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

Anita Rao, a policyholder, finds that her insurer complied with a direction of the regulator issued under the Insurance Act, 1938 under section 34 and as a result her policy benefits were affected. She sues the insurer for compensation in contract. What does section 110D provide?

Her claim is barred. Section 110D says no person has any right, whether in contract or otherwise, to compensation for loss incurred through the operation of the specified sections or through an insurer's compliance with an order or direction given under the Act.

  1. AShe may sue for compensation only up to the premium paid
  2. BShe may sue if the direction was issued without notice
  3. CShe may sue the regulator but not the insurer
  4. DNo person has any right, in contract or otherwise, to compensation for loss caused by operation of the listed sections or by the insurer's compliance with an order or direction under the ActCorrect

Explanation

Section 110D bars claims for compensation, whether in contract or otherwise, for loss caused by operation of sections 34, 34A, 34E or 37A or by an insurer's compliance with an order or direction under the Act. Her contractual suit is therefore barred. Option A is wrong because the bar has no premium-based exception.

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