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

Sunrise Assurance Ltd, an Indian insurer, is told by a consultant that its obligations towards the rural sector and unorganised workers are optional and cover only life policies. Under Section 32C of the Insurance Act, 1938, which statement is correct?

Every insurer, not just public sector or life insurers, must provide life or general insurance to rural residents, unorganised sector workers and economically vulnerable or backward classes. Section 32C states that these policies include crop insurance, so the obligation is mandatory and covers both life and general business.

  1. AEvery insurer must provide life or general insurance policies to rural residents, unorganised sector workers and economically vulnerable or backward classes, and such policies include crop insuranceCorrect
  2. BOnly public sector insurers must serve the rural sector, and crop insurance is excluded
  3. CThe obligation applies only to life insurers and only for unorganised sector workers
  4. DThe obligation is voluntary and arises only if the insurer opts for it in its board resolution

Explanation

Section 32C says every insurer shall discharge the obligations under section 32B by providing life or general insurance to rural residents, unorganised sector workers and economically vulnerable or backward classes, and such policies shall include insurance for crops. The other options narrow the class of insurer, the type of business or make the duty optional, all contrary to the text.

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