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

IRDAI directs an Investigating Officer to inspect the books of Surya General Insurance Ltd. The insurer has outsourced its claims data processing to a vendor, Datafirst Services, which holds the claims database. During inspection the Officer asks Datafirst's manager to produce the database. Under section 33 of the Insurance Act, 1938, what is the position?

The vendor's manager must produce the database. Section 33(3) of the Insurance Act, 1938 extends the duty to produce books, registers, documents and the database to officers of a service provider or contractor where the insurer has outsourced services, not just to the insurer's own officers.

  1. AThe duty to produce applies only to officers of the insurer, so the vendor may refuse
  2. BThe duty extends to officers of a service provider or contractor where services are outsourced by the insurerCorrect
  3. CThe vendor need produce documents only if a court orders it
  4. DThe vendor must produce documents only after IRDAI gives it a hearing

Explanation

Section 33(3) makes it the duty of every manager, managing director or other officer of the insurer, including a service provider or contractor where services are outsourced, to produce books, registers, documents and the database. So Datafirst's manager must comply. The option limiting the duty to insurer officers ignores the outsourcing language.

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