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CS Professional · Banking and Insurance - Laws and Practice · Regulatory Framework in Insurance

Rajan Insurance Ltd. is a foreign-incorporated insurer that wants to begin direct life insurance business in India in its own name after the IRDA Act, 1999 came into force. Under the proviso to section 2C of the Insurance Act, 1938, what is the position?

It cannot begin. After the IRDA Act, 1999 commenced, only an Indian insurance company may begin any class of insurance business in India. A foreign-incorporated insurer cannot start direct business in its own name, whatever fee or registration it offers.

  1. AIt may begin, if it is registered under the Companies Act as a branch
  2. BIt may begin, provided it pays a fee to the Authority
  3. CIt may not begin, because no insurer other than an Indian insurance company may begin any class of insurance business in India after that commencementCorrect
  4. DIt may begin, if the Central Government grants a three-year exemption

Explanation

The third proviso to section 2C bars any insurer other than an Indian insurance company from beginning any class of insurance business in India on or after commencement of the IRDA Act, 1999. Registration or a fee does not alter this. The three-year exemption relates only to general insurance business of existing insurers.

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