CS Professional · Banking and Insurance - Laws and Practice · Life Insurance
A student says that LIC's non-life profits are still paid to the Central Government under section 28A. Which fact best shows the student is mistaken?
The student is mistaken because Act 13 of 2021 amended section 28A with effect from 30 June 2021, replacing payment to the Central Government with allocation to or reserving for the members. The other provisions concern different matters.
- AAct 13 of 2021 substituted the words so that the balance is allocated to or reserved for the members, effective 30-6-2021Correct
- BSection 30 gives LIC exclusive privilege over all insurance business
- CSection 40B caps expenses of management for all insurers
- DSection 56 of the Insurance Act governs payment of profits to the Government
Explanation
The footnote to section 28A shows that Act 13 of 2021 replaced 'paid to the Central Government' with 'allocated to or reserved for the members' with effect from 30-6-2021. The other sections deal with exclusive privilege, management expenses and liquidation, not this profit utilisation.
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