In India, the insurance law sector operates under a comprehensive framework of insurance laws and regulations. These legal provisions aim to ensure stability, transparency, and fair operation within the insurance industry.

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Nature of Insurance Business

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  • Insurance is an arrangement where a company or the State guarantees compensation for specified loss, damage, illness, or death in exchange for a specified premium.
  • It serves as a means of financial protection against various risks.
  • The entity providing insurance is called an insurer, while the person buying insurance is the insured or policyholder.
  • Insurance transactions involve the insured assuming a known, relatively small loss (the premium) in exchange for the insurer’s promise to compensate in case of a covered loss.
  • The loss must be reducible to financial terms and involve an insurable interest established by ownership, possession, or pre-existing relationship.

Contract of Insurance Law

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  • The insured receives an insurance policy detailing conditions and circumstances for financial compensation.
  • The amount charged by the insurer to the insured is the premium.
  • If the insured experiences a potentially covered loss, they submit a claim to the insurer for processing.

Uberrimae Fidei Contract

  • In some contracts, all material facts must be disclosed, whether asked or not. These are Uberrimae Fidei contracts, meaning contracts of “utmost good faith.”
  • Non-disclosure in such contracts may amount to fraud or misrepresentation, allowing the aggrieved party to avoid the contract.

Background of Insurance Business in India

Government of Karnataka Compulsory Gratuity Insurance Law Rules, 2024

  • On January 10, 2024, the Government of Karnataka enacted these rules, ensuring legislative approval for compulsory insurance related to gratuity.
  • Key provisions include:
    • Compulsory Insurance: Employers in Karnataka are mandated to obtain an insurance policy covering their gratuity liabilities.
    • Approved Gratuity Trust (AGT): Certain establishments must establish an AGT.
    • Mandatory Registration: Covered establishments must register with the Controlling Authority.
    • Full Gratuity Coverage: The insurance policy fully covers gratuity obligations.
    • Board of Trustees and Governance: A Board of Trustees oversees the gratuity fund.

Employee’s State Insurance Law Scheme Medical Service – Karnataka

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