(P.M. ACT 1 OF 1963)
INSURANCE ACT, 1963

PART II - CONDUCT OF INSURANCE BUSINESS
Deposits, registers of policies and insurance funds

Section 7. Deposits.

*(1) A Federation insurer, while registered in respect of any class of insurance business, shall at all times have in respect of that business a deposit with the Accountant­General of a value (subject to sub-section (8)) of not less than three hundred thousand dollars.

(2) Any such deposit shall be made in cash or in securities specified in the Second Schedule or partly in one way and partly in the other; and any cash comprised in a deposit may be invested in such manner available for the investment of funds in Court as the insurer may select.

(3) All income accruing in respect of a deposit shall be payable to the insurer making the deposit.

(4) A deposit made under this section in respect of any class of business shall be retained by the Accountant­General** until either the insurer ceases to be registered in respect of that class of insurance business or the deposit is required in the winding up of the insurer; and if the insurer ceases to be registered as aforesaid, the deposit or part of it may be further retained for the purpose of and in accordance with any such provision for liabilities in respect of policies as is required by sub-section (3) of section 6.

(5) If at any time a deposit under this section (other than a deposit retained after the insurer has ceased to be registered as aforesaid) comprises assets other than government securities, and the value of those assets is less than the sum of three hundred thousand dollars reduced by the value of any government securities comprised in the deposit, then (subject to sub-section (8)) the Commissioner may by notice in writing direct the insurer to add thereto within twenty-eight days of the service of the notice, cash or securities specified in the Second Schedule of a value not less than the difference.

(6) An insurer which has made a deposit under this section may at any time substitute for any assets comprised in the deposit cash or securities specified in the Second Schedule, so long as the value of the deposit is not thereby reduced to an amount below that which is required by this Act (or would be so required but for sub-section (8)).

(7) In the foregoing sub-sections "securities" (except in the expression "government securities") includes any form of investment, and "government securities" means securities of which the principal or interest is charged directly or by way of guarantee on the Consolidated Fund; but no deposit shall include-
(7 A) Where by virtue of paragraph (c) of sub-section (7) any securities comprised in a deposit are declared unsuitable, the insurer shall within one calendar month of the securities being so declared, substitute therefor such other securities as are authorised by this section.

(8) Until the year 1965 the deposit required by this section in respect of either class of insurance business need not, in the case of an existing insurer, which, but for this Act, would have been required to have a deposit under section 4 of the Life Assurance Companies Ordinance, 1948, or (in the case of general business) under section 4 of the Fire Insurance Companies Ordinance , 1948, or section 76 of the Road Traffic Ordinance §, 1958, exceed the deposit which would have been so required, unless in the case of general business the insurer carries on in the Federation insurance business for which a deposit was not required by those Ordinances.

(9) In the case of an existing insurer any deposit made under the enactments mentioned in sub-section (8) shall, if the deposit is in the hands of the Accountant-General at the commencement of this Act**** ,either be returned by him to the insurer at the end of three months from that commencement or be held by him on account of a deposit required by this Act, as the insurer may require.
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*Designation of Accountant-General of the Federation to sign all deeds, documents and other instruments relating to deposits-See F.L.N. 142/63.
**Subject to the modifications made to sub-section (9) of section 7 of this Act, by F.L.N. 470/64, references to the Accountant-General shall be construed as references to the Accountant-General of the Federation-See Modification of Laws (Insurance) (Extension) Order, 1964, F.L.N. 470/64.
***Subject to the modifications made to sub-section (9) of section 7 of this Act, by F.L.N. 470/64, references to the Accountant-General shall be construed as references to the Accountant-General of the Federation-See Modification of Laws (Insurance) (Extension) Order, 1964, F.L.N. 470/64.
**** In its application to Sabah and Sarawak, t the case of a pre-registered insurer who has given any deposit under any of tile enactments mentioned in sub-section (8) of section 7 of this Act as modified by paragraph (b) of section 4 of the order, sub-section (9) of section 7 of this Act sha1l effect as if for the words "commence­ment of this Act" to the end, there were read the words "date on which this Act is extended to apply to Sabah and /Sarawak, be returned by him to the insurer, upon receipt from that insurer of a statutory declaration to the effect that the modified initial accounting period*** has commenced and that the provisions of sub-section (9) of section 9 (jis modified in its extended application) have been complied with"-See Modification of Laws (Insurance) (Extension) Order F.L.N. 470/64.
Subject to the modifications made to sub-section (9) of section 7 of this Act, by F.L.N. 470/64, references to the Accountant-General shall be construed as references to the Accountant-General of the Federation-See Modification of Laws (Insurance) (Extension) Order, 1964; F.L.N. 470/64.
In its application to Sabah substitute "section 4 of the Life Assurance Companies Ordinance (Cap 71)". There is no corresponding reference to Sarawak-See F.L.N. 470/64.
In its application to Sabah substitute "section 4 of the Fire Insurance Companies Ordinance (Cap 46)". There is no corresponding reference to Sarawak-See F.L.N. 470/64.
§In its application to Sabah and Sarawak substitute the corresponding written law and its corresponding written provisions- The Road Traffic (Third Party Insurance) Ordinance of Sabah (Cap. 129), sections 4 (1) (a) and 17, and the Motor Vehicles (Third Party Risks) Ordinance of Sarawak (Cap. 130), sections 4 (1) (a) and 17-See Modification of Laws (Insurance) (Extension) Order, 1964, F.L.N. 470/64.
In its application to Sabah and Sarawak, references to an existing insurer shall be construed as references to a pre-registered insurer** and references to any deposit required or made under (the enactments mentioned in sub-section (8) of section 7 of this Act shall be construed as references to any deposit required or given under the corresponding enactments of Sabah and Sarawak as the case may be-See Modification Of Laws (Insurance) (Extension) Order, 1964, F.L.N. 470/64.
In its application to Sabah and Sarawak the reference to the Accountant-General in this sub-section, shall, in relation to a pre-registered insurer** be construed as a reference to the Accountant-General of Sabah or the Accountant-General of Sarawak, as the circumstances may require-See F.L.N. 470/64 .
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** "pre-registered insurer" means, in relation to either class of insurance business, an insurer which was registered under the Act immediately before the date of coming into force of this Order and which has been carrying on that class of business in one or more of the States of Sabah, Sarawak and Singapore since before that date-SeeModification of Laws (Insurance) (Extension) Order, 1964, F.L.N. 470/64.
***"Modified initial accounting period" means, in relation to any pre-registered insurer, the accounting period beginning with the 1st day of January, 1965, or if the pre-registered insurer has no such accountlng period, the first accountIng period beginning thereafter-See Modification of Laws (Insurance) (Extension) Order, 1964, F.L.N. 470/64.

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