40B. 1[ Limitation of expenses of management in life insurance business.
(1) Every insurer transacting life insurance business in India shall furnish to the Controller, within such time as may be prescribed, statements in the prescribed form certified by an actuary on the basis of premiums currently used by him in regard to new business in respect of mortality, rate of interest, expenses and bonus loading.
(2) After the 31st day of December, 1950 , no insurer shall, in respect of life insurance business transacted by him in India, spend as expenses of management in any calendar year an amount in excess of the prescribed limits and in prescribing any such limits regard shall be had to the size and age of the insurer and the provision generally made for expenses of management in the premium rates of insurers: Provided that where an insurer has spent as such expenses in any year an amount in excess of the amount permissible under this sub- section, he shall not be deemed to have contravened the provisions of this section, if the excess amount so spent is within such limits as may be fixed in respect of the year by the Controller after consultation with the Executive
Committee of the Life Insurance Council constituted under section 64F, by which the actual expenses incurred may exceed the expenses permissible under this sub- section.
(3) In respect of any statement mentioned in sub- section (1), the Controller may require that it shall be submitted to another actuary appointed by the insurer for the purpose and approved by the Controller, for certification by him, whether with or without modifications.
(4) Every insurer transacting life insurance business in India shall incorporate in the revenue account--
(a) a certificate signed by the chairman and two directors and by the principal officer of the insurer, and an auditor' s certificate, certifying that all expenses of management in respect of life insurance business transacted by the insurer in India have been fully debited in the revenue account as expenses; and
(b) if the insurer is carrying on any other class of insurance business in addition to life insurance business an auditor' s certificate certifying that all charges incurred in respect of his life insurance business and in respect of his business other than life insurance business have been fully debited in the respective revenue accounts. Explanation.-- In this section,--
(a) " calendar year" or" year" means, in relation to an insurer who is required to furnish returns in accordance with sub- section (2) of section 16, the period covered by the revenue account furnished by such insurer under clause (b) of that sub- section;
(b) " expenses of management" means all charges wherever incurred whether directly or indirectly, and includes--
(i) commission payments of all kinds,
(ii) any amount of expenses capitalized,
(iii) in the case of an insurer having his principal place of business outside India, a proper share of head office expenses which shall not be less than such percentage as may be prescribed of the total premiums (less re- insurances) received during the year in respect of life insurance business transacted by him in India, but does not include in the case of an insurer having his principal place of business in India any share of head office
expenses in respect of life insurance business transacted by him outside India.]