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CMA Final · Risk Management in Banking and Insurance · Introduction to Insurance Business

As reproduced, section 103 of the Insurance Act, 1938 prescribes the consequence for a person who carries on the business of insurance without obtaining a certificate of registration under section 3. What is it?

Carrying on insurance business without a certificate of registration under section 3 attracts a penalty up to rupees twenty-five crores together with imprisonment up to ten years, under section 103. The punishment combines a heavy monetary penalty and a jail term, not just one of them.

  1. APenalty up to rupees twenty-five crores and imprisonment up to ten yearsCorrect
  2. BPenalty of rupees one lakh only, with no imprisonment
  3. CImprisonment up to six months, with no penalty
  4. DCancellation of the person's company registration with no further penalty

Explanation

Section 103 as given provides that such a person is liable to a penalty not exceeding rupees twenty-five crores and also to imprisonment which may extend to ten years. The other options understate the consequence or invent a different one.

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