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CMA Final · Risk Management in Banking and Insurance · Introduction to Insurance Business

Section 32B of the Insurance Act, 1938 requires every insurer to undertake life and general insurance business in the rural and social sectors. How are the percentages of such business determined?

The percentages are specified by the Authority (IRDAI) in the Official Gazette. Section 32B obliges every insurer to undertake those percentages of life and general business in rural and social sectors. Neither the insurer's board, the RBI nor an industry body fixes them.

  1. AAs specified by the Authority through notification in the Official GazetteCorrect
  2. BAs decided by each insurer's board in its annual business plan
  3. CAs fixed by the General Insurance Council every year
  4. DAs prescribed by the Reserve Bank of India for all insurers

Explanation

Section 32B says every insurer shall undertake such percentages of life and general insurance business in the rural and social sectors as may be specified in the Official Gazette by the Authority. The board, the RBI or an industry council does not set these percentages, so the other options are wrong.

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