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

Consider these statements under the Insurance Act, 1938. (I) Section 32D requires insurers carrying on general insurance business to underwrite a minimum percentage of third party motor risks as specified by regulations. (II) Under its proviso, the Authority may by regulations exempt insurers primarily engaged in health, re-insurance, agriculture or export credit guarantee business. (III) Section 40B lets life insurers spend any amount as management expenses without limit. Which is correct?

Only statements I and II are correct. Section 32D requires a minimum third party motor underwriting percentage with exemptions possible by regulation for specified niche insurers. Statement III is wrong because Section 40B caps life insurers' management expenses at the amount specified by regulations.

  1. AI and II onlyCorrect
  2. BII and III only
  3. CI and III only
  4. DI, II and III

Explanation

Statements I and II reflect Section 32D and its proviso. Statement III is wrong because Section 40B bars a life insurer from spending on management expenses in a financial year any amount exceeding that specified by the regulations.

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