Section 3 of IA : Section 3: Registration

Explanation using Example

Imagine a scenario where a new company, "SafeHeaven Insurance Pvt. Ltd.," decides to enter the Indian market to provide health insurance policies. Before they can legally start their business operations, they must apply to the Insurance Regulatory and Development Authority (IRDA) to obtain a certificate of registration, as mandated by Section 3(1) of the Insurance Act, 1938.

The company prepares its application, ensuring it includes all the necessary documents as specified by IRDA regulations, in compliance with Section 3(2) of the Act. In their application, they highlight their sound financial condition, competent management team, and the adequacy of their capital structure, addressing the criteria listed in Section 3(2A).

SafeHeaven Insurance also proposes to offer affordable health cover, which aligns with Section 3(2AA), potentially giving them preference in the registration process.

However, after review, if IRDA finds that SafeHeaven Insurance does not meet the necessary requirements, they can refuse registration, as per Section 3(2B). If this happens, SafeHeaven Insurance has the right to appeal the decision to the Securities Appellate Tribunal within 30 days, as provided by Section 3(2C).

If SafeHeaven Insurance successfully obtains the registration but later fails to maintain the required asset value over liabilities as per section 64VA, IRDA has the authority to suspend or cancel their registration according to Section 3(4)(a).

Should the registration be canceled, SafeHeaven Insurance must cease entering into new insurance contracts, though their existing contracts would remain in effect, as stated in Section 3(5B). They would then have the opportunity to rectify the issues and potentially have their registration reinstated, as per Section 3(5C).