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

Ravi Traders Ltd, a business-consulting firm in Jaipur, wants to name itself 'Ravi Assurance Advisors' although it is not an insurer. Under Section 2C(4) of the Insurance Act, 1938, what is the position?

The use is not permitted. Section 2C(4) reserves words like insurance and assurance, and their derivatives, for insurers. Limited use is allowed only to insurance intermediaries and associations of insurers or intermediaries to indicate their nature. A general consulting firm falls outside these exceptions.

  1. APermitted, because 'assurance' is a common English word
  2. BPermitted if it pays a fee to the IRDAI
  3. CNot permitted, because no person other than an insurer may use words such as 'insurance' or 'assurance' or their derivatives in its name or in connection with its business, subject to the intermediary provisionsCorrect
  4. DPermitted only if it is a public company

Explanation

Section 2C(4) bars non-insurers from using 'insurance', 'insurer', 'assurance', 're-insurance', 'insurance company' or their derivatives in name or business. Only insurance intermediaries and associations get limited use under sub-sections (5) and (6). A consulting firm is neither, and being a public company does not help.

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