(P.M. ACT 1 OF 1963)
INSURANCE ACT, 1963
PART II - CONDUCT OF INSURANCE BUSINESS
Deposits, registers of policies and insurance funds
Section 10. Establishment and maintenance of insurance funds, and allocation of surplus.
(1)
Every Federation insurer registered under this Act shall establish and maintain in accordance with this section an insurance fund in respect of the class or each of the classes of insurance business carried on by the insurer in the Federation so far as that business relates to Federation policies.
(2) There shall be paid into an insurance fund all receipts of the insurer properly attributable to the business to which the fund relates (including the income of the fund), and the assets comprised in the fund small be applicable only to meet such part of the insurer's liabilities and expenses as is properly so attributable.
(3) In the case of a fund established in respect of life business, no part of the fund shall be allocated by way of bonus to participating policies, except with the approval of a qualified actuary and out of a surpIus of assets over liabilities as shown on the last statutory valuation of the fund; and on the making of any such allocation that surplus shall be treated for purposes of this section as reduced by the amount allocated.
(4) If on the last statutory valuation (in the case of a fund established in respect of life business) or in the last statutory balance sheet (in the case of a fund established in respect of general business) there was shown a surplus of assets over liabilities of an insurance fund, there may, subject to any provision to the contrary in any instrument or contract binding the insurer, be withdrawn from the fund an amount not exceeding the surplus, and on the making of any such withdrawal that surplus shall be treated for purposes of this section as reduced by the amount withdrawn:
Provided that, in the case of a fund established in respect of life business, no withdrawal shall be made without the approval of a qualified actuary, and no part of the surplus attributable to participating policies shall be withdrawn in excess of one quarter of the amount allocated thereout by way of bonus to participating policies.
(5) In respect of any policy belonging to the insurer's life business which is under sub- section (4) of section 9 removed from the insurer's register of policies, there may be withdrawn from the fund established in respect of that business an amount not exceeding the prescribed amount.
(6) Any amount withdrawn from an insurance fund under sub-section (4) or (5) and, in a winding up, any part of an insurance fund remaining after meeting the liabilities and expenses to which the fund is applicable may be dealt with as if it had not formed part of the fund.
(7) In a winding up assets comprised in the deposit made by an insurer under this Act in respect of either class of business shall be treated as assets of the insurance fund established by him in respect of business of that class, and sub-sections (2) and (6) shall apply to those assets accordingly.
(8) An insurance fund established by a Federation insurer for any class of business shall, notwithstanding that the insurer at any time ceases to carry on that class of business in the Federation, continue to be maintained by the insurer so long as the insurer is required by this Act to maintain the register of policies for policies belonging to that class.
*(9) In the case of an existing shall be established as at the d insurer's register of policies, and registered or required to be establishment, and by reference of the insurer as at that date; and-
(a)
there shall be allocated to the fund assets of a value not less (after allowing for any charges to which the fund is not applicable) than the aggregate of the amounts specified in sub-section (10); and
(b)
all such matters as would subsequently have affected the fund if established at that date shall be brought into account accordingly.
(10) The amounts referred to in paragraph
(a)
of subsection (9) are as follows-
(a)
the amount, determined in the prescribed manner, of the liability of the insurer in respect of the policies referred to in sub-section (9); and
(b)
the amount of any other liabilities of the insurer in so far as the assets alocated to the fund will be applicable or be treated as having been applicable to meet those liabilities.
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* In its application to Sabah and Sarawak the following sub-section shall have effect in place of sub-section (9) of section 10 of this Act:
"(9) In the case of a pre-registered insurer there shall be an addition to any insurance fund as at the beginning of the modified intitial accounting period**, and by reference to the policies added the register or required to be added to the register on that date, and by reference to the assets and liabilities of the insurer as at that date: and-
(a)
there shall be added to the fund assets of a value not less (after allowing for any charges to which the fund is not applicable) than the aggregate of the amounts specified in sub-section (10); and
(b)
all such matters as would subsequently have affected the fund if added to as aforesaid at that date shall be brought into account accordingly."
-See
Modification of Laws (Insurance) (Extension) Order, 1964, F.L.N. 470/64,
In its application to Sabah and Sarawak the following sub-section shall have effect in place of sub-section (10) of section 10 of this Act:
"(10) The amounts referred to in paragraph
(a)
of sub-section (9) as extended and modified in its application to Sabah & and Sarawak are as follows-
(a)
The amount, determined in the prescribed manner, of the liability of the insurer in respect of the policies added or required to be added to the register as at the beginning of the modified intitial accounting period**; and
(b)
the amount of any liabilities of the insurer in so far as the assets added to the fund will be applicable or be treated as having been applicable to meet those liabilities."-See Modification of Laws (Insurance) (Extension) Order, 1964, F.L.N. 470{64.
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**See
section 3 of F.L.N.
470/64
for definition.
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