LIFE INSURANCE NATIONALISATION RULES, 1972

LIFE INSURANCE NATIONALISATION RULES, 1972

[Gazette of Pakistan, Extraordinary, 27th September 1972]

S. R. O. 778. (I)/72: In exercise of the powers conferred by Article 48 of ‑the Life Insurance (Nationalisation) Order, 1972 (P. O. No. 10 of 1972), read with clause (2) of Article 18 thereof, the Federal Government is pleased 4o make the following rules, namely :‑

l. Short title and commencement.‑(1) These rules may be called the Life Insurance Nationalisation Rules, 1972.

(2) They shall come into force at once.

2. Definitions.‑In these rules, unless there is anything repugnant in the subject or context‑

(a) "Order" means the Life Insurance (Nationalisation) Order, 1972 ,(P. O. No. 10 of 1972) ;

(b) "Trustee" includes the Chairman of a Corporation ; and

(c) words and expression used but not defined in these rules shall have the same meanings as in the Order.

3. Determination whether. any property appertains to life insurance. business.‑‑(1) Allassets of an insurer transacting life insurance business which are deposited with a scheduled bank under subsection (,4) of section 27 of the Act shall be deemed to appertain to life insurance business.

(2) All premises rented specifically for the purpose of life insurance business shall be deemed to appertain to life insurance business..

(3) If any premises are used jointly for life insurance business and other classes of insurance business, the trustee shall, within a period of three months of the transfer of life insurance business to the Corporation, determine the total area of the premises needed for the conduct of life insurance business.

(4) Rent and tax for the part of the premises taken over for the use of life insurance business shall be proportionate to the total area of the premises.

(5) Any vehicle used specifically for the purpose of life insurance business shall be deemed to be the property appertaining to the life insurance business.

(6) Any vehicle not used specifically for life insurance business shall be deemed to appertain to other classes of insurance business.

(7) No liability shall be deemed to appertain to the life insurance business unless it is "proved beyond reasonable doubt that the liability, relates to goods supplied or services rendered for purposes appertaining to life insurance business.

(8) No agreement or instrument which enhances the liability of the: insurer shall be deemed to appertain to life insurance business unless it is proved beyond reasonable doubt that the liability was incurred for the purpose of improving, or increasing the life insurance business of the insurer or for improving or increasing the value of an asset pertaining to life­ insurance business of the insurer.

4. Allocation of paid‑up capital between lifeinsurance business and` general insurance business.‑So much of the paid‑up capital of an insurer incorporated under any law for the time being in force in Pakistan and transacting life insurance business either singly or in combination with other classes of insurance business as is shown ‑in the column relating to life­ insurance business in the last available balance‑sheet prepared in accordance with the First Schedule to the Act, and file with the Controller of Insurance before the coming into force of these rules shall be deemed to be the paid‑up capital of the insures pertaining to life insurance business.

5. Apportionment of agreements entered into by insurers for the purpose of life insurance business and other classes of insurancebusiness.‑(1) If an agreement is entered into by an insurer transacting both life and general insurance business for the purpose of leasing and renting any property for use as office premises for conducting the business of the Insurer, the lease.. or agreement shall be deemed to be that of the insurer and shall continue to, be in the name of the insurer.

(2) As soon as may be possible but not later than six months after the: specified date, a trustee shall notify the Insurer whether the office premises will also be used for the conduct of the life insurance business.

(3) For the period that the office premises are used for life insurance business, the insurer shall be paid by the trustee out of the life fund rent for use of the premises in proportion to the area in use for the aforesaid`

(4) if there is a dispute between a trustee and an insurer relating to the area in use for the purpose of life insurance business the matter shall be~ referred to the Tribunal whose decision shall be final.

6. Apportionment of agreements relating to rendition of services of electricity and gas to office premises.‑(1) Any agreement between the insurer transacting both life and general insurance business and an undertaking supplying gas, electricity or water for the premises used as office by the insurer shall be deemed to be an agreement between the insurer and the said undertaking and shall continue to be an agreement between the insurer and the undertaking.

(2) The charges for electricity, gas or water shall be distributed between the life insurance business and general insurance business in proportion to the area in use for the purpose of life insurance business and other business and shall be paid by the trustee to the insurer on the rendition of accounts and vouchers relating to such expenditure.

    (3) If there is a dispute between a trustee and an insurer relating to the, area in use for the purpose of life‑ insurance business, the matter shall‑be referred to the Tribunal whose decision shall be final.

7. Severance of leases.‑‑(1) No lease entered into for office premises shall be severed by the insurer transacting both life and general insurance business without the written consent of the trustee.

(2) The trustee shall not withhold his consent if the premises are not in use for the purpose of life Insurance business.

(3) if it is determined that any premises are required for the purpose of life insurance business, the trustee may enter into a fresh lease for the premises from the date the lease expires.

8. Apportionment and adjustments of debts, liabilities and obligations for the purpose of life insurance business and general insurance business.‑(I) Where any agreement written or otherwise is entered into for the supply of any goods or services which are used for the purposes of life insurance business as well as general insurance business, the agreement shall continue to be between the insurer and the party who entered into such agreement.

(2) If the goods or services for which such an agreement is entered into are utilised also for life insurance business, the trustee shall pay to the insurer for the utilisation of such goods or services if the trustee continues to utilise such goods or services.

(3) The apportionment of the expenses far any goods or services utilised also for life insurance business shall be in proportion to the area in use for the purpose of life insurance business if that agreement relates to a particular premises, but if such an agreement does not relate to a particular premises, the expenses shall be apportioned in proportion to the premium income from life insurance business and other business derived from the area to which such agreement relates.

(4) Any agreement relating to residential premises entered into by the insurer shall be deemed to be an agreement entered into by the insurer if it relates to a residence used by an official employed by the insurer for the purpose of general insurance business and shall be deemed to be an agreement entered into by a trustee if it relates to an official employed for life insurance business.

. (5) If there is any dispute as to whether any employee works for life or general insurance business, the matter shall be referred to the Controller of Insurance whose decision shall be final.

9. Apportionment of moneys and assets belonging to provident and superannuation fund.‑(1) Where an insurer has established a provident fund, superannuation fund or a gratuity fund for the benefit of his employees. so much of the assets belonging to the provident fund as Is made up of the contribution of employees and the employer and interest accumulated on such contributions as are made in respect of employees pertaining to life insurance business or so much of the assets belonging to a superannuation fund or gratuity fund as is made up of the liabilities of such fund towards employees pertaining to life insurance business shall be transferred to and vest in the trustee.

(2) The date from which the transfer of funds takes place under sub-rule (1) shall be notified by the Federal Government in the official Gazette.

10. Ensuring the safety of assets taken over.‑(1)The assets taken over by a trustee if not deposited for safe custody under subsection (4) of section 27 of the Act shall be deposited for safe custody immediately with the scheduled bank with which the insurer has entered into an agreement for safe custody of assets.

(2) A trustee shall take such steps in relation to immovable property pertaining to life insurance business as may be necessary‑-----

(a) to preserve in good repair the building, if any,

(b) to ensure that the right to receive rents or take possession of premises vacated is not prejudiced by any act.

11. Performance of duties by persons .connected with an insurer.‑All employees working for life 'insurance business of an insurer shall be under the disciplinary control of the trustee who shall exercise all powers which were vested in a Board of Directors' in relation to such employees before that business was vested in the trustee.

12. Administration, management of disposal by way of transfer or otherwise of any property belonging to or managed by an insurer.‑(1) If the total value of assets computed in accordance with the principles , laid down in rule 14 is less than the liabilities to holders of life policies as on the 31st December 1971, calculated on the basis laid down by the Controller of Insurance under subsection (7) of section 13 of the Act or on the basis on which the last actuarial investigation was carried out, or if the reserves computed on such basis. are higher than the aggregate of the reserves calculated on the basis laid down by the Controller of Insurance, other money due to creditors and any amount due for wrongful termination of the service of any employee agent or employer of agents, the trustee may apply to the Controller of Insurance to prohibit the transfer, disposal, hypothecation, pledging or disposal by any other means of any asset pertaining to general insurance business of the insurer.

Explanation.‑For the purpose of this rule, any amount due from any person and shown as debt shall be deemed to be recoverable to such extent as the trustee may determine.

(2) If the insurer satisfies the Controller of Insurance that the value of assets computed in accordance with rule 14 pertaining to life insurance business exceeds the liabilities computed in the manner laid down in sub-­rule (1); the Controller shall vacate any order relating to the disposal of assets pertaining to general insurance business.

(3) If the liabilities computed in the manner laid down In sub‑rule (1) exceed the value of assets computed in accordance with rule 14, the trustee may require that payment of any money from any bank account pertaining to general insurance business shall not be made without his written consent.

(4) The manner of calculation of assets and liabilities under this rule shad apply also for the purpose of Article 34 of the Order.

13. Collecting and disposal of assets of an insurer.‑If. the trustee is satisfied that the assets pertaining to life insurance business of an insurer as on the 31st December 1971, valued In accordance with the principles laid down in rule .14 exceed the liabilities computed in the manner laid down in sub‑rule (1) of rule 12 and such assets are in custody of a scheduled bank under subsection (4) of section 27 of the Act or the aggregate of the cash in hand and with bank and the assets is sufficient to meet such liabilities, the trustee may, by order, relieve the insurer from any responsibility relating to the affairs of life insurance business.

(2) The Trustee may publish an order under sub‑rule (1) in the official Gazette.

(3) The assns pertaining to life insurance business shall be disposed of by the trustee in the best interest of the holders of life insurance policies.

(l)  The manner in which the assets of an insurer shall be valued.‑(1) All securities, shares and debentures which arc quoted on any stock exchange registered under the Securities and Exchange Ordinance, 1969 (XVII of 1969), shall be valued by the insurer for the purpose of the Order at book value or market value as quoted on the stock exchange, whichever is lower.

Explanation l.‑For the purposes of this rule, the shares, securities and debentures and other scripts quoted on a stock exchange shall be taken in the aggregate for the purpose of determining the book or market value.

Explanation 2.‑The date on which the value of assets in sub‑rule (1) shall be computed shall be notified by the Federal Government in the official Gazette.

(2) Bank deposits shall be valued at the amount initially deposited and the National Defence Certificates shall be valued at the face value.

(3) Building and vacant land shall be valued at cost.

I5. Period during which an appeal to theTribunal may be made.‑Where an appeal lies to the Tribunal on any matter under the Order or these rules the appeal shall be presented within three months of the date of the award or the order against which the appeal is to be preferred.

16. Investment of the funds of a Corporation.‑Subject to any specific order in writing issued by the Federal Government in this behalf, a Corporation shall invest its funds in accordance with the provisions of the Act.

17. Nothing in these Rules shall affect the exercise by the Life Insurance Management Board of the powers and functions assigned to it by the Federal Government from time to time.

[F. No. 1(2)/72‑Ins. (N)J.