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

IRDAI finds that an entity is running a multilevel scheme to procure insurance business. Under the Insurance Act, 1938, what step can the Authority take?

The Authority can, through an officer authorised for the purpose, make a complaint to the appropriate police authorities against the entity or persons involved in the multilevel marketing scheme. This power comes from section 42A(3) of the Insurance Act, 1938.

  1. AThrough an authorised officer, make a complaint to the appropriate police authorities against the entity or persons involvedCorrect
  2. BAppoint a principal agent to take over the scheme
  3. CDirect the Life Insurance Council to prosecute
  4. DRefer the matter to the Executive Committee for fining the entity

Explanation

Section 42A(3) lets the Authority, through an officer authorised for the purpose, complain to the appropriate police authorities against the entity or persons involved in the multilevel marketing scheme. The Act gives no role to the Councils or to a principal agent here.

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