CMA Final · Risk Management in Banking and Insurance · Insurance Intermediaries
An insurance intermediary receives commission from an insurer on policies issued in India in a way that does not follow the regulations specified under Section 40 of the Insurance Act, 1938. As per Section 40(3), the intermediary is liable to:
The intermediary is liable to a penalty which may extend to one lakh rupees. Section 40(3) of the Insurance Act, 1938 applies this penalty to any insurance agent, intermediary or insurance intermediary who contravenes the commission provisions or regulations, without prejudice to section 102.
- AA penalty which may extend to one lakh rupeesCorrect
- BA penalty which may extend to ten lakh rupees
- CImprisonment of up to one year only
- DNo penalty, as only insurers are liable
Explanation
Section 40(3) provides that an insurance agent, intermediary or insurance intermediary who contravenes the provisions or the regulations is liable to a penalty which may extend to one lakh rupees, without prejudice to section 102. Option D is wrong because the intermediary is expressly covered.
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