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

Meridian Brokers, an insurance intermediary, wants its nominee to sit on the Board of Ganga General Insurance Ltd. The nominee believes the bar in Section 48A can sometimes be relaxed. Under the Act, who may permit this and on what basis?

Only the Authority can permit it. Under the second proviso to Section 48A, the Authority may allow an agent or intermediary onto an insurer's Board subject to conditions or restrictions that protect policyholders or avoid conflict of interest. Shareholders, the Council or the Central Government cannot grant this relaxation.

  1. AThe Central Government, by notification, without any conditions
  2. BThe Authority, subject to conditions or restrictions to protect policyholders or avoid conflict of interestCorrect
  3. CThe General Insurance Council, on a majority vote of its Executive Committee
  4. DThe shareholders of the insurer, by special resolution at a general meeting

Explanation

The second proviso to Section 48A lets the Authority permit an agent or intermediary to be on the Board, subject to conditions or restrictions it may impose to protect policyholders' interest or avoid conflict of interest. The Central Government, the Council and shareholders have no such power under this section.

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