Insurance Act

Sir, - Mr. Swaminathan's letter on the Insurance Act (The Hindu, March 14) has come in good time. It is quite clear that no serious attention was paid to the amendments necessary in the Act in the context of companies with a paid-up capital of 100 crores and backed by foreign companies entering the market. I will quote only one example of the recklessness with which the amendments have been conceived. Section 40 (c) limiting the expenditure on commission on life insurance business to 35 per cent of first year's premiums and some renewal commissions but allowing new companies in the first ten years of their business, commission on the first year premium at 40 per cent places the new companies in a position of advantage. One cannot help feeling that the Government has gone out of its way to handicap the LIC and favour the new entities.

Under Sec. 31 which gives powers to the Authority to decide whether the remuneration paid to any person is reasonable or not, insurers are required to send the Government a list of persons who have been paid more than Rs. 5,000 in a year by way of commission for scrutiny. To think that remuneration in excess of Rs. 5,000 in a year may be excessive is absurd in the present context.

Numerous other provisions can be cited to show that the Act needs a radical revision.

S. V. Ramaswami,

Hyderabad

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