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

An insurer carrying on general insurance business pays excessive commission to its distributors and expenses are rising. Which action falls within the functions of the Executive Committee of the General Insurance Council under section 64L(1)?

The Executive Committee of the General Insurance Council may advise the Authority on controlling insurers' expenses, including commission and other expenses, under section 64L(1)(b). It has no power to cancel registration or itself prescribe binding commission rates.

  1. ARender advice to the Authority on controlling the insurer's expenses, including commission and other expensesCorrect
  2. BCancel the insurer's registration directly
  3. CFix the commission rates payable to agents by itself and enforce them as law
  4. DWind up the insurer's business class under a partial scheme

Explanation

Section 64L(1)(b) empowers the Committee to render advice to the Authority on controlling expenses of insurers, including commission and other expenses. It also may bring prejudicial conduct to the Authority's notice under clause (c). It has no power to cancel registration, fix binding commission rates itself, or wind up classes of business, which are handled under other provisions such as section 58 through the Tribunal.

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