CMA Final · Risk Management in Banking and Insurance

Insurance Intermediaries for CMA Final Paper 20B

Insurance intermediaries are the persons and firms, such as agents, brokers and corporate agents, who solicit and place insurance business between insurers and customers. To solve questions, identify the intermediary, then apply who regulates it (IRDAI, Section 14), the qualification and conduct rules, and the insurer's responsibility for agents under Section 42 of the Insurance Act.

What this chapter covers

This chapter is about the people and firms that sell and service insurance, and the law that controls them. You learn what an intermediary does, the main types (agents, brokers, corporate agents), and how the regulator, IRDAI, registers them, sets qualifications, training and a code of conduct, and disciplines them.

The legal core is short and exact. Section 14 of the IRDA Act, 1999 lists the Authority's duties, powers and functions. Section 25 of the same Act sets up the Insurance Advisory Committee. Section 42 of the Insurance Act, 1938 deals with appointment of insurance agents, their disqualifications and penalties. Read these from the official text, not from memory.

This chapter links to the rest of Paper 20B. Insurance risk, underwriting, claims and solvency all depend on how business reaches the insurer and who answers for the conduct of the seller. Intermediary rules also show up in case scenarios in Section A, where a short fact pattern asks what an agent, an insurer or IRDAI may or must do.

Paper 20B Section A has 10 standalone MCQs and a case scenario with 5 MCQs, and this chapter gives you clean, text-based facts for both. The descriptive section asks you to apply the law to a case, so a student who knows the exact conditions of Sections 14, 25 and 42 can write a short, precise answer with a clear conclusion. The chapter is also small, so the effort-to-marks ratio is good if you learn the lists accurately.

Insurance Intermediaries: topics in the order to study them

1Insurance Intermediaries: Meaning and RoleStart here to get the basic idea of who sits between insurer and customer and why the law regulates them.
2Types of Intermediaries: Agents, Brokers, Corporate AgentsOnce the role is clear, learn the types and how Section 42 of the Insurance Act treats agents.
3IRDAI Duties, Powers and Functions under Section 14The regulator's powers explain registration, conduct and training rules, so learn the list before those rules.
4Registration, Code of Conduct and Training of IntermediariesThis applies Section 14 powers to intermediaries, together with the disqualifications and penalties in Section 42.
5Insurance Advisory Committee under Section 25Study it last because it is a small, fact-based topic that is easy to confuse with other committees.

How to prepare Insurance Intermediaries

This chapter rewards exact reading of a few sections. Plan short sessions that suit phone study, and always check the wording against the official text.

Read the meaning and role of intermediaries and write a two-line definition in your own words.
Make a one-page note of the types of intermediary and what each does. Note what the Act text says only about agents and do not add details you cannot support.
Read Section 14 of the IRDA Act clause by clause. Group the clauses: registration, policyholder protection, intermediary regulation, accounts and investment, solvency, penalties.
Read Section 42 of the Insurance Act and list the disqualifications (a) to (h) and the two penalty limits. Practise recalling them without looking.
Read Section 25 of the IRDA Act and note the size, composition, chair and purpose of the Committee.
Write one short case-based answer: state the rule, apply it to the facts, and give a clear conclusion.
Attempt MCQs on the chapter and explain to yourself why each wrong option is wrong.

Common mistakes in Insurance Intermediaries

Mixing up the Insurance Advisory Committee under Section 25 of the IRDA Act with the Advisory Committee under Section 101B of the Insurance Act.
Fix: Link Section 25 of the IRDA Act to advising on regulations under section 26, with up to 25 members. Section 101B of the Insurance Act is for section 101A, with up to five persons.
Saying an agent can represent any number of insurers.
Fix: State the limit exactly: one life insurer, one general insurer, one health insurer and one of each other mono-line insurer.
Blaming only the agent when an agent breaks the code of conduct.
Fix: Remember Section 42(5): the insurer is responsible for all acts and omissions of its agents and can be liable to a penalty up to ₹1 crore.
Mixing the two penalty figures in Section 42(4).
Fix: Tie ₹10,000 to the person acting as an unauthorised agent and ₹1 crore to the insurer or person appointing such a person or transacting business through them.
Writing the list of IRDAI powers from memory and missing the substituted or omitted parts.
Fix: Use the current text. Clause (n) was substituted w.e.f. 5 February 2026, and certain words in clause (i) were omitted.
Adding rules about brokers or corporate agents that are not in your study material.
Fix: Write only what you can support. Anchor your answer in the Act's wording and in Section 14(2)(a) and (c) for registration, qualification and conduct.

Last-day revision: Insurance Intermediaries

An insurance intermediary acts between insurer and customer in soliciting, placing or servicing insurance business.
IRDA Act Section 14(1): the Authority must regulate, promote and ensure orderly growth of insurance and re-insurance business.
Section 14(2)(a): the Authority issues, renews, modifies, withdraws, suspends or cancels registration.
Section 14(2)(c): the Authority specifies qualifications, code of conduct and practical training for intermediaries, insurance intermediaries and agents.
Section 14(2)(d): the Authority specifies the code of conduct for surveyors and loss assessors.
Section 14(2)(m): the Authority adjudicates disputes between insurers and intermediaries or insurance intermediaries.
Section 14(2)(n) now covers penalty under section 102 of the Insurance Act, as substituted w.e.f. 5 February 2026.
Insurance Act Section 42(2): no person may act as agent for more than one life insurer, one general insurer, one health insurer and one of each other mono-line insurer.
Section 42(4): acting as an agent in contravention can attract a penalty up to ₹10,000; an insurer appointing such a person can face up to ₹1 crore.
Section 42(5): the insurer is responsible for all acts and omissions of its agents, including code of conduct violations.
IRDA Act Section 25: the Insurance Advisory Committee has not more than 25 members excluding ex officio members; the Authority's Chairperson and members are ex officio. Its object is to advise on regulations under section 26.

Insurance Intermediaries practice questions

Insurance Intermediaries in other exams

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

Insurance Intermediaries: frequently asked questions

Which paper of CMA Final covers insurance intermediaries?

It falls under Paper 20B, Risk Management in Banking and Insurance, one of the three electives. You select the elective when you enrol for the Final Course.

Which sections should I read from the official text?

Read Section 14 and Section 25 of the IRDA Act, 1999, and Section 42 of the Insurance Act, 1938. Also know that Sections 14, 25, 64L and 101B of the Insurance Act deal with other matters such as records, returns and committees, so do not confuse them.

How are questions asked on this chapter?

Section A tests it with MCQs, including questions built on a case scenario. In the descriptive section you are asked to apply the rule to a case, so write the rule, apply it to the facts and give a conclusion.

Do I need to memorise the full list of IRDAI powers?

Learn the list in groups and know the key clauses by purpose, such as registration, conduct and training, dispute adjudication and penalty. Exact clause letters help in MCQs, but the purpose matters most in written answers.