Risk Management in Banking and Insurance · Concept and Types of Health Insurance Policies

Insurance Councils and Third Party Motor Obligations

Updated 11 October 2026 · Fact-checked

Section 64C deems the existing Life Insurance Council and General Insurance Council to be the Councils under the Insurance Act, 1938. Section 32D requires every general insurer to underwrite a minimum percentage of third party motor risks, as set by regulations. Solve questions by naming the section, its rule and its exact condition.

Understand Insurance Councils and Third Party Obligations

The Insurance Act, 1938 sets up two representative bodies of insurers. Under section 64C, the existing Life Insurance Council (insurers carrying on life insurance business in India) and the existing General Insurance Council (insurers carrying on general, health insurance business and re-insurance in India) are deemed to be the Councils constituted under the Act. Note that health insurance insurers fall under the General Insurance Council.

Each Council acts through its Executive Committee. Section 64E says the authority of each Council is the Executive Committee. Under section 64F(2), the General Insurance Council's Executive Committee has four representatives of members of the Council, elected in their individual capacity by the members in the manner laid down in the bye-laws. It also has one eminent person not connected with insurance business, nominated by the Authority, and four persons nominated by the Authority to represent insurance agents, third party administrators, surveyors and loss assessors, and policyholders. One of the four elected representatives is elected Chairperson. If anybody of persons fails to elect any of the members, the Authority may nominate a person to fill the vacancy, and that person is deemed to be a member as if duly elected.

The functions of the General Insurance Council's Executive Committee are in section 64L. It aids and advises general insurers on standards of conduct and sound practice and on efficient service to policyholders. It advises the Authority on controlling insurers' commission and other expenses. It brings to the Authority's notice any insurer acting in a way prejudicial to policyholders' interests. It may also act in incidental matters notified in the Gazette with the Authority's approval. To fund this, it may collect fees laid down in the Council's bye-laws; the Council may waive fees for a year by resolution, and if the Authority approves, no fees are collected for that year.

Section 64R gives the Councils general powers: appoint officers and servants, decide how fees are collected, maintain a list of member insurers, and make bye-laws on elections, meetings and quorum, statements insurers must submit, and fees. Section 64D lets a member authorise any of its officers to represent it at a Council meeting.

Section 32D is a separate obligation. Every insurer carrying on general insurance business must underwrite a minimum percentage of third party motor vehicle risks, as specified by regulations. The proviso lets the Authority, by regulations, exempt any insurer primarily engaged in health, re-insurance, agriculture or export credit guarantee business. The exemption is not automatic. An insurer primarily engaged in health business is relieved of the obligation only if the Authority's regulations exempt it. Related is section 40C: every insurer must furnish details of expenses of management to the Authority in the manner and form specified by regulations.

Key rules to remember

Section 64C: Existing Life Insurance Council + existing General Insurance Council = deemed Councils under the Act; The General Insurance Council covers general, health insurance business and re-insurance.
Section 64F(2) – Executive Committee of General Insurance Council: 4 representatives of members (elected in their individual capacity by the members, as per bye-laws) + 1 eminent person (nominated) + 4 nominees (agents, TPAs, surveyors and loss assessors, policyholders); Chairperson is elected from the four elected representatives. If anybody of persons fails to elect any member, the Authority may nominate a person, who is deemed to be duly elected (64F(3)).
Section 64L(1) – Functions: Advise insurers on conduct and service; advise Authority on commission and expenses; report prejudicial insurers; incidental acts notified in Gazette; Fees under 64L(2) are as per Council bye-laws; may be waived for a year with Authority's approval.
Section 32D: Insurer carrying on general insurance business must underwrite minimum % of third party motor risks, as specified by regulations; Authority may, by regulations, exempt an insurer primarily engaged in health, re-insurance, agriculture or export credit guarantee. No exemption without such regulations.
Section 64E: Authority of each Council = its Executive Committee; Section 64R(2) lets a Council delegate powers under clauses (a), (b), (c) of 64R(1) to the Executive Committee.

How to solve Insurance Councils and Third Party Obligations questions

Use this method for any theory or case question on Councils and third party obligations.

1Identify the type of insurer in the question: life, general, health, re-insurer, or one in a specially exempted class.
2Pick the section: 64C for which Council, 64F for composition, 64L for functions, 64R for powers, 32D for third party motor.
3State the rule in plain words, using the exact conditions of the section.
4For 32D, say the percentage is set by regulations and not fixed in the Act, then check the exemption proviso.
5Apply the rule to the facts and reach a clear conclusion.
6Cite section numbers only for the provisions you are sure of.

Quickest way: Section-to-fact matching

When to use it: Use for MCQs and short case questions where you have under two minutes.

Underline the key words: Council, Executive Committee, fees, third party, motor, exempt.
Match: Council identity = 64C; committee members = 64F; functions or fees = 64L; motor third party = 32D.
Eliminate options that give a fixed percentage under 32D or that put health insurers under the Life Council.
Choose the option that matches the exact wording.

Common mistakes in Insurance Councils and Third Party Obligations

Placing health insurers under the Life Insurance Council.
The word insurance is read loosely, and health seems close to life.
Fix: Remember that 64C puts general, health insurance business and re-insurance under the General Insurance Council.
Stating a fixed percentage for third party motor business under section 32D.
Students recall a figure from practice rather than the section.
Fix: The Act says the minimum percentage is as specified by regulations. Do not give a number.
Saying all insurers are exempt from 32D if they do health business.
The proviso is overstated.
Fix: Only an insurer primarily engaged in health, re-insurance, agriculture or export credit guarantee business can be exempted, and only by the Authority's regulations.
Treating the General Insurance Council as the authority that regulates insurers directly.
Advisory and regulatory roles are mixed up.
Fix: Under 64L the Executive Committee aids, advises and reports to the Authority. It does not replace the Authority.
Confusing who forms the Executive Committee of each Council.
The Life and General committees have similar but different nominee lists.
Fix: For General: 4 elected, 1 eminent person, 4 nominees (agents, TPAs, surveyors and loss assessors, policyholders). Life has its own list in 64F(1).

Worked examples

Example 1

Medisure Health Ltd is a stand-alone health insurer. A student says it must underwrite a fixed 10% of its business in third party motor risks under section 32D. Evaluate the statement.

Show the solution

Section 32D places the obligation on every insurer carrying on general insurance business.
It requires a minimum percentage as specified by the regulations. The Act itself does not fix a number, so the claim of a fixed 10% from the Act is wrong.
The proviso lets the Authority exempt, by regulations only, an insurer primarily engaged in health, re-insurance, agriculture or export credit guarantee business.
Medisure is primarily engaged in health business, so it belongs to a class the Authority may exempt. The exemption is not automatic: it applies only if the regulations exempt it.

Answer: The statement is incorrect. Section 32D leaves the percentage to regulations, and an insurer primarily engaged in health business like Medisure can be relieved of the obligation only if the Authority's regulations exempt it.

Example 2

Explain the functions of the Executive Committee of the General Insurance Council and how it meets its costs.

Show the solution

Under 64L(1)(a), it aids and advises general insurers on standards of conduct and sound practice and on efficient service to policyholders.
Under 64L(1)(b), it advises the Authority on controlling insurers' commission and other expenses.
Under 64L(1)(c), it brings to the Authority's notice any insurer acting prejudicially to policyholders' interests.
Under 64L(1)(d), it acts in incidental or ancillary matters notified in the Gazette by the Council with the Authority's approval.
Under 64L(2), it may collect fees laid down in the Council's bye-laws from general insurers.
Under the proviso, the Council may by resolution waive fees for a year; if the Authority approves, no fees are collected for that year.

Answer: The Committee advises insurers, advises the Authority on expenses, reports prejudicial conduct and handles notified incidental matters. It funds itself through bye-law fees, which can be waived for a year with the Authority's approval.

Exam tips

Link section numbers to one-line rules: 64C Councils, 64E authorities, 64F committees, 64L functions, 64R powers, 32D third party motor.
In MCQs, watch for options that fix a percentage under 32D. The Act leaves it to regulations.
In case questions, first classify the insurer, then check whether the exemption proviso fits.
Write the four functions of 64L as four short bullets. Examiners reward complete lists.

Practice questions from Concept and Types of Health Insurance Policies

Insurance Councils and Third Party Obligations in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Insurance Councils and Third Party Obligations: frequently asked questions

Which Council do health insurers belong to?

Section 64C describes the General Insurance Council as the representative body of insurers carrying on general, health insurance business and re-insurance in India. So health insurers belong to the General Insurance Council.

What does section 32D require?

Every insurer carrying on general insurance business must underwrite a minimum percentage of third party motor vehicle risks, as specified by regulations. The Authority may exempt insurers primarily engaged in health, re-insurance, agriculture or export credit guarantee business.

Who runs the General Insurance Council?

Its authority is the Executive Committee under section 64E. Under 64F it has four elected members, one eminent person and four nominees of the Authority, with the Chairperson elected from the four elected members.

Does the General Insurance Council collect fees?

Yes. Under 64L(2) the Executive Committee may collect fees laid down in the Council's bye-laws from general insurers. The Council may waive fees for a year by resolution, and if the Authority approves, none are collected for that year.