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CMA Final · Risk Management in Banking and Insurance

General Insurance Chapter for CMA Final Paper 20B

General Insurance in Paper 20B covers the classes of non-life insurance and the statutory bodies under the Insurance Act, 1938. The General Insurance Council is the representative body of general insurers. Its Executive Committee advises insurers and the Authority, as set out in Section 64L. Learn the sections, then apply them to cases.

What this chapter covers

This chapter has two parts. The first is the business side: what general insurance is and its main classes, such as fire, marine, motor, health and miscellaneous covers. The second is the legal framework: the Councils of Life Insurance and General Insurance under Part of the Insurance Act, 1938 (Sections 64C to 64R).

Section 64C says the existing General Insurance Council is a representative body of insurers who carry on general, health insurance business and re-insurance in India, and is deemed constituted under the Act. The Executive Committee does the working role. Its functions are in Section 64L, its make-up in Section 64F, its term in Section 64H, and its duty to advise on management expenses in Section 64M.

The chapter links to the rest of Paper 20B through regulation and risk. Insurers are risk carriers, so the Council and Executive Committee are part of how conduct, expenses and policyholder service are kept sound. Expect to connect this chapter with the regulator, the role of the Authority, and insurance risk management elsewhere in the paper.

This chapter is compact and fact-based, so it is a good place to secure marks in Section A and in short written answers. Questions often test who does what: who is on the Executive Committee, what it advises on, and how long it lasts. These can be answered exactly if you learn the Act's words. A case scenario can ask you to apply a function to a situation, such as an insurer acting against policyholder interests. Students who only memorise headings lose marks on the details.

General Insurance: topics in the order to study them

  1. 1Overview of General Insurance and Its ClassesStart with the business itself so the Council and its functions make sense.
  2. 2Councils of Life and General Insurance (Section 64C)Learn what the Councils are and who they represent before studying their committees.
  3. 3Executive Committee of General Insurance Council (64L)Next, study the committee that does the work: its functions in Section 64L, plus composition, term and the expense-advice duty.
  4. 4Functions and Role of the General Insurance CouncilFinish by combining the Council's general powers and the Committee's functions into one picture for case answers.

How to prepare General Insurance

Treat this as a legal-structure chapter. Read the Act's wording, then build a one-page chart of the bodies and what each does.

  1. Read the classes of general insurance and write one example risk for each class.
  2. Learn Section 64C: two Councils, who they represent, and that they are deemed constituted under the Act.
  3. Learn the Executive Committee: Section 64F composition (four elected insurer representatives, an eminent person nominated by the Authority, and four nominated persons for agents, third party administrators, surveyors and loss assessors, and policyholders), with the Chairperson elected from the four.
  4. Memorise the four functions in Section 64L(1): advise insurers on standards of conduct and service, advise the Authority on commission and expenses, report prejudicial insurers to the Authority, and act in incidental matters notified with approval.
  5. Add the supporting rules: three-year term (Section 64H), the duty to meet before 31 March each year to advise on expense limits (Section 64M), and the Council's powers (Section 64R).
  6. Practise MCQs and short cases; for each, name the section and the body acting.
  7. On the last day, recite the chart from memory and check against the Act.

Common mistakes in General Insurance

  • Mixing up the Council and its Executive Committee.

    Fix: Remember the Council is the representative body of insurers. Its authority is the Executive Committee, which carries out the functions.

  • Saying the Executive Committee controls or penalises insurers directly.

    Fix: Under Section 64L it advises insurers, advises the Authority and brings cases to the Authority's notice. Warnings and action sit with the Authority.

  • Getting the composition wrong.

    Fix: For general insurance, recall four elected, one eminent person and four nominated persons. Do not carry over the life committee's list.

  • Missing the timing rules.

    Fix: Put them on your chart: three-year term in Section 64H and meeting before 31 March in Section 64M.

  • Quoting section numbers you are unsure of.

    Fix: Use only the sections you have verified in the Act. If unsure, state the rule in plain words.

  • Writing generic insurance theory in a case answer.

    Fix: Identify the function in the facts, name the body and section, then state the outcome in two or three lines.

Last-day revision: General Insurance

  • Section 64C: Life Insurance Council and General Insurance Council are deemed constituted under the Act.
  • The General Insurance Council represents insurers carrying on general, health insurance and re-insurance business.
  • Section 64E: the authority of each Council is its Executive Committee.
  • Section 64F(2): four elected insurer representatives, one eminent person, four nominated persons.
  • The Chairperson of the General Insurance Council's Executive Committee is elected from the four insurer representatives.
  • Section 64L(1)(a): advise insurers on conduct, sound practice and efficient service to policyholders.
  • Section 64L(1)(b): advise the Authority on controlling commission and other expenses.
  • Section 64L(1)(c): bring to the Authority's notice an insurer acting prejudicially to policyholders.
  • Section 64L(2): fees may be collected as laid down in the Council's bye-laws, and can be waived by resolution approved by the Authority.
  • Section 64H: Executive Committee lasts three years from its first meeting; outgoing members continue until a new one is formed.
  • Section 64M: Executive Committee must meet at least once before 31 March every year to advise on expense limits under Section 40C.
  • Section 64M: the Authority may warn an insurer after a hearing; action can follow after two warnings are disregarded.

General Insurance practice questions

General Insurance in other exams

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

General Insurance: frequently asked questions

Which Paper of CMA Final has the General Insurance chapter?

It is in Paper 20B, Risk Management in Banking and Insurance, one of the three electives. You choose the elective when you enrol for the Final course.

What are the functions of the Executive Committee of the General Insurance Council?

Under Section 64L(1), it advises insurers on standards of conduct, sound practice and service to policyholders. It advises the Authority on controlling commission and other expenses. It also brings to the Authority's notice any insurer acting against policyholders' interests, and acts in incidental matters notified with approval.

How long does the Executive Committee last?

Three years from the date of its first meeting, after which it stands dissolved and a new one is formed (Section 64H). Outgoing members continue to discharge duties until the new committee is constituted.

Can the Executive Committee collect fees from insurers?

Yes. Section 64L(2) allows it to collect fees laid down in the Council's bye-laws from general insurers. The Council may waive fees for a year by resolution, and once the Authority approves, no fees are collected for that year.

What does Section 64M require every year?

The Executive Committee must meet at least once before 31 March to advise the Authority on the limits by which actual expenses of management may exceed the limits under Section 40C.