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CS Professional · Banking and Insurance - Laws and Practice · Functions in Insurance and Compliance related thereto (Part I)

Shree Surya Life Insurance Ltd. is found by IRDAI to be settling death claims in a manner likely to be prejudicial to the interests of holders of life insurance policies. Under the Insurance Act, 1938 as reproduced, what step is open to the Authority after giving the insurer an opportunity to be heard?

The Authority may appoint an Administrator to manage the life insurer's affairs under its direction and control, after giving the insurer an opportunity to be heard. This power under section 52A applies where the insurer acts in a manner likely to prejudice life policyholders' interests.

  1. AAppoint an Administrator to manage the insurer's affairs under the Authority's direction and controlCorrect
  2. BDirect the General Insurance Council to take over the claims function
  3. CCap the insurer's claim payouts at the amount of expenses of management
  4. DBar policyholders from claiming compensation for delayed claims

Explanation

Section 52A allows the Authority, if it believes a life insurer is acting prejudicially to policyholders, to appoint an Administrator after giving the insurer a hearing. The Administrator works under the Authority's direction and control. The other options describe powers or effects not given by this section.

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