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Report No. 190 Views of the Law Commission 6.1.15 The Law Commission after considering the matter and the responses received is of the view that sub-section (7) of section 38 should be retained, with some modification for the purpose of greater clarity. 6.1.16 The Commission also accepts the suggestion that a clear distinction be made between absolute assignment and conditional assignment since this is leading to some confusion while operationalising the scheme of assignment and transfer. There is a need to clearly spell out the contingencies under which an assignment or transfer would be treated as a conditional one. It is proposed to retain both terminologies, viz., assignment and transfer and use them in the alternative to enable greater flexibility in the working of these provisions. It is also proposed that a provision be inserted for partial assignment conditional upon restricting further assignments of the residual rights. This would be by a necessary clarification. Further, the provision should be appropriately amended to extend its applicability to all personal lines of non-life insurance business as well. 6.1.17 The Commission finds considerable merit in the apprehension expressed by the IRDA regarding misuse of the facility of assignment and transfer and accordingly proposes to build in certain safeguards like disclosure of reasons for the assignment, the antecedents of the assignee, the exact terms on which the assignment is being made and an obligation upon the insurer to get the credentials of the assignee verified at the cost of the insured. If the insurer is not satisfied that the assignment is bona fide, there would be an option to decline to register the assignment or transfer upon reasons in writing to be communicated to the policyholder subject to such decision being challenged by way of petition before the Grievance Redressal Authority. Where there is a dispute between assignees as to which of the assignments is prior in point of time for the purposes of a claim, the dispute should be adjudicated by the GRA.    |
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