CS Professional · Banking and Insurance - Laws and Practice · Regulatory Framework in Insurance
Anil, who has no valid appointment from any insurer, solicits and procures policies, acting as an insurance agent in contravention of the Insurance Act, 1938. What is the maximum penalty on Anil himself under Section 42?
Anil is liable to a penalty which may extend to ten thousand rupees. Section 42(4) fixes this ceiling for a person who acts as an insurance agent in contravention of the Act, while the one crore ceiling applies to insurers who appoint such persons.
- ARupees ten thousandCorrect
- BRupees one lakh
- CRupees one crore
- DRupees ten crore
Explanation
Section 42(4) says any person who acts as an insurance agent in contravention of the Act is liable to a penalty up to ten thousand rupees. The one crore penalty is for the insurer or person acting for it who appoints a non-permitted person, which is a different party.
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