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CMA Final · Corporate and Economic Laws · Laws and Regulations related to Insurance Sector

Section 32D of the Insurance Act, 1938 requires every insurer carrying on general insurance business to underwrite a minimum percentage of business in third party risks of motor vehicles. Which statement about this provision is correct?

The Authority may, by regulations, exempt an insurer primarily engaged in health, re-insurance, agriculture or export credit guarantee business. Section 32D binds general insurers to underwrite a minimum percentage of motor third party risks as specified by regulations, with this proviso allowing exemption.

  1. AThe Authority may by regulations exempt an insurer primarily engaged in health, re-insurance, agriculture or export credit guarantee businessCorrect
  2. BOnly life insurers are required to comply with it
  3. CThe minimum percentage is fixed in the Act itself at a uniform rate
  4. DNo insurer can be exempted from it under any circumstances

Explanation

Section 32D leaves the minimum percentage to be specified by regulations, not fixed in the Act, and applies to general insurers. Its proviso lets the Authority exempt insurers primarily engaged in health, re-insurance, agriculture or export credit guarantee business.

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