The Ministry of Finance, Department of Financial Services, issued Notification G.S.R. 652(E) on July 23, 2026, publishing the draft Insurance Rules, 2026, to supersede the Insurance Rules, 1939. Issued under Section 114 of the Insurance Act, 1938, the draft rules are open for public objections and suggestions for 30 days before publication in the Official Gazette. The rules mandate specific disclosures regarding risks, rebates, and Section 41 in prospectuses, premium tables, and proposal forms. They define conditions for bona fide insurance agents across life, health, property, or liability risks (requiring securing policies on six different lives or risks) and prescribe Forms I and II for declarations on share ownership and beneficial interest under Section 6A. Furthermore, the draft rules establish procedures for search and seizure under Section 34H, regulate Council executive committee duties, and empower the Authority to suspend, cancel, reconstruct, or wind up insolvent or extravagant life and general insurers. Additionally, under Section 64VB(1), specific relaxations for advance premium payments are outlined for government policies, health, fidelity, marine, aviation, motor third-party, and disaster-affected renewals.
MINISTRY OF FINANCE
(Department of Financial Services)
NOTIFICATION
New Delhi, the 23rd July, 2026
G.S.R. 652(E).— Draft rules to supersede the Insurance Rules, 1939, except as respects things done or omitted to be done before such supersession, which the Central Government proposes to make in exercise of the powers conferred by Section 114 of the Insurance Act, 1938, are hereby published for information of all persons likely to be affected thereby, and notice is hereby given that the said draft rules will be taken for publication in the Gazette of India after the expiry of a period of thirty days from the date on which the copies of the draft rules are made available to the public.
Objections or suggestions, if any, from persons likely to be affected may be addressed to the Secretary, Ministry of Finance, Department of Financial Services, Jeevan Deep Building, 3rd floor, Sansad Marg, New Delhi 110001.
Objections or suggestions that may be received from persons likely to be affected with respect to the draft rules within the aforesaid period shall be considered by the Central Government.
DRAFT RULES
Preliminary
1. Short title and commencement:
1. These rules may be called the Insurance Rules, 2026.
2. They shall come into force from the date of their publication in the Official Gazette.
2. Definitions.—In these rules,—
(1) “the Act” means the Insurance Act, 1938 (4 of 1938);
(2) Words used but not defined in these rules have the meanings respectively assigned to them in the Act.
3. Prospectuses and tables.— No person shall supply or exhibit any prospectus or table of premium rates to any other person with a view to the issue of a policy of insurance unless such prospectus or table includes—
a. a description of the contingency or contingencies to be covered by insurance and the class or classes of lives or property eligible for insurance under the terms of such prospectus or table;
b. a full statement of the circumstances, if any, in which rebates of the premiums quoted in the prospectus or table shall be allowed on the effecting or renewal of a policy, together with the rates of rebate applicable to each case; and
c. a copy of Section 41 of the Act but not including the proviso to sub-section (1) thereof.
4. Proposal forms.— It shall be clearly indicated —
a. in every proposal form in the case of life insurance; or
b. in the document, if any, forming the basis of the contract in the case of any other form of insurance, that rebate of premiums shall be allowed only in accordance with the details given in the prospectus or table of premium rates or, as the case may be, the relevant document, and that an offer or acceptance of any other rebate shall be an offence under Section 41 of the Act.
Committees of the Insurance Councils
5. List of insurers.—The Authority shall cause to be published in the Gazette of India a list of the members of the Life Insurance and General Insurance Councils once every year in the month of January.
6. Duties of dissolved Executive Committees.—When the Executive Committee of the Life Insurance Council or of the General Insurance Council is dissolved, the outgoing members thereof who continue to hold office until a new Executive Committee is constituted, shall be entitled to discharge the following duties in the meantime—
a. keep and maintain up-to-date a copy of the list of all members of the Life Insurance Council or the General Insurance Council, as the case may be;
b. supervise the work of officers and person(s) employed by the Committee;
c. collect the prescribed fees; and
d. help the Chairperson and the Secretary to conduct the necessary elections to the new Executive Committee.
Bona fide insurance agents
7. Bona fide insurance agents for the purposes of Section 41.—The conditions to be satisfied by an insurance agent to establish that it is a bona fide insurance agent employed or engaged by the insurer for the purposes of the proviso to sub-section (1) of Section 41 of the Act shall be the following, namely:
a. It must have secured policies on six different lives excluding its own and it must have been an insurance agent continuously from the time of its soliciting or procuring the first policy on each of such six lives or proposing for the policy on its own life, whichever is earlier, till the time when the policies on those six lives and the policy on its own life have all been issued or
b. It must have secured six number of policies in relation to risks associated with health, excluding its own and it must have been an insurance agent continuously from the time of its soliciting or procuring the first policy in relation to risk associated with health of each of such six policyholders or proposing for the policy on its health, whichever is earlier, till the time when the policies on those six policyholders and the policy on its own health have all been issued or
(c) It must have secured six number of policies in relation to risks associated with property or liability, excluding its own and it must have been an insurance agent continuously from the time of its soliciting or procuring the first policy in relation to risk associated with property or liability of each of such six policyholders or proposing for the policy on its property or liability, whichever is earlier, till the time when the policies on those six policyholders and the policy on its own property or liability have all been issued.
Shares and Ownership
8. Declaration as to the nature of ownership of shares.—The declaration to be furnished by a transferee in pursuance of clause (b)(i) of sub-section (4) of Section 6A of the Act to a public company limited by shares having its registered office in India and carrying on any class of insurance business shall be in Form I.
9. Declaration as to beneficial interest in shares.—The declaration to be made in pursuance of subsection (5) of Section 6A of the Act to a public company limited by shares having its registered office in India and carrying on insurance business by a person who has any interest in any of its shares standing in the name of another person shall be in Form II.
Contravention of limitation of expenses
10. Action against Extravagant Life Insurers. — (1) If it appears from the report of an actuarial valuation under Sub-section (3) of Section 64K of the Act, read with the statutory returns relating to accounts that the insurer concerned is insolvent, the Authority may suspend or cancel the registration of such insurer and request the Executive Committee of Life Insurance Council to consider whether in the circumstances of the case it is possible to have the business of the insurer reconstructed or whether some other insurer is willing to take over the business.
(2) When such a request is received, the Executive Committee of the Life Insurance Council shall meet not later than one month of the receipt of such request to consider the matter and within 7 days of such meeting shall communicate its decision to the Authority.
(3) If the Executive Committee is unable to meet within the time specified in sub-rule (2) or is unable to suggest any practical steps for the reconstruction or transfer, the Authority may as soon as may be, apply to the Court for the winding up of that insurer.
(4) If the valuation under sub-section (3) of Section 64K does not disclose the insurer to be insolvent, the actuary making the investigation shall append to its report a statement whether an encroachment on the bonus loadings contained in the premiums has occurred and whether such encroachment is due either partly or wholly to heavy expenses incurred by the insurer after giving credit for any profits made in other directions. The Authority may request the Executive Committee of the Life Insurance Council for advice so that such encroachment may neither continue nor recur and the Executive Committee shall meet within a month of the receipt of such request and make such recommendations as it deems fit.
(5) On receipt of the recommendations referred to in sub-rule (2) or sub-rule (4), the Authority may issue such directions to the insurer concerned as it deems fit and if the insurer complies with such directions, the suspended or cancelled registration may be revived wherever possible or where it is not so possible, the insurer may be registered afresh.
(6) If the directions are not complied with, the Authority may apply to the Court for the winding up of the insurer.
11. Action against Extravagant General Insurers or Reinsurers. — (1) In pursuance of sub-section (3) of Section 64M of the Act the Authority may—
a. Suspend or cancel the registration of the general insurer or reinsurer under the Act, and
b. request the Executive Committee of the General Insurance Council to consider practical steps for the reconstruction of the insurer concerned or for transferring its business to some other insurer.
2. When such a request as is referred to in the preceding sub-rule is received by the Executive Committee of the General Insurance Council, it shall meet not later than one month of the receipt of such request to consider the request and within seven days of such meeting shall communicate its decision to the Authority.
3. The Authority may, after considering the recommendations of the Executive Committee in this behalf apply to the court for the winding up of the insurer concerned if it thinks fit.
4. On receipt of the recommendations, the Authority may issue such directions to the insurer concerned as it deems fit and if the insurer complies with such directions, the suspended or cancelled registration may be revived wherever possible or where it is not so possible, the insurer may be registered afresh.
5. If the directions are not complied with, the Authority may apply to the Court for the winding up of the insurer.
Miscellaneous
12. Place of Insurance Business.— For the purpose of the Act, the insurance business shall be deemed to be transacted —
a. in India, if the insurance business, wherever effected, relates to any property situate in India or to any vessel or aircraft registered in India;
b. in India, according as the premiums in respect of those transactions are ordinarily paid in India, as the case may be:
Provided that if any question arises whether any premiums are ordinarily paid inside or outside India, the Authority shall decide the question and its decision shall be final.
13. Activities of Insurers.—(1) An insurer may do all acts necessary for making investments permissible under the Act for the protection of such investments and for the realisation of such investments and may in that connection take over and administer mortgaged property until a suitable occasion arises for its disposal.
(2) An insurer carrying on general insurance business may act as the manager in charge of a branch office of another insurer in respect of general insurance business.
14. Payment where nominee is a minor.— (1) The holder of a policy of life insurance may, in any case where the nominee is a minor, appoint any person to receive the money secured by the policy in the event of his death during the minority of the nominee, and communicate such appointment to the insurer concerned by forwarding the documents relating to such appointment which should be endorsed by the appointee to show his consent thereto.
2. Any such appointment in order to be effectual shall unless incorporated in the text of the policy itself, be made by an endorsement on the policy.
3. Any such appointment may at any time before the policy matures for payment be cancelled or changed by an endorsement or further endorsement, as the case may be, and communicated to the insurer.
15. Search and Seizure.—(1) The powers of search and seizure under Section 34H of the Act shall be exercised in accordance with sub-rules (2) to (14).
(2) The Authority may, after recording its reasons for doing so authorise any officer subordinate to him not lower in rank than a Deputy General Manager (hereafter in this rule referred to as the authorised officer) for the purposes of Section 34H of the Act:
Provided that such authorisation shall—
i. be in writing under its signature;
ii. bear its seal, and
(iii)authorise the authorised officer to enter and search any building or place specified therein, and to exercise the powers and perform the functions under sub-section (1) of Section 34H of the Act with such assistance of police officers or of the officers of the Central Government, or both, as may be required.
(3) Whenever any building or place authorised to be searched is closed, any person residing in or being in charge of such building or place shall on demand by the authorised officer and on production of the authority allow him free ingress thereto and afford all reasonable facilities for a search therein.
(4) If ingress into such holding or place cannot be so obtained it shall be lawful for the authorised officer executing the authority with such assistance of police officers or of officers of the Central Government or of both as may be required, to enter such building or place and search therein and in order to effect an entrance into such building or place, to break open any outer or inner door or window of any building or place, whether that of the person to be searched or of any other person, if after notification of its authority and purpose and demand of admittance duly made, it cannot otherwise obtain admittance:
Provided that, if any such building or place is an apartment in actual occupancy of a woman, who according to custom does not appear in public the authorised officer, shall, before entering such apartment, give notice to such woman that she is at liberty to withdraw and shall afford her every reasonable facility for withdrawing and may then break open the apartment and enter it.
(5) The authorised officer may require any person who is the owner, or has the immediate possession, or control, of any box, locker, safe, almirah or any other receptacle situate in such building or place, to open the same and allow access to inspect or examine its contents, and where the keys thereof are not available or where such person fails to comply with any such requirement, may cause any action to be taken including the breaking open of such box, locker, safe, almirah or other receptacle which the authorised officer may deem necessary for carrying out all or any of the purposes specified in the authority issued under sub-rule (2).
(6) The authorized officer may, where it is not practicable to seize any book, account or document, serve an order on the owner or the person who is in immediate possession or control thereof that it shall not remove, part with or otherwise deal with it except with the previous permission of the authorized officer who may take such steps as may be necessary for ensuring compliance with this sub-rule.
(7) Where any person in or about such building or place is reasonably suspected of concealing about its person any book, account or document for which search is being made, such person may also be searched by the authorized officer with such assistance as it may consider necessary. If such person is a woman, the search shall be made by another woman with a strict regard to decency.
(8) Before making a search, the authorized officer about to make it shall call upon two or more respectable inhabitants of the locality in which the building or place to be searched is situate to attend and witness the search and may issue an order in writing to them or any of them so to do.
(9) The search shall be made in the presence of the witnesses aforesaid and a list of all books, accounts and documents seized in the course of such search and of the places in which they were respectively found shall be prepared by the authorized officer and signed by such witnesses; but no person witnessing a search shall be required to attend as a witness of the search in any proceedings under the Act unless specially summoned.
(10) The occupant of the building or place searched or some person in its behalf shall be permitted to attend during the search and a copy of the list prepared under sub-rule (9) shall be delivered to such occupant or person. A copy shall also be forwarded to the Authority.
(11) When any person is searched under sub-rule (7) a list of all books, accounts and documents taken possession of shall be prepared and a copy thereof shall be delivered to such person. A copy shall also be forwarded to the Authority.
(12) The authorized officer may convey the books, accounts and other documents, if any, seized by him in course of the search made by him to the office of the Authority or to the office of the authorised officer or to any other office under the jurisdiction of the Authority.
(13) The Authority or the officer in charge of the office mentioned in sub-rule (12), as the case may be, shall take such steps as it may consider necessary for the safe custody of books, accounts and other documents conveyed to him.
(14) The authorisation of the Authority referred to in sub-rule (2) shall be in Form No. III.
Sufficiency of Assets
16. Advance Payment of Premiums.—For the purposes of sub-section (1) of Section 64VB of the Act, a risk in respect of a policy may be assumed before the premium payable in respect thereof is received: —
i. if the entire amount of the premium is guaranteed to be paid by a Banking Company before the end of the calendar month next succeeding to the month in which the risk is assumed, if the premium due is not paid by the insured before that date;
ii. if an advance deposit is made with the insurer to the credit of the insured sufficient to cover the payment of the entire amount of the premium together with the premium, if any, due from the insured in respect of any other risk already assumed against such deposit, such deposit being agreed to be adjusted towards the premium before the end of the month next succeeding to the month in which the risk is assumed, if the premium due is not paid by the insured before that date.
17. Relaxation.—In respect of the categories of insurance policies mentioned hereunder the requirements of sub-section (1) of Section 64VB shall stand relaxed to the extent and in the manner mentioned against each category of policy, subject to the conditions mentioned therein:
a. Policies issued to Government and semi-Government bodies.—The risk may be covered on such policies on the strength of an undertaking by the proposer to pay the premium within 30 days of the date of intimation of the amount of premium or within such further period as the Authority may fix in any particular case.
b. Policies under Sickness Insurance, Group Personal Accident Insurance, Medical Benefits Insurance and Hospitalisation Insurance Schemes. —Premiums on such policies may be accepted in instalments provided that the instalment covering a particular period shall be received within 15 days from the date of commencement of the period.
c. Fidelity Guarantee Insurance. —Fidelity Guarantee Insurance policies covering Government and semi-Government employees may be issued without receipt of premium in advance if the policy is not in renewal of an existing policy and subject to the condition that the premium is paid within thirty days from the date of appointment of the person covered by the policy.
d. Policies covering risks where exact premium cannot be ascertained without reference to Head Office, Principal Office, etc.—Where the exact premium for a risk cannot be ascertained without reference to Head Office, Principal Office or, for any other reason, the risk may be assumed if there is a deposit made by or on behalf of the insured with the insurer at a suitable rate but the premium in such cases shall be paid or adjusted within thirty days of the commencement of risk, failing which the cover shall be cancelled on the expiry of the period of thirty days:
Provided that in the case of policies covering Carriers’ Liability, the adjustment of premium may be made after the expiry of the policy.
(e) Declaration Policies. — Risk in respect of such policies may be assumed if at least the premium calculated on 75 per cent of the sum assured has been received before assumption of the risk.
(f)Policies issued on the basis of adjustable premiums. —Risk in respect of policies issued on the basis of adjustable premiums such as workmen’s compensation, cash in transit, etc., may be assumed on receipt of provisional premiums based on a fair estimate.
(g) Annual Insurances connected with aircraft hulls, other aviation risks and marine hulls.— Facilities for delayed payment of premium or the payment of premium by means of instalments not exceeding four in number may be allowed at the discretion of the insurer on policies covering the following risks, namely—
i. aircraft hulls,
ii. marine hulls,
iii. legal liability to passengers,
iv. automatic personal accident insurance to passengers,
v. blanket policies covering liability in excess of basic cover connected with aviation risks,
vi. war risk insurance of air passengers and aircraft hulls,
vii. third party and other liability risks connected with aviation risks and marine hulls risks,
viii. Strikes, Riots and Civil Commotion (SRCC) risk connected with aviation risk and marine hulls risks
provided that a clause to that effect is endorsed on the policy.
(h) Short period covers in respect of insurance connected with aircraft hulls, other aviation risks and marine hulls.— Short period covers may be granted on a hull covered basis on the following risks, namely—
i. aircraft hulls,
ii. marine hulls,
iii. legal liability to passengers,
iv. automatic personal accident insurance to passengers,
v. blanket policies covering liability in excess of basic cover connected with aviation risks,
vi. war risk insurance of air passengers and aircraft hulls,
vii. third party and other liability risks connected with aviation risks and marine hull risks,
viii. Strikes, Riots and Civil Commotion (SRCC) risk connected with aviation risk and marine hull risks, subject to the condition that the premium or additional premium in respect of risks assumed in a calendar month shall be paid by end of the next calendar month.
i. Policies issued for a period of more than one year.—In the case of policies issued for a period of more than one year, such as Contract Performance Bonds or Guarantees, Contractors’ “All Risk” policies, Machinery Erection policies and the like, the premium may be staggered as necessary according to custom, over the period of the cover, provided that the first equated instalment is higher than any other instalment by at least 5 per cent of the total premiums payable and each instalment is paid in advance. Where the premiums are payable by declaration, they may be paid within fifteen days from the dates of receipt of declaration.
j. Schedule and Consequential Loss Policies.—In such cases a provisional amount towards the premium shall be collected before the date of inception or renewal of risk on the basis of the previous year’s premium.
k. Marine covers other than Hulls.—(i) In the case of inland shipments and transit risks, risk may be assumed under open policies in respect of seasonal crops such as tea, on the payment of a provisional premium based on a fair estimate.
(ii) In the case of exports overseas, risk may be assumed subject to the condition that the premium shall be paid within fifteen days from the date of sailing of the overseas vessel.
(iii)In the case of imports, risk may be assumed subject to the condition that the premium shall be paid within fifteen days of the receipt of declaration in India from the insurer’s or insured’s representative overseas:
Provided that the relaxations under sub-clauses (ii) and (iii) shall apply to marine cover notes only and not to marine policies.
(l) Policies relating to insurances.—The premium shall be deemed to have been duly paid if paid on the full insurance to any one of the co-insurers.
(m) Policies of reinsurance.—(i) Risk may be assumed without payment of premium in advance on insurances accepted under automatic reinsurance contracts.
(ii) In the case of facultative reinsurances accepted, risk may be assumed without payment of premium in advance if the ceding insurer, has given an undertaking to pay its share of the premium, instalment of premium, premium subject to delayed payment or, where a deposit premium or provisional premium was paid on the original policy, the adjusted premium, or, in the case of premiums subject to delayed payment, the delayed premium, as the case may be, before the end of the calendar month succeeding the month in which the premium is due under the original policy.
(n) Policies of National Agriculture Insurance Scheme.—The subsidy in premium due from Central Government or State Governments or Union Territories shall be deemed to have been duly paid, if paid in full, before the settlement of claim.
(o) Motor vehicle third party insurance policies.—In the case of renewal of motor vehicle third party insurance policies falling during the time-period for which notifications or guidelines issued by the Central Government in relation to a disaster under the Disaster Management Act, 2005 are in force, the risk may be assumed subject to the condition that the premium shall be paid within such time as the Central Government or the Authority, as the case may be, by notification, direct in this behalf;
(p) Health insurance policies.— In the case of renewal of health insurance policies falling during the time-period for which notifications or guidelines issued by the Central Government in relation to a disaster under the Disaster Management Act, 2005 are in force, the risk may be assumed subject to the condition that the premium shall be paid within such time as the Central Government or the Authority, as the case may be, by notification, direct in this behalf.
[F.No. 12018/02/2021-Ins.II]
Dr. DEBASISH PRUSTY, Addl. Secy.
