Skip to content

CMA Final · Risk Management in Banking and Insurance · Managing Risk in Insurance Business

A person is managing director of Insurer A carrying on life insurance business and is proposed to be appointed managing director of Insurer B, also a life insurer. Under Section 32A of the Insurance Act, 1938 as given, which statement is correct?

The appointment is prohibited under Section 32A, which bars common officers between life insurers. The only exception is that the Authority may permit it for amalgamating the two insurers' business or transferring one insurer's business to the other.

  1. AIt is prohibited, but the Authority may permit it for the purpose of amalgamating the business of the two insurers or transferring the business of one to the otherCorrect
  2. BIt is freely permitted because both insurers are regulated by the same Authority
  3. CIt is permitted only if Insurer B is smaller than Insurer A
  4. DIt is prohibited with no exception under any circumstances

Explanation

Section 32A(1) bars a managing director or other officer of a life insurer from holding such office in another life insurer, a banking company or an investment company. The proviso lets the Authority permit it only for amalgamating or transferring business between the two insurers. Hence the no-exception and free-permission options are both wrong.

Did you get it right without looking?

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

Practise Managing Risk in Insurance BusinessFree diagnostic mock

More Managing Risk in Insurance Business questions