Skip to content

CMA Final · Risk Management in Banking and Insurance · Introduction to Insurance Business

A general insurer, Suraksha General Ltd, writes mainly motor, fire and marine policies. Under section 32D of the Insurance Act, 1938 as reproduced, which statement is correct about its obligation on third party motor risks?

Suraksha General must underwrite the minimum percentage of third party motor insurance business specified by the regulations. Section 32D applies to every general insurer. Only insurers mainly engaged in health, re-insurance, agriculture or export credit guarantee can be exempted by the Authority.

  1. AIt must underwrite the minimum percentage of third party motor business specified by the regulationsCorrect
  2. BIt is barred from underwriting third party motor risks
  3. CIt must underwrite 100% of its motor business as third party risks
  4. DIt must underwrite such business only if the Central Government directs it in writing each year

Explanation

Section 32D requires every insurer carrying on general insurance business to underwrite a minimum percentage of third party motor risks as specified by the regulations. The Authority can exempt only insurers primarily engaged in health, re-insurance, agriculture or export credit guarantee business, and Suraksha is not such an insurer.

Did you get it right without looking?

One question tells you little. A timed set on Introduction to Insurance Business shows your real accuracy, how long you take and where you lose marks.

Practise Introduction to Insurance BusinessFree diagnostic mock

More Introduction to Insurance Business questions