Actuaries Act, 2006

Sep 18, 2020

For regulating and developing profession of actuaries who are persons who compile and analyse statistics and use them to calculate insurance risks and premiums.

Actuaries Act, 2006

Act No. 35 of 2006

[27th August, 2006]

An Act to provide for regulating and developing the profession of Actuaries and for matters connected therewith or incidental thereto

Be it enacted by Parliament in the Fifty-seventh Year of the Republic of India as follows:—

Statement of Objects and Reasons.—The insurance sector has already been opened to private sector with the enactment of the Insurance Regulatory and Development Authority Act, 1999. In addition to the six nationalized insurance companies, which were transacting insurance business, twenty-one private sector companies have started transacting insurance business in the country.

2. Traditional responsibilities of Actuaries in life and general insurance business include designing and pricing of policies, monitoring the adequacy of the funds to provide the promised benefits, recommending fair rate of bonus where applicable, valuation of the insurance business, ensuring solvency margin and other insurance risks like legal liability, loss of profit, etc. They also define the risk factors, advise on the premia to be charged and re-insurance to be purchased, calculate reserve for outstanding claims and carry out financial modelling. An Actuary works as consultant either individually or in partnership with other Actuaries in multi-disciplines like insurance, information technology, taxation, employees benefit, risk management, investment, etc. Evidently, the scope of the functions and duties of an Actuary has increased considerably under the changed conditions.

3. At present, the Actuarial Society of India, which is registered under the Societies Registration Act, 1860 and the Bombay Public Trust Act, 1950 manages the affairs of the actuarial profession in India. It is proposed to regulate the profession of Actuaries through an enactment on the same lines as the professions of Chartered Accountants, Cost and Works Accountants and Company Secretaries are regulated under the Chartered Accountants Act, 1949, the Cost and Works Accountants Act, 1959 and the Company Secretaries Act, 1980, respectively.

4. The Institute of Actuaries of India, to be constituted under the proposed Bill will have the responsibility of conducting examinations for the profession of Actuaries, regulating the profession including professional misconduct, and creating necessary facilities for the growth and training of the members of the profession. It is also proposed to dissolve the Actuarial Society of India and transfer the assets and liabilities of the said Society to the proposed Institute of Actuaries of India. The Bill, inter alia, makes provision for an Appellate Authority, a Tribunal, a Quality Review Board, etc., for the purposes of the Bill.

5. The Bill seeks to achieve the above objects.

Chapter 1

PRELIMINARY

1. Short title, extent and commencement.

1. Short title, extent and commencement.—This Act may be called the Actuaries Act, 2006.

(2) It extends to the whole of India.

(3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint:

Provided that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the commencement of that provision.

[Note: This Act came into force w.e.f. 10-11-2006.]

2. Definitions.

2. Definitions.—(1) In this Act, unless the context otherwise requires,—

(a) “Actuary” means a person skilled in determining the present effects of future contingent events or in finance modelling and risk analysis in different areas of insurance, or calculating the value of life interests and insurance risks, or designing and pricing of policies, working out the benefits, recommending rates relating to insurance business, annuities, insurance and pension rates on the basis of empirically based tables and includes a statistician engaged in such technology, taxation, employees’ benefits and such other risk management and investments and who is a fellow member of the Institute; and the expression “actuarial science” shall be construed accordingly;

(b) “Actuarial Society” means the Actuarial Society of India registered under the Societies Registration Act, 1860 (21 of 1860) and the Bombay Public Trusts Act, 1950 (Bombay Act 39 of 1950);

(d) “Authority” means the Appellate Authority referred to in Section 32;

(e) “Board” means the Quality Review Board constituted under sub-section (1) of Section 43;

(f) “Council” means the Council of the Institute as referred to in Section 12;

(g) “fellow” means a fellow member of the Institute;

(h) “Institute” means the Institute of Actuaries of India constituted under Section 3;

(i) “member” means an individual whose name appears in the register of members maintained by the Institute;

(j) “prescribed” means prescribed by rules made under this Act;

(k) “President” means the President of the Council;

(l) “register” means the register of members maintained by the Institute under this Act;

(m) “specified” means specified by regulations made under this Act;

(n) “Tribunal” means a Tribunal established under sub-section (1) of Section 16;

(o) “Vice-President” means the Vice-President of the Council;

(p) “year” means the period commencing on the 1st day of April of any year and ending on the 31st day of March of the succeeding year.

(2) Save as otherwise provided in this Act, a member of the Institute shall be deemed “to be in practice” when individually or in partnership with Actuaries in practice as a member or an employee of a company, he, whether or not in consideration of remuneration received or to be received,—

(i) engages himself in actuarial profession; or

(ii) offers to perform or performs services involving the application of actuarial techniques in the fields of insurance, pension, investment, finance and management; or

(iii) renders such other services as, in the opinion of the Council, are or may be rendered by an actuary in practice; or

(iv) is in employment of a person engaged in one or more of the activities mentioned in clauses (i), (ii) and (iii) above,

and the words “to be in practice” with their grammatical variations and cognate expressions shall be construed accordingly.

Explanation.—For the purposes of this sub-section, the expression “company” includes a public financial institution as defined in Section 4-A of the Companies Act, 1956 (1 of 1956).

Chapter 2

INSTITUTE OF ACTUARIES OF INDIA

3. Incorporation of Institute.

3. Incorporation of Institute.—(1) With effect from such date as the Central Government may, by notification in the Official Gazette, appoint, all persons whose names are entered in the register of the Actuarial Society at the commencement of this Act and all persons who may thereafter have their names entered in the register to be maintained under this Act, so long as they continue to have their names borne on the register, are hereby constituted a body corporate by the name of the Institute of Actuaries of India and all such persons shall be known as members of the Institute.

(2) The Institute shall have perpetual succession and a common seal and shall have power to acquire, hold and dispose of property, both movable and immovable, and shall by its name sue or be sued.

(3) The head office of the Institute shall be situated at such place as may be decided by the Central Government.

4. Transfer of assets, liabilities, etc., of Actuarial Society.

4. Transfer of assets, liabilities, etc., of Actuarial Society.—On the appointed day,—

(a) all the assets and liabilities of the Actuarial Society shall stand transferred to, and vested in, the Institute.

Explanation.—The assets of the Actuarial Society shall be deemed to include all rights and powers and all properties, whether movable or immovable, including, in particular, cash balances, deposits and all other interests and rights in, or arising out of, such properties as may be in the possession of the said Society and all books of account and other documents relating to the same; and liabilities shall be deemed to include all debts, liabilities and obligations of whatever kind;

(b) without prejudice to the provisions of clause (a), all debts, obligations and liabilities incurred, all contracts entered into and all matters and things engaged to be done by, with or for the Actuarial Society immediately before that day, for or in connection with the purpose of the said Society, shall be deemed to have been incurred, entered into or engaged to be done by, with or for, the Institute;

(c) all sums of money due to the Actuarial Society immediately before that day shall be deemed to be due to the Institute; and

(d) all suits and other legal proceedings instituted or which could have been instituted by or against the Actuarial Society immediately before that day may be continued or may be instituted by or against the Institute.

5. Objects of Institute.

5. Objects of Institute.—The objects of the Institute shall be—

(a) to promote, uphold and develop the standards of professional education, training, knowledge, practice and conduct amongst Actuaries;

(b) to promote the status of the Actuarial profession;

(d) to promote, in the public interest, knowledge and research in all matters relevant to Actuarial science and its application; and

(e) to do all such other things as may be incidental or conducive to the above objects or any of them.

6. Entry of names in register.

6. Entry of names in register.—(1) Any of the following persons shall be entitled to have his name entered in the register, namely:—

(a) any person who immediately before the appointed day was an associate or a fellow (including an honorary fellow) of the Actuarial Society;

(b) any person who has passed the examination conducted by the Actuarial Society and has completed training either as specified by the said Society or as specified by the Council, except any such person who is not a permanent resident of India;

(c) any person who has passed such examination and completed such training, as may be specified for membership of the Institute;

(d) any person who has passed such other examination and completed such other training outside India as is specified as being equivalent to the examination and training specified under this Act for membership of the Institute:

Provided that in the case of any person belonging to any of the classes mentioned in this sub-section who is not permanently residing in India, the Central Government or the Council may impose such further conditions as it may deem necessary or expedient in the public interest.

(2) Every person mentioned in clause (a) of sub-section (1) may have his name entered in the register without the payment of any entrance fee.

(3) Every person belonging to any of the classes mentioned in clauses (b), (c) and (d) of sub-section (1) shall have his name entered in the register on an application being made and granted in the specified manner and on payment of such fees, as may be specified.

(4) The Council shall take such steps as may be necessary for the purpose of having the names of all persons belonging to the class mentioned in clause (a) of sub-section (1) entered in the register before the appointed day.

(5) Notwithstanding anything contained in this section, the Council may confer on any person honorary fellow membership, if the Council is of the opinion that such person has made a significant contribution to the profession of Actuary and thereupon the Council shall enter the name of such person in the register but such person shall not have any voting rights in any election or meetings of the Institute and shall not also be required to pay any fee to the Institute.

7. Associates and fellows.

7. Associates and fellows.—(1) The members of the Institute shall be divided into two classes designated respectively as associates and fellows.

(2) Any person other than a person to whom the provisions of sub-section (3) apply, shall, on his name being entered in the register, be deemed to have become an associate and as long as his name remains so entered, shall be entitled to use the letters “AIAI” after his name to indicate that he is an associate.

(3) Any person who was a fellow of the Actuarial Society and who is entitled to have his name entered in the register under clause (a) of sub-section (1) of Section 6 shall be entered in the register as a fellow.

(4) Any person whose name is entered in the register as fellow shall, so long as his name remains so entered, be entitled to use the letters “FIAI” after his name to indicate that he is a fellow.

8. Honorary, affiliate and student members.

8. Honorary, affiliate and student members.—(1) The Council may choose, in such manner as may be specified, any person of eminence in matters relating to and of interest to the profession of Actuary as an honorary member of the Institute provided that he is not practicing as an Actuary.

(2) Any person, who is a fellow member, or is a holder of membership considered equivalent to the fellow membership of the Institute, of any other institution similar to the Institute, whether within or outside India, may be admitted as an affiliate member for such period, and on such terms and conditions as may be specified.

(3) Any person who enrolls himself for examination of the Institute, and possesses such academic qualifications as may be specified, may be admitted as a student member of the Institute on such terms and conditions as may be specified.

(4) An honorary member or an affiliate member or a student member shall have no right to vote on any matter or resolution in any meeting of the Institute.

9. Certificate of practice.

9. Certificate of practice.—(1) No member of the Institute shall be entitled to practice unless he fulfils the qualifications as may be specified and obtains from the Council a certificate of practice.

(2) A member who desires to be entitled to practice shall make an application in such form and pay such annual fee for certificate of practice as may be specified and such fee shall be payable on or before the first day of April in each year.

(3) The certificate of practice obtained under sub-section (1) may be cancelled by the Council under such circumstances as may be specified.

10. Members to be known as Actuaries.

10. Members to be known as Actuaries.—Every member of the Institute in practice shall, and any other member may, use the designation of an Actuary and no member using such designation shall use any other description whether in addition thereto or in substitution therefor:

Provided that nothing contained in this section shall be deemed to prohibit any such member from adding any other description or letters to his name, if entitled thereto, to indicate membership of such other Institute, whether in India or elsewhere, as may be recognised in this behalf by the Council, or any other qualification that he may possess, or to prohibit a firm, all the partners of which are members of the Institute and in practice, from being known by its firm name as Actuaries.

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