to pay a premium due under that policy, the insurer shall, before the expiry of three months from the date on which that premium in respect was payable but not paid, give notice to the policy holder informing him of the options available to him.

(4) Notwithstanding anything to the contrary in the policy, the options available to the policy holder under this section shall include without limitation two of the following, namely :-

(a) the policy shall be paid up in accordance with this Part;

(b) the surrender value of the policy shall be applied to the payment of the premium due until the surrender value is
exhausted;

(d) the policy shall be surrendered, and the company shall issue to the policy holder a contract for term life insurance for a term to be specified by the policy holder and a sum insured determined on the basis of the surrender value of the policy surrendered less the amount of any debt owed to the company under, or secured by, the policy.

(5) Notwithstanding anything to the contrary in the policy, the action taken by the insurer with respect to the policy shall be -

(a) if a course of action not stated in the notice issued under sub-section (3) is agreed in writing between the insurer and the policy holder, after the policy holder has received the notice, that course of action;

(b) if the policy holder agrees in writing to an option contained in the notice issued under sub-section (3), that course of action;

(c) if the policy holder does not respond to the notice issued under sub-section (3), and after making reasonable efforts the insurer is unable to contact the policy holder:

(i) if the policy holder has elected in writing, either at the time of taking the policy or at any time thereafter before the cessation of the payment of premium, that a course of action should be taken; that course of action; otherwise

(ii) if a course of action (not being the course of action set out in clause (b) of sub-section (4)) is stated in the policy, that course of action; otherwise

(iii) the course of action set out in clause (a) of subsection (4).

(6) No commission shall be payable to any person in respect of the following, namely:-

(a) the application of the surrender value to the payment of premiums in accordance with clause (b) of sub-section (4);

and

(b) the issue of a contract of term insurance under clause (d) of sub-section (4).

PART XIII

INTERMEDIARIES

94. This Part to apply only to direct insurance business.- The provisions of this Part shall apply only to direct insurance business.

95. Liability of Insurer for act or omissions of agent.- (1) Every insurer

shall, so far as relates to a contract of insurance entered into by the insurer through an agent, be liable to the policy holder for the acts or omissions of that agent as though that agent were an employee of the insurer, in circumstances where the policy holder has relied in good faith on the agent and as a consequence has suffered loss or damage. Liability shall be absolute and shall not be capable of being contracted out of, either in the agency agreement or on a policy, proposal or other document.

(2) For the purposes of this Part, any person who, for remuneration arranges insurance cover for a policy holder or intending policy holder, and who is not a registered insurance broker, shall be presumed to be the agent of the insurer in relation to any matter relating to insurance.

(3) The provisions of the foregoing sub-section shall not operate to limit, curtail, diminish or extinguish any liability of the insurer to which the insurer would otherwise have been subject.

96. Persons acting as agents.- (1) It shall be unlawful for any person to act

as an agent in respect of an insurer if that person, or, in the case of a body corporate, any director of the body corporate, or officer of the body corporate engaging in the business of insurance agency:

(a) is a minor;

(b) has been found of unsound mind by a Court of competent jurisdiction;

(c) has been found guilty, within the five years preceding the present date, of criminal misappropriation or criminal breach of trust, cheating or forgery or an abetment of or attempt to commit any such offence by a Court of competent jurisdiction;

(d) has served any custodial sentence imposed by a Court of competent jurisdiction, ending within the five years preceding the present date;

(e) has been found guilty by a Court of competent jurisdiction of any offence involving insurance; or

(f) has been otherwise declared as disqualified by the Tribunal, other than for a term which had expired prior to the present date.

(2) It shall be unlawful for any person to act as an agent in respect of an insurer except under a contract in writing.

(3) Any person who acts as agent in breach of this section, and any insurer who knowingly permits him to act as agent, shall be guilty of an offence.

(4) A contract of agency shall include, and if it does not, shall be deemed to include, as a condition, that the agent must obtain the permission of the insurer before entering into a contract of agency with any other insurer while the contract with the first or any other insurer remains in force.

(5) A contract of agency which does not disclose any existing contracts of agency with other insurers shall be deemed to include a warranty that no other such contracts exist.

97. Minimum qualifications for agents.- The Commission may prescribe

minimum qualifications for persons appointed as insurance agents, which may extend to educational requirements, experience in the industry and membership of an approved trade or professional organisation.

98. Insurer to maintain register of agents.- (1) An insurer shall maintain a register of all agents employed by the insurer, containing such particulars

as may be prescribed:

Provided that in the case of an insurer deemed to be registered at the commencement date, the particulars required by section 43 of the repealed Act to be contained in the register maintained under that section of the repealed Act shall be deemed to constitute the particulars required to be maintained under this sub-section, for a period of one year from the commencement date.

(2) Prior to appointing a person as its agent, and at intervals of not more than

twelve months thereafter during the time the person continues to act as its agent, an insurer shall obtain from that person in such form as may be prescribed, a declaration in respect of the following matters:

(a) the information provided by him for inclusion in the register referred to in sub-section (1) is complete and correct;

(b) he has complied with the requirements of the Ordinance concerning the qualifications of agents;

and

(3) It shall be an offence for an insurer to use an agent who has not been

included on the register referred to in sub-section (1), or to use an agent who has not made the declaration referred to in sub-section (2), or knowingly to use an agent who has made a false declaration.

99. Payments by and to insurance agents.-(1) Any sums received by an

insurance agent from a policy holder or an insurer, other than remuneration payable to the agent by the insurer, shall be deemed to be held on trust for the insurer. Payment by a policy holder to an insurance agent shall be deemed to constitute payment to the insurer.

(2) Any payment to which sub-section (1) applies shall be passed on to the insurer or the policy holder (as the case may be) as soon as practicable
and in any case not later than two weeks from receipt by the agent.

(3) No insurance agent shall, except with the approval of the insurer who is the agent's principal, pay to or receive from a policy holder or intending
policy holder any sums in relation to a contract of insurance:

Provided that this sub-section shall not operate to relieve any person from a liability to which that person is otherwise subject by the operation of this Ordinance.

(4) It shall be unlawful for an agent to deduct from premiums paid by and received from a policy holder any sums on account of commission due to the agent.

(5) No payment of commission or other remuneration to an insurance agent shall be made otherwise than by a crossed cheque, pay order or electronic funds transfer or in such other manner as may be prescribed:

Provided that this sub-section shall not apply to payments to an agent which do not in the aggregate in one year exceed the sum of five thousand rupees.

100. Duty to disclose agency.- An agent acting for an insurer shall disclose to

the policy holder or intending policy holder the fact that he acts as an agent for that insurer and any relationship between the agent and the

101. Restriction on life insurance agents, becoming directors of life

insurance companies.- (1) No insurance agent who solicits or procures life insurance business, shall be eligible to be or remain a director of any insurance company carrying on life insurance business unless he suspends such solicitation or procurement.

(2) Any insurance agent who contravenes the provisions of sub-section (1)

shall cease to be a director and shall be disqualified from acting as an insurance agent, for such period as the Tribunal may determine.

102. Insurance brokers to be licensed.-(1) It shall be unlawful for any

person to act as or describe himself or hold himself out or permit himself to be described or held out as an insurance broker in respect of direct insurance business unless he holds a current insurance broker's licence issued by the Commission.

(2) No person who is not a company shall be eligible to be licensed as an insurance broker.

(3) An insurance broker's licence may only be issued by the Commission to a company which complies with such minimum requirements as may be
prescribed by the Government in respect of:

(a) paid-up capital;

(b) statutory deposits;

(d) such other matters as may be prescribed.

(4) An application for an insurance broker's licence shall be made in the prescribed form, and shall be accompanied by the following documents,
namely:-

(a) the memorandum and articles of the broker;

(b) evidence of professional indemnity insurance;

(c) a declaration in a prescribed form to the effect that neither the applicant nor any director or principal officer of the applicant is disqualified from holding his office as such;

(d) a letter of support from not fewer than five registered insurers in the prescribed form, each signed, on behalf of the insurer, by a duly authorised representative;

(e) evidence of payment of the prescribed fee; and

(f) such other evidence and documents as may be prescribed.

(5) An insurance broker's licence shall be issued initially for a period of one year and may on application in the prescribed form be renewed annually.

(6) The Commission may cancel or refuse to issue or renew a broking licence, where the Commission believes on reasonable grounds that the broker has contravened a provision of the Ordinance, including without limitation that the broker has failed to maintain prescribed minimum levels of paid-up capital, statutory deposit or professional indemnity

(7) The Commission may apply for an order from the Tribunal, that a person is disqualified from acting as an insurance broker, or as a director or principal officer of an insurance broker, if it demonstrates on reasonable grounds that the activity of the person as an insurance broker or as a director or principal officer of an insurance broker would be detrimental to the interests of policy holders.

103. Brokers to be presumed agents under certain circumstanees; liability of brokers when not so presumed.- (1) A licensed insurance broker
shall be presumed to act as the agent of any insurer with which such broker has a contract of agency, so far as relates to any policies placed by that broker with that insurer, and the insurer shall be liable for the conduct or misconduct of the broker with respect to such policies.

(2) Where a licensed insurance broker is not, by virtue of the foregoing sub-section, presumed to act as the agent of an insurer, the broker shall be liable to the policy holder and the insurer shall not be liable for the conduct or misconduct of the broker as distinct from itself or its agents, except as otherwise provided in this Ordinance.

104. Ownership and management interests inter se of brokers and insurers prohibited.- No insurer and no director of an insurer shall hold any direct or indirect ownership interest in an insurance broker or take part in the management or direction of an insurance broker, and vice versa.

105. Broker's duty to disclose relationships.- (1) A licensed insurance broker shall disclose to the policy holder or intending policy holder any relationship between the broker and any insurer

(2) A licensed insurance broker, in placing business with an insurer with whom the broker has a contract of agency, shall, before the contract of insurance is effected, inform the intending policy holder of both the existence of the contract of agency and that the broker is acting as the agent of the insurer in respect of all matters concerning the contract of insurance.

106. Payments by and to insurance brokers.-(1) Any sums received by an insurance broker from a policy holder or an insurer, other than remuneration payable to the broker by the insurer, shall be deemed to be held on trust for the insurer. Payment by a policy holder to an insurance broker shall be deemed to constitute payment to the insurer.

(2) Any amount held by an insurance broker for payment to the policy holder shall be paid to the policy holder as soon as practicable and in any case in
not less than two weeks.

(3) Any amount held by an insurance broker for payment to the insurer shall unless the insurer has previously agreed otherwise in writing be paid to
the insurer as soon as practicable.

(4) Any payment of money (other than premium) from an insurance broker to an insurer or vice versa shall be made by crossed cheque, pay order or
electronic funds transfer.

107. Requirements in respect of persons ceasing to act as insurance

brokers.- (1) A company ceasing to act as an insurance broker shall maintain, for such period as may be prescribed, such minimum level of professional indemnity insurance in respect of liabilities arising from its activities as an insurance broker to which the company may be subject, as may be prescribed.

(2) No company formerly acting as an insurance broker may be voluntarily wound up during the period prescribed in the preceding sub-section.

108. Basis for payment of remuneration by insurers to insurance brokers.- (1) ..A licensed insurance broker shall not receive from an insurer or from a person on behalf of an insurer a gift, gratuity, benefit or other reward (however described) except as remuneration for services rendered to the insurer:

(a) in arranging or effecting a particular contract of insurance;

(b) in connection with dealing with or settling a claim under a particular contract of insurance; or

(c) otherwise than in connection with the broker arranging or effecting contracts of insurance or dealing with or settling claims under contracts of insurance.

(2) An insurer shall not pay to an insurance broker, and an insurance broker

shall not receive from an insurer, in respect of the arranging or effecting of contracts of insurance by that insurance broker with the insurer, remuneration at a rate or on a basis that has been varied having regard to any one or more of the following:

(a) the number of contracts so arranged or effected;

(b) the total amount of premiums paid or payable under such contracts;

109. Insurance brokers to report annually to Commission.- A licensed insurance broker shall make an annual report to the Commission. Such report shall include audited accounts of the insurance broking business and such other information and statements as may be prescribed, each in uch format as may be prescribed.

110. Power to inspect insurance agents and insurance brokers.- The

Commission may, in accordance with procedures prescribed by rules, visit the premises of an insurance broker or of an agent of an insurance company, to establish compliance by the broker, or the agent, or any insurer of which the broker or agent is agent, with the provisions of this law relating to insurance contracts, brokers and agents.

111. Persons permitted to act as insurance surveyors.- (1) Subject to sub-

section (2), it shall be unlawful for any person to act for remuneration as a surveyor, loss adjuster, or loss assessor (by whatever title called) unless such person is

(a) an adjuster of aviation or maritime losses; or

(b) a person licensed as a surveyor under this Ordinance.

(2) Nothing in this section shall prevent -

(a) the performance in the course of his employment by an employee of an insurer of activities of the nature of insurance surveying for that insurer; or

(b) the expression in the course of his general professional practice of an expert opinion on the nature, cause or quantum of an insurance loss by an advocate, solicitor, accountant, actuary or other professional person engaged in a profession other than surveying.

112. Licensing of insurance surveyors.- (1) The Commission may, on

application by a person, grant to that person a licence, having a term of not more than twelve months, to act as a surveyor, where the Commission is satisfied that that person is qualified under this section to be granted such a licence.

(2) A licence granted under the preceding sub-section (or renewed under this sub-section) may be renewed for a term of not more than twelve months on application made by the holder of the licence prior to expiry of the licence, where the Commission is satisfied that such person is qualified under this section to be granted such a licence.

(3) No person shall be entitled to apply for or to hold a licence as a surveyor under this Ordinance unless the following conditions are fulfilled at the date of the application and at all times during which the licence is held:

(a) the person is a company with a prescribed minimum share capital;

(b) the person carries professional indemnity insurance at such level as may be prescribed;

(c) reports issued in respect of surveys conducted by the person are signed by natural persons, registered under section 113 as authorised surveying officers;

(d) reports issued in respect of surveys conducted by the person contain such information and comply with such conditions as may be prescribed;

(e) the person is a member of such approved professional association as may be prescribed; and

(f) the person complies with such other conditions as may be prescribed:

Provided that a person, including a firm, who or which was, immediately prior to the commencement date, the holder of a certificate of registration under section 44A(4) of the repealed Act, shall be exempt, subject to such conditions as may be prescribed, from compliance with the conditions set out in this subsection.

Provided further that the application of such exemption to a person shall cease permanently and immediately on that person ceasing to hold such a certificate or to hold a licence issued under this section in renewal of such a certificate.

Provided further that such exemption shall cease permanently and absolutely at the expiry of five years from the commencement date, from which date no firm and no natural person shall be licensed as a surveyor.

Provided further that such exemption shall not be available to any person in respect of the requirement for a licence to act as an insurance surveyor in a class of insurance surveying for which a certificate of registration under section 44A(4) of the repealed Act was not held by such person as at the commencement date.

(4) An application for a licence or for renewal of a licence under this section shall contain such information and be accompanied by such documents as
may be prescribed.

(5) A person licensed as a surveyor who becomes aware that he has ceased, or is about to cease, to comply with any condition of that licence shall, within one week of becoming aware of such non-compliance, notify the Commission of the circumstances surrounding such non-compliance, and his licence shall stand suspended as at the date falling one week after the date on which he became aware, or should reasonably have become aware, of the non-compliance. Such suspension of a licence shall continue until the Commission is satisfied that the person has taken such action as the Commission believes on reasonable grounds to be necessary to remove the causes of the non-compliance, or until the term of the licence expires, whichever is earlier.

(6) If the Commission believes on reasonable grounds that a licensed surveyor has failed to comply, or has ceased to comply, with a condition of his licence, the Commission may by notice to the licensed surveyor of not less than two weeks cancel that licence.

Provided that a licence shall not be cancelled under this sub-section without giving the holder of the licence an opportunity to be heard.

(7) A person who purports to act as a licensed surveyor during the period during which his licence is suspended, or following cancellation of his licence, shall be guilty of an offence and liable on conviction to a fine not exceeding one million rupees.

113. Registration of authorised surveying officers.- (1) The Commission

may, on application by a person, register that person for a term of not more than twelve months as an authorised surveying officer, where the Commission is satisfied that such person is qualified to be registered under this section.

(2) Registration granted under the preceding sub-section (or renewed under this sub-section) may be renewed for a term of not more than twelve months on application made by the person registered prior to expiry of registration, where the Commission is satisfied that the person is qualified under this section to be so registered.

(3) No person shall be entitled to apply to be registered, or to be or remain registered, as an authorised surveying officer unless the following conditions are fulfilled at the date of the application and at all times during which the person is registered -

(a) the person is a natural person;

(b) the person is a director, officer or employee of a company licensed as a surveyor under this Ordinance; and

Provided that a natural person who was, immediately prior to the commencement date, the holder of a certificate of registration under section 44A(4) of the repealed Act, shall be deemed, subject to such conditions as may be prescribed, to possess the qualifications required under clause (c) of this sub-section.

Provided further that the application of the first proviso to this sub-section to a person shall cease permanently and immediately on that person ceasing to hold such a certificate or to be registered under this section on renewal of such a certificate.

Provided further that the first proviso to this sub-section shall cease to apply permanently and absolutely at the expiry of five years from the commencement date.

Provided further that the first proviso to this sub-section shall not apply to any person in respect of the requirement for registration under this Ordinance as an authorised surveying official in a class of insurance surveying for which a certificate of registration under section 44A(4) of the repealed Act was not held as at the commencement date.

(4) An appliation for registration or for renewal of registration under this section shall contain such information and be accompanied by such documents as may be prescribed.

(5) A person registered as an authorised surveying officer who becomes aware that he has ceased, or is about to cease, to comply with any condition of that registration shall, within seven days of becoming aware of such non-compliance, notify the Commission of the circumstances surrounding such non-compliance, and his registration shall stand suspended as at the date falling seven days from the date on which he became aware, or should reasonably have become aware, of the non- compliance; and such suspension of a registration shall continue until the Commission is satisfied that the person has taken such action as the Commission believes on reasonable grounds to be necessary to remove the causes of the non-compliance, or until the term of the registration expires, whichever is earlier.

(6) If the Commission believes on reasonable grounds that an authorised surveying officer has failed to comply, or has ceased to comply, with a condition of his registration, the Commission may by notice to the authorised surveying officer of not less than fourteen days cancel that registration:

Provided that a registration shall not be cancelled under this subsection without giving the person concerned an opportunity to be heard.

(7) A person who purports to act as an authorised surveying officer during the period when his registration is suspended, or following cancellation of his registration, shall be guilty of an offence and liable on conviction to a fine not exceeding one hundred thousand rupees.

114. Classes of insurance surveying.- Surveyors and authorised surveying

officers may be classified into such classes or sub-classes as may be prescribed, and, if so classified, separate application shall be made and separate licences and certificates issued in respect of each such class or sub-class.

PART XIV

SPECIAL PROVISIONS OF LAW

115. Application of Pakistan law to policies issued in Pakistan.- The

holder of a policy of insurance issued by an insurer in respect of insurance business transacted in Pakistan after the commencement of this Ordinance shall have the right, notwithstanding anything to the contrary contained in the policy or in any agreement relating thereto, to receive payment in Pakistan of any sum secured thereby and to sue for any relief in respect of the policy in any Tribunal; and if the suit is brought in Pakistan any question of law arising in connection with any such policy shall be determined according to the law in force in Pakistan:

Provided that nothing in this section shall apply to a policy of marine insurance.

116. Payment of money into Tribunal.- (1) Where in respect of any policy

of life insurance maturing for payment an insurer is of opinion that by reason of conflicting claims to or insufficiency of proof of title to the amount secured thereby or for any other adequate reason it is impossible otherwise for the insurer to obtain a satisfactory discharge for the payment of such amount, the insurer may before the expiry of nine months from the date of the maturing of the policy or, where the circumstances are such that the insurer cannot be immediately aware of such maturing, from the date on which notice of such maturing is given to the insurer, apply to pay the amount into the Tribunal within the jurisdiction of which is situated the place at which such amount is payable under the terms of the policy or otherwise.

(2) A receipt granted by the Tribunal for any such payment shall be a satisfactory discharge to the insurer for the payment of such amount.

(3) An application for permission to make a payment into the Tribunal under this section shall be made by a petition verified by an affidavit signed by a principal officer of the insurer setting forth the following particulars, namely:-

(a) the name of the insured person and his address;

(b) if the insured person is deceased, the date and place of his death;

(d) the name and address of each claimant so far as is known to the insurer with details of every notice of claim received;

(e) the reasons why in the opinion of the insurer a satisfactory discharge cannot be obtained for the payment of the
amount; and

(f) the address at which the insurer may be served with notice of any proceeding relating to disposal of the amount paid into the Tribunal.

(4) An application under this section shall not be entertained by the Tribunal if the application is made before the expiry of six months from the maturing of the policy by survival, or from the date of receipt of notice by the insurer of the death of the person insured, as the case may be.

(5) If it appears to the Tribunal that a satisfactory discharge for the payment of the amount cannot otherwise be obtained by the insurer it shall allow the amount to be paid into the Tribunal and shall invest the amount in Government securities pending its disposal.

(6) The insurer shall transmit to the Tribunal every notice of claim received after the making of the application under sub-section (3), and any payment required by the Tribunal as costs of the proceedings or otherwise in connection with the disposal of the amount paid into the Tribunal shall as to the costs of the application under sub-section (3) be borne by the insurer and as to any other costs be in the discretion of the Tribunal.

(7) The Tribunal shall cause notice to be given to every ascertained claimant of the fact that the amount has been paid into the Tribunal, and shall cause notice at the cost of any claimant applying to withdraw the amount to be given to every other ascertained claimant.

(8) The Tribunal shall decide all questions relating to the disposal of claims to the amount paid into the Tribunal.

117. Small Disputes Resolution Committees.- (1) The Federal Government

shall constitute one or more Small Disputes Resolutions Committees to arbitrate disputes arising between an insurer and a policy holder.

(2) The constitution and procedure of the Committees shall be prescribed by rules made by the Federal Government, and the Arbitration Act, 1940 (X
of 1940), or any re-enactment thereof shall not apply to such Committees.

(3) No person shall be appointed a member of the Committee if he has any interest (as defined in sub-section (1) of section 16 of the SECP Act) in
the subject matter of the arbitration.

(4) The Committees shall only have jurisdiction in respect of life insurance policies not being group life policies, domestic insurance policies and private motor insurance policies in respect of claims the pecuniary value of which shall be limited to a sum to be prescribed.

Provided that the Committees shall not have jurisdiction in respect of claims made under private motor insurance policies for loss to the policy holder arising from liabilities incurred to third parties arising out of or in connection with the use of motor vehicles on land, as specified in the Motor Vehicles Act, 1939 (IV of 1939);.

118. Payment of liquidated damages on late settlement of claims.- (1) It

shall be an implied term of every contract of insurance that where payment on a policy issued by an insurer becomes due and the person entitled thereto has complied with all the requirements, including the filing of complete papers, for claiming the payment, the insurer shall, if he fails to make the payment within a period of ninety days from the date on which the payment becomes due or the date on which the claimant complies with the requirements, whichever is later, pay as liquidated damages a sum calculated in the manner as specified in sub-section (2) on the amount so payable unless he proves that such failure was due to circumstances beyond his control.

Explanation: for the purposes of this sub-section, failure or delay by any person in making payment (including without limitation payment under a contract of reinsurance) to an insurer shall not constitute circumstances beyond the control of the insurer.

(2) The liquidated damages payable under sub-section (1) shall be payable for the period during which the failure continues and shall be calculated at monthly rests at the rate five per cent higher than the prevailing base rate.

119. Supply of copies of" proposals and medical reports.- Every Insurer shall, on application by a policy holder and on payment of such fee as may be prescribed, supply to the policy holder certified copies of the questions put to him and his answers thereto contained in his proposal for insurance and in any medical report supplied in connection therewith.

120. Prohibition of business on dividing principle.- No insurer shall after the commencement of the Ordinance, begin or carry on, any business upon the dividing principle, that is to say, on the principle that the benefit secured by a policy is not fixed but depends either wholly or partly on the results of a distribution of certain sums amongst policies becoming claims within certain time-limits, or on the principle that the premiums payable by a policy holder depend wholly or partly on the number of policies becoming claims within certain time-limits:

Provided that nothing in this section shall be deemed to prevent an insurer from allocating bonuses to holders of participating policies of life insurance in accordance with the provisions of this Ordinance, either as reversionary additions to the sums insured or as immediate cash bonuses or otherwise.

Provided further that nothing in this section shall apply to the business of Takaful insurance carried on by an insurer in accordance with laws established for the conduct of Takaful business.

PART XV

INSURANCE TRIBUNAL

121. Constitution of the Tribunal.-(1) The Federal Government shall

constitute a Tribunal or Tribunals in consultation with the Commission and shall in respect of each Tribunal so constituted specify the territorial limits within which, or the class or classes of cases in respect of which each such Tribunal shall exercise jurisdiction under this Ordinance:

Provided that the Federal Government may by notification in the official Gazette confer all or any of the powers of the Tribunal on any District or Additional District and Sessions Judge of an area where for any reason it may not be expedient to constitute a separate Tribunal, and in doing so the Federal Government shall also specify the composition and pecuniary and territorial limits of such a Tribunal.

(2) The Tribunal shall consist of a Chairperson who shall be a serving or retired judge of the High Court and not less than two members being persons of ability and integrity who have such knowledge or experience of life insurance, non-life insurance, actuarial science, finance, economics, law, accountancy, administration or other discipline as would, in the opinion of the Federal Government, enable them to discharge the duties and functions of members of the Tribunal.

(3) To constitute a sitting of a Tribunal the presence of the Chairperson and at least one other member shall be necessary.

(4) A Tribunal shall not merely by reason of a change in its composition, or the absence of any member from any sitting, be bound to recall and rehear any witness who has given evidence, and may act on the evidence already recorded by or produced before it.

(5) A Tribunal may hold its sitting at such places within its territorial jurisdiction as the Chairperson may decide from time to time.

(6) No act or proceeding of a Tribunal shall be invalid by reason only of the existence of a vacancy in, or defect in the constitution of the Tribunal.

122. Powers of Tribunal.-(1) A Tribunal shall:

(a) in the exercise of its civil jurisdiction, have in respect of a claim filed by a policy holder against an insurance company in respect of, or arising out of a policy of insurance, all the powers vested in a civil Court under the Code of Civil Procedure, 1908 (Act V of 1908);

(b) in the exercise of its criminal jurisdiction, try the offences punishable under this Ordinance and shall, for this purpose, have the same powers as are vested in the Court of Sessions under the Code of Criminal Procedure, 1898 (Act V of 1898);

(c) exercise and perform such other powers and functions as are, or may be, conferred upon, or assigned to it, by or under this Ordinance; and

(d) in all matters with respect to which procedure has not been provided for in this Ordinance, follow the procedure laid down in the Code of Civil Procedure, 1908 (Act V of 1908) or the Code of Criminal Procedure, 1898 (Act V of 1898) as the case may be.

(2) The jurisdiction of a Tribunal shall not extend to appeals to which section 33 and section 34 of the SECP Act apply.

(3) No Court other than a Tribunal shall have or exercise any jurisdiction with respect to any matter to which the jurisdiction of a Tribunal extends under this Ordinance, including a decision as to the territorial limits and the execution of a decree, order or judgment passed by a Tribunal:

Provided that for the purposes of this section a Small Claims Settlement Committee established under section 117 shall not be deemed to be a Court.

123. Procedure of the Tribunal.- (1) A Tribunal shall for the purpose of the

trial of an application, follow such procedure as may be prescribed and have the same powers as are vested in a civil court trying a suit under the Code of Civil Procedure, 1908 (Act V of 1908) in respect of:

(a) summoning and enforcing the attendance of any person and examining him on oath;

(b) requiring the discovery and production of documents and material objects;

(d) issuing commissions for the examination of witnesses or documents.

(2) If, in the course of the trial of an application, any one of its members ceases to hold office, or is, for any reason, unable to attend the sittings of
that Tribunal, the trial shall continue notwithstanding such vacancy, and the decision may be given by the remaining members.

(3) If upon any matter requiring the decision of the Tribunal there is a difference of opinion among its members, the opinion of the majority shall prevail and the decision of that Tribunal shall be expressed in terms of the view of the majority:

Provided that where the members are equally divided on any point it shall be decided in accordance with the views of the Chairperson.

(4) The decision of a Tribunal shall be given in writing and shall be signed by the Chairperson.

(5) A Tribunal shall give a copy of the decision to each party to the dispute and shall also forward a copy to the Commission.

(6) A Tribunal shall, upon an application made in this behalf by any party to a dispute adjudicated by it and on payment of such fee not exceeding one rupee for every one hundred words, and subject to such conditions, as may be prescribed, furnish certified copies of its proceedings or of any document submitted to or produced before it.

124. Appeal.- (1) Subject to the right of appeal conferred by sub-section (2)

hereof, the decision of the Tribunal on any application shall be final and shall not be questioned in any Court or before any other authority.

(2) Any party aggrieved by a decision of the Tribunal may, if the amount of the claim in dispute or the penalty prescribed, as the case may be, is not less than one hundred thousand rupees, prefer an appeal to the High Court within a period of thirty days from the date of such decision.

(3) An appeal under sub-section (2) shall be heard by a Bench of not less than two judges of the High Court having territorial jurisdiction over the relevant Tribunal.

PART XVI

INSURANCE OMBUDSMAN

125. Appointment of Insurance Ombudsman.-(1) As soon as may be, after the commencement of this Ordinance, the Federal Government shall appoint an Insurance Ombudsman.

(2) The Insurance Ombudsman shall be a natural person having high integrity and ability and unimpeachable insurance or legal credentials, and shall not at the date of his appointment be more than seventy years of age. He shall not be a shareholder of an insurance company.

(3) The Insurance Ombudsman shall hold office for a period of four years from the date of his appointment unless he resigns earlier or is disqualified or removed in accordance with sub-section (2) or (3) of section 126. He shall not be eligible for any extension of tenure or for reappointment under any circumstances whatsoever.

(4) Any vacancy occurring in the office of the Insurance Ombudsman shall be filled within sixty days of the occurrence of such vacancy.

(5) The Insurance Ombudsman shall not hold any other office of profit in the service of Pakistan or occupy any other position carrying the right to remuneration for the rendering of services, and shall not during the two years immediately prior to his appointment have held any office in any body corporate carrying on insurance business in Pakistan.

126. Terms and conditions of Insurance Ombudsman.-(1) The Insurance Ombudsman shall be entitled to the same salary and allowances as a Judge of a High Court.

(2) The Insurance Ombudsman may at any time resign his office by giving written notice to the Commission of not less than three months.

(3) The Insurance Ombudsman shall be disqualified from holding his office and his appointment may be revoked if:

(a) he has been convicted of an offence involving moral turpitude;

(b) he has been guilty of misconduct;

(d) he is incapable of discharging his duties by reason of physical, physiological or mental unfitness and has been so declared by a registered medical practitioner appointed by the Commission;

(e) he is disqualified by virtue of holding an office (other than that of Insurance Ombudsman) for which he receives remuneration; or

(f) he fails to discharge diligently or impartially his duties under this Ordinance:

Provided that, unless a disqualification referred to in this subsection arises from the judgement or a court or tribunal of competent jurisdiction under any relevant provision of applicable law, the appointment of an Insurance Ombudsman shall not be revoked without an enquiry by an impartial person or body of persons constituted in accordance with such procedure as may be prescribed by rules made by the Federal Government, and such rules shall provide for a reasonable opportunity for him to be heard in his defence.

(4) The Insurance Ombudsman shall be provided with a secretariat to be appointed in consultation with the Commission. Appointments to the secretariat may be made on deputation from the Commission or other insurance companies or otherwise on the basis of professional qualifications. The costs of the secretariat shall be shared by insurance companies in such proportions as may be determined by the Commission.

127. Jurisdiction, functions and powers of 1 nsurance Ombudsman.- (1) The

Insurance Ombudsman may on a complaint by any aggrieved person undertake any investigation into any allegation of mal-administration on the part of any insurance company

Provided that the Insurance Ombudsman shall not have any jurisdiction to investigate or inquire into any matters which -

(a) are within the jurisdiction of the Office of the Wafaqi Mohtasib under the Establishment of the Office of Wafaqi Mohtasib (Ombudsman) Order, 1983 (P.O. 1 of 1983); or

(b) are sub-judice before a court of competent jurisdiction or tribunal or board in Pakistan on the date of the receipt of a complaint, reference or motion by him.

(2) For the purposes of this section "mal-administration" includes -

(a) a decision, process, recommendation, act of omission or commission which:

(i) is contrary to law, rules or regulations or is a departure from established practice or procedure, unless it is bona fide and for valid reasons; or

(ii) is perverse, arbitrary or unreasonable, unjust, biased, oppressive, or discriminatory; or

(iii) is based on irrelevant grounds; or

(iv) involves the exercise of powers, or the failure or

refusal to do so, for corrupt or improper motives, such as, bribery, jobbery, favouritism, nepotism and administrative excesses; and

(b) corruption, nepotism, neglect, inattention, inordinate delay, incompetence, inefficiency and ineptitude in the administration or discharge of duties and responsibilities.

(3) Notwithstanding anything contained in sub-section (1), the Insurance Ombudsman shall not accept for investigation any complaint which is brought by or on behalf of an insurance company and which relates to a contract of reinsurance.

(4) Notwithstanding anything contained in sub-section (1), the Insurance Ombudsman shall not accept for investigation any complaint by or on behalf of an employee of an insurance company concerning any matters relating to the insurance company in respect of any personal grievance relating to his service therein.

(5) For carrying out the objectives of this Ordinance and, in particular for ascertaining the root causes of corrupt practices and injustice, the Insurance Ombudsman may arrange for studies to be made or research to be conducted nd may recommend appropriate steps for their eradication.

128. Reference to Insurance Ombudsman by Court.- If at any time during the pendency of a case, a Court or Tribunal trying a case relating to an insurance company is of the opinion that the management of the insurance company as prima facie acted in a mala fide manner, or in violation of insurance rules and regulations, it may make reference to the Insurance Ombudsman for inquiring into the matter and passing such order in accordance with the provisions hereof as he may deem fit:

Provided that the making of a reference shall not prevent the Court or Tribunal from deciding the claim before it on its merits.

129. Procedure for making complaints.-(1) A complaint shall be made on solemn affirmation or oath in writing addressed to the Insurance Ombudsman. The complaint shall set out the full particulars of the transaction complained of and the name and address of the complainant.

(2) Prior to making a complaint the complainant shall intimate in writing to the concerned insurance company his intention of filing a complaint and if the insurance company either fails to respond, or makes a reply which is unsatisfactory to the complaint, within a period of one month, the complainant may file a complaint at any time thereafter within a further period of thee months:

Provided that the Insurance Ombudsman may, if satisfied that there were reasonable grounds for the delay in filing the complaint, condone the delay and entertain the complaint.

(3) The Insurance Ombudsman may adopt any procedure as he considers appropriate for investigating a complaint.

Provided that he shall not pass any order against a insurance company without first giving it a notice and an opportunity to be heard.

(4) Subject to section 128, the Insurance Ombudsman shall not have any power to issue an order in the nature of a stay order or to entertain any complaints if the matter is pending before a Court, Tribunal or other legal forum.

(5) The Insurance Ombudsman may reject a complaint summarily or he may accept the same or pass any other order he deems fit.

Provided that in each case he shall pass a reasoned order for his decision.

(6) The Federal Government may further prescribe rules for the conduct of proceedings in relation to complaints brought before the Insurance Ombudsman.

130. Recommendations for implementation.- (1) In the event the Insurance Ombudsman comes to the conclusion that the complaint is justified, in part or in whole, he shall try and facilitate an amicable resolution or settlement by resort to mediation and failing that communicate his findings to the
concerned insurance company with the direction -

(a) to reconsider the matter;

(b) to modify or cancel the earlier decision, action or failure to take appropriate action;

(d) to take the requisite steps to improve the functioning or efficiency of the insurance company; or

(e) to take such other remedial steps or actions as may be specified by the Insurance Ombudsman.

(2) Any insurance company, or official of a insurance company or a complainant aggrieved by an order passed by the Insurance Ombudsman may file an appeal with the Commission within thirty days which shall pass any order thereon it deems fit.

(3) Any order passed by the Insurance Ombudsman which has not been appealed against, or any order passed by the Commission in appeal, as the case may be, shall become final and operative and if not implemented shall render the insurance company concerned liable to such action including the imposition of a fine or penalty as the Commission may deem fit, and in relation to a insurance company officer, to the appropriate disciplinary or other proceedings.

(4) Nothing contained herein shall prevent a complainant from filing a suit against an insurance company in the event his complaint is rejected.

131. Power to call for information.- The Insurance Ombudsman shall have the power for purposes of disposing a case, to require an insurance company to
disclose to him any information subject to the following conditions, namely:-

(a) the Insurance Ombudsman shall make every endeavour to ensure that insurance confidentiality is maintained as required by insurance law and procedure and shall take no action which is violative thereof;

(b) the Insurance Ombudsman may call for any or all such documents which are relevant or pertinent for purposes of
deciding a complaint;

Provided that he shall not be entitled to call for unrelated documents which may compromise the insurance company's position in relation to other customers;

Provided further that in cases where the Insurance Ombudsman is investigating cases of corruption, he shall have a greater latitude in relation to the inspection of documents; and

(c) in the event of an insurance company refusing to furnish information, or copies of relevant documents, the Insurance Ombudsman may draw an adverse inference and comment on the same in his findings.

132. Duties of insurers.- (1) An insurer shall at all times co-operate with the Insurance Ombudsman and with any person properly authorized by him, in the conduct of an investigation by the Insurance Ombudsman into a complaint which has been brought before him.

(2) An insurer that obstructs, through its wilful act or failure to act, any investigation by the Insurance Ombudsman shall be guilty of an offence.

133. Duty and power of the Insurance Ombudsman to report to the Commission.- (1) Where the Insurance Ombudsman has reason to believe during the course of his investigation into a complaint brought before him, or finds as a result of his investigation that an insurer has -

(a) failed to comply with this Ordinance; or

(b) failed to act in good faith; or

disrepute;

he shall make a report on that matter to the Commission in such manner as the Commission may prescribe.

(2) The Insurance Ombudsman may make a report to the Commission on any matter arising from his investigation into a complaint brought before him, in
which he deems it fit or proper to do so.

(3) The Insurance Ombudsman may, in a report made under sub-section (1) or under sub-section (2), make recommendations as to action to be taken,
including without limitation an investigation by the Commission, or the taking of the requisite steps or legal proceedings against an insurance company which has acted in violation of insurance laws, rules, regulations, procedures, or directives of the Commission.

134. Report of Insurance Ombudsman.-(1) The Insurance Ombudsman shall prepare and submit to the Federal Government on or before the 31 st March in every year following the commencement date a report setting out a review of the activities of his office during the preceding year.

(2) The Insurance Ombudsman shall also submit a report or reports to the Federal Government containing the results of such inquiries as he may be directed to conduct by the Federal Government from time to time.

(3) All reports submitted by the Insurance Ombudsman shall be published and released to the public unless he directs otherwise for reasons to be recorded.

Continued
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