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

An insurance agent collects a premium of ₹48,000 on behalf of an insurer. As per Section 64VB of the Insurance Act, 1938, what must the agent do?

The agent must deposit with, or post to, the insurer the whole premium collected, without deducting commission, within twenty-four hours of collection, excluding bank and postal holidays. Section 64VB(4) imposes this to protect the insurer's premium-in-advance control.

  1. ADeposit or post the full premium to the insurer within twenty-four hours of collection, excluding bank and postal holidays, without deducting commissionCorrect
  2. BDeposit the premium net of commission within seven days
  3. CRetain it until the insurer issues the policy and then remit
  4. DCredit it to the agent's own account and refund when due

Explanation

Section 64VB(4) requires the agent to deposit or dispatch the premium in full, without deduction of commission, within twenty-four hours of collection excluding bank and postal holidays. Net-of-commission remittance is therefore wrong, as is any delayed remittance.

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