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CMA Final · Risk Management in Banking and Insurance · Concept and Types of Health Insurance Policies

As per Section 40C of the Insurance Act, 1938 (as reproduced), every insurer transacting insurance business in India must do which of the following in relation to expenses of management in general, health insurance and re-insurance business?

Every insurer must furnish to the Authority the details of its expenses of management, in the manner and form specified by regulations. The provision is a reporting obligation covering general, health and re-insurance business, not a statutory fixed percentage cap in the Act.

  1. AFurnish details of expenses of management to the Authority in the manner and form specified by regulationsCorrect
  2. BKeep expenses of management below a fixed percentage of premium written by the insurer stated in the Act
  3. CObtain Executive Committee approval before incurring any commission expense
  4. DPublish expense details only to policyholders in the annual report

Explanation

The substituted Section 40C requires insurers to furnish details of expenses of management to the Authority in the manner and form specified by regulations. It contains no fixed percentage cap in the Act, so the second option is wrong.

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