Banking and Insurance - Laws and Practice · Functions in Insurance and Compliance related thereto (Part IV)

Compliance Duties of Insurers and Intermediaries Under the Insurance Act

Updated 11 October 2026 · Fact-checked

Compliance duties of insurers and intermediaries are the filings, valuations, records and conduct rules they must follow under the Insurance Act, 1938 and IRDAI regulations. To answer a question, name the duty, cite the provision or regulation-making power, apply it to the facts, and conclude with the consequence and the Company Secretary's role.

Understand Compliance Duties of Insurers and Intermediaries

An insurer holds other people's money for years. The law therefore makes it prove, again and again, that it is solvent, that its books are honest and that it treats policyholders fairly. Compliance duties are how it proves this.

The Insurance Act, 1938 sets the main duties. IRDAI then fills in the detail through regulations. Section 114A gives the Authority power to make regulations consistent with the Act and the rules. It lists the matters regulations may cover, such as the form of balance-sheet, investment of assets, records of policies and claims, the code of conduct for agents and intermediaries, and the licensing of intermediaries. So in an exam, the Act gives the duty and the regulation gives the procedure.

Valuation is a good example. Under section 64V(1), for checking compliance with section 64VA (the solvency provision), assets are valued at a value not exceeding their market or realisable value, and the Authority may exclude certain assets as specified by regulations. Section 64V(2) requires a proper value on every item of liability, in the manner specified by regulations. Section 64V(3) requires every insurer to furnish, with its returns, a statement of assets and liabilities as on 31 March each year. It must be certified by an Auditor approved by the Authority for general insurance business, or by an actuary approved by the Authority for life insurance business. It must be furnished within the time specified by regulations.

Supervision is the other side. Under section 33A, the Authority may appoint staff, at such places as it considers necessary, to scrutinise the returns, statements and information furnished by insurers and to ensure efficient performance of its functions. So filings are actually read, not just stored.

Intermediaries have their own duties. Regulations may prescribe licensing, qualifications, examinations, fees, renewal and a code of conduct for intermediaries and insurance intermediaries. Industry bodies also help. Under section 64L, the Executive Committee of the General Insurance Council aids and advises general insurers on standards of conduct and sound practice, advises the Authority on controlling expenses, and brings to its notice any insurer acting prejudicially to policyholders. The Company Secretary ties all this together by tracking due dates, reviewing filings and reporting to the board.

Key rules to remember

Valuation of assets (section 64V(1)): Asset value ≤ market or realisable value; Applies for ascertaining compliance with section 64VA. The Authority may exclude certain assets as specified by regulations.
Valuation of liabilities (section 64V(2)): Every item of liability must carry a proper value, in the manner specified by regulations; Do not state a fixed method. The Act leaves the manner to regulations.
Annual statement of assets and liabilities (section 64V(3)): Statement as on 31 March, furnished with returns, within time specified by regulations; Certified by an Auditor approved by the Authority (general insurance) or an actuary approved by the Authority (life insurance).
Scrutiny of returns (section 33A): Authority may appoint staff to scrutinise returns, statements and information; Shows that filed returns are reviewed by the regulator.
Regulation-making power (section 114A): Regulations must be consistent with the Act and rules; laid before Parliament for 30 days; Section 114A(3) requires laying before each House for a total of thirty days, in one or more sessions.
Executive Committee, General Insurance Council (section 64L(1)): Aid and advise insurers + advise the Authority on expenses + report prejudicial insurers + incidental matters; Four functions, clauses (a) to (d). Fees are collected as laid down in the Council's bye-laws.

How to solve Compliance Duties of Insurers and Intermediaries questions

Use the same pattern for any case-based question on compliance duties: provision, analysis of facts, conclusion.

1Identify who the facts concern: an insurer (life or general), an intermediary, or the regulator.
2Name the duty in issue: a return, valuation statement, record, licence, code of conduct or disclosure.
3State the rule in plain words with its exact condition, for example who must certify and as on which date.
4Cite the section only if you are sure of it, such as 64V, 33A, 64L or 114A. Otherwise say the Act or IRDAI regulations require it.
5Apply the rule to the facts: check dates, who certified, what was omitted and which timeline was missed.
6Conclude clearly: compliant or not, the likely regulatory consequence, and the corrective step.
7Add the Company Secretary's practical role: compliance calendar, board reporting, drafting the filing or response.

Quickest way: Duty - Source - Fact - Fix

When to use it: Use when time is short and the question asks for a list of duties or a short advice note.

Write the duty in one line (what must be filed, valued or followed).
Write the source: Act section or IRDAI regulation under section 114A.
Write the one fact that decides the issue (date, certifier or missing record).
Write the fix and the Company Secretary's action in one line each.

Common mistakes in Compliance Duties of Insurers and Intermediaries

Saying assets are valued at cost or book value for solvency purposes.
Students carry over ordinary accounting practice.
Fix: Remember section 64V(1): value not exceeding market or realisable value, with certain assets excludable by the Authority.
Saying any chartered accountant can certify the statement of assets and liabilities.
The words Auditor and actuary are read loosely.
Fix: State that the certifier must be approved by the Authority: an Auditor for general insurance and an actuary for life insurance.
Quoting detailed timelines and formats as if the Act fixes them.
Students mix the Act with regulations.
Fix: Say the Act empowers regulations on time, form and manner (section 114A) and describe the duty without inventing figures.
Treating the Council's Executive Committee as a regulator that penalises insurers.
Section 64L is skimmed.
Fix: It aids and advises, and brings prejudicial conduct to the Authority's notice. Enforcement stays with the Authority.
Listing duties without applying them to the facts of the case.
Students memorise notes and skip analysis.
Fix: Always follow provision, analysis, conclusion. Tie each duty to a fact in the question.
Ignoring the Company Secretary's role in the answer.
The question seems purely legal.
Fix: End with practical steps: compliance calendar, certification checks, board reporting and drafting.

Worked examples

Example 1

Suvarna General Insurance Ltd has prepared its statement of assets and liabilities as on 31 March. The statement values a building at its original cost, which is higher than its realisable value, and has been signed only by the company's finance head. Advise the company.

Show the solution

Provision: section 64V(1) says that, for ascertaining compliance with section 64VA, assets are valued at a value not exceeding their market or realisable value.
Analysis of valuation: the building is shown at original cost above realisable value. This breaches the ceiling in section 64V(1).
Provision on certification: section 64V(3) requires the statement to be certified by an Auditor approved by the Authority for general insurance business.
Analysis of certification: signature by the finance head alone does not satisfy this requirement.
Conclusion and practical step: restate the building at a value not exceeding realisable value, have the statement certified by an approved Auditor, and furnish it with the returns within the time specified by regulations.

Answer: The statement is non-compliant on valuation and on certification. Revalue the building to no more than its market or realisable value, obtain certification from an Auditor approved by the Authority, and file it with the returns on time.

Example 2

As Company Secretary of Bharat Life Insurance Ltd, you are asked to prepare a note for the board on the company's annual valuation filing and on how the regulator checks it.

Show the solution

State the duty: under section 64V(3), the insurer must furnish a statement of assets and liabilities as on 31 March each year along with its returns.
State the certifier: for life insurance business, an actuary approved by the Authority.
State the standards: assets at not more than market or realisable value, with exclusions as the Authority may specify; every liability properly valued in the manner specified by regulations.
State the supervision: under section 33A, the Authority may appoint staff to scrutinise returns, statements and information, so discrepancies can be detected.
Add practical points: maintain a compliance calendar, coordinate with the appointed actuary, review the statement before filing, and report status to the board.
Conclude: the filing is a statutory duty with regulatory scrutiny, and the Company Secretary ensures timely, correctly certified filing.

Answer: The board should note that Bharat Life must file an actuary-certified statement of assets and liabilities as on 31 March with its returns, within the time specified by regulations. The Authority's staff can scrutinise it under section 33A, so the Company Secretary should monitor the timeline and review the filing before submission.

Exam tips

Link every duty to its source: the Act for the duty, regulations under section 114A for the procedure.
For valuation questions, quote the key words of section 64V: not exceeding market or realisable value, proper value of liabilities, 31 March.
Always say who certifies: approved Auditor for general, approved actuary for life.
Do not invent timelines, penalty amounts or regulation numbers. Describe the rule in plain words if unsure.
Close each case answer with the Company Secretary's practical action, as the paper rewards drafting and compliance points.

Practice questions from Functions in Insurance and Compliance related thereto (Part IV)

Compliance Duties of Insurers and Intermediaries: frequently asked questions

What are the main compliance duties of an insurer under the Insurance Act, 1938?

Insurers must furnish returns and statements, value assets and liabilities properly, keep prescribed records and follow IRDAI regulations. Section 64V requires an annual statement of assets and liabilities as on 31 March. Many details are left to regulations.

Who certifies the statement of assets and liabilities?

Under section 64V(3), an Auditor approved by the Authority certifies it for general insurance business. An actuary approved by the Authority certifies it for life insurance business.

Does the Act fix the format and deadlines for every return?

No. Section 114A allows the Authority to specify form, time and manner through regulations. Cite the regulation-making power and avoid quoting dates you are unsure of.

What is the Company Secretary's role in insurance compliance?

The Company Secretary tracks statutory and regulatory due dates, reviews filings and certifications, advises the board and handles communication with the regulator. In exams, end your answer with these practical steps.