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The Insurance Act, 1938

( ACT NO. IV Of 1938 )

Limitation of expenses of management in life insurance business
40B. (1) No insurer shall, in respect of life insurance business transacted by him in Bangladesh, 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 the Chief Controller of Insurance may, on an application made to him in this behalf, condone the contravention of this sub-section by an insurer who has, on reasonable grounds, spent as such expenses an amount in excess of such limits.
 
 
(2) Every insurer transacting life insurance business in Bangladesh 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 Bangladesh 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 “expenses of management” means all charges wherever incurred whether directly or indirectly, and includes:-
 
 
 
 
(i) commission payments of all kinds;
 
 
 
 
(ii) a proper share of expenses capitalised; and
 
 
 
 
(iii) in the case of an insurer having his principal place of business outside Bangladesh, a proper share of head office expenses which shall not exceed such percentage of the total net premiums, that is to say, gross premiums written direct in Bangladesh plus reinsurances accepted minus reinsurances ceded during the year in respect of life insurance business transacted by him in Bangladesh as may be prescribed, but does not in the case of an insurer having his principal place of business in Bangladesh include any share of head office expenses in respect of life insurance business transacted by him outside Bangladesh.

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Ministry of Law, Justice and Parliamentary Affairs