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CS Professional · Banking and Insurance - Laws and Practice · Inspection, Investigation, Penalty and Appellate Procedure

Following an IRDAI direction under the Insurance Act, 1938 issued by way of an order under section 34, Amrit Insurance Ltd complied and suffered a loss of Rs 40 lakh. A policyholder-agent claims compensation from IRDAI for related loss. Under section 110D, what is the position?

No compensation can be claimed. Section 110D states that no person has any right, whether in contract or otherwise, to compensation for loss incurred by operation of section 34 or the other listed sections, or by an insurer's compliance with an order under the Act.

  1. ACompensation is payable by the insurer in contract
  2. BCompensation is payable by IRDAI as of right
  3. CNo person has any right, in contract or otherwise, to compensation for loss caused by operation of section 34 or by compliance with an order under the ActCorrect
  4. DCompensation is payable only if the loss exceeds Rs 25 lakh

Explanation

Section 110D bars any right, whether in contract or otherwise, to compensation for loss incurred by reason of the operation of sections including 34, or by compliance by an insurer with any order or direction under the Act. No monetary threshold exists.

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