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

Bharat General Insurance Ltd. is found settling motor claims in a way that harms policyholders. Under the Insurance Act, 1938, what is the function of the Executive Committee of the General Insurance Council in this situation?

The Executive Committee must bring to the notice of the Authority the case of a general insurer acting in a manner prejudicial to policyholders' interests. It does not itself cancel registration, impose penalties or wind up the insurer.

  1. ACancel the insurer's registration directly
  2. BBring the insurer's conduct to the notice of the AuthorityCorrect
  3. CImpose a penalty on the insurer on its own
  4. DWind up the insurer through the Tribunal

Explanation

Section 64L(1)(c) requires the Executive Committee to bring to the notice of the Authority the case of any general insurer acting in a manner prejudicial to the interests of holders of general insurance policies. It has no power itself to cancel registration, penalise or wind up; those lie elsewhere.

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