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CS Professional · Banking and Insurance - Laws and Practice · General and Health Insurance

Nirmal Secure Pvt Ltd proposes to market itself in India as 'Nirmal Insurance Advisors' while not being an insurer or a registered intermediary. Under section 2C(4) of the Insurance Act, 1938, as amended, what is the legal position?

The use is not allowed. Section 2C(4) prohibits anyone other than an insurer from using words such as insurance, assurance or their derivatives in its name or business. Only insurance intermediaries may use limited words under the regulations, and this firm is neither an insurer nor an intermediary.

  1. APermitted, since the name only describes advisory services
  2. BNo person other than an insurer may use words such as 'insurance' or its derivatives in its name or businessCorrect
  3. CPermitted if the firm is a private company
  4. DPermitted only with prior approval of the General Insurance Council

Explanation

Section 2C(4) bars any person other than an insurer from using 'insurance', 'insurer', 'assurance', 're-insurance', 'insurance company' or their derivatives in its name or in connection with its business. Sub-section (5) permits limited use by insurance intermediaries in accordance with the regulations, but this firm is not one. Company type and Council approval are irrelevant.

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