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CS Professional · Banking and Insurance - Laws and Practice · Concept of Insurance

Kisan Bima Ltd. argues that its rural-sector obligation under section 32B can be met without offering any crop cover, since crop insurance is optional. Which statement is correct under the Insurance Act, 1938?

The argument fails. Section 32C says every insurer must discharge its section 32B obligations by providing policies to rural residents, unorganised sector workers and vulnerable classes, and that such policies shall include insurance for crops. It applies to both life and general insurers, with no minimum policyholder count.

  1. AThe argument fails, because section 32C says the policies provided to discharge the obligation shall include insurance for cropsCorrect
  2. BThe argument holds, because crop insurance is left to State Governments alone
  3. CThe argument holds, because section 32C covers only life insurers
  4. DThe argument fails, but only if the insurer has more than 100 rural policyholders

Explanation

Section 32C states that every insurer discharges the section 32B obligations to provide policies to rural residents, unorganised workers, economically vulnerable or backward classes and others specified by regulations, and that such policies shall include insurance for crops. It applies to life and general insurers, with no policyholder threshold.

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