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CS Professional · Banking and Insurance - Laws and Practice · Functions in Insurance and Compliance related thereto (Part III)

A life insurer is acting in a manner likely to prejudice the interests of life policyholders, and claim settlements are being delayed. The regulator decides to appoint an Administrator under section 52A. Which statement is correct?

After giving the life insurer an opportunity to be heard, the regulator may appoint an Administrator who manages the insurer under the regulator's direction and control. The regulator fixes the remuneration and may cancel the appointment or replace the Administrator at any time under section 52A.

  1. AThe Administrator is appointed without any hearing to the insurer and manages independently of the regulator
  2. BThe Administrator manages the insurer's affairs under the direction and control of the regulator after the insurer has been given an opportunity to be heard, and receives remuneration as the regulator directsCorrect
  3. CThe Administrator can be appointed only for a general insurer
  4. DThe Administrator's remuneration is fixed by the insurer's board

Explanation

Under section 52A(1), the regulator, after giving the insurer an opportunity to be heard, may appoint an Administrator to manage the insurer under its direction and control. Under 52A(2), remuneration is as the regulator directs and it may cancel the appointment. Option A is wrong on both hearing and independence.

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