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

Sunrise General Insurance Ltd., a general insurer, has been settling motor claims very slowly and the delays are hurting policyholders. Under the Insurance Act, 1938, which function of the Executive Committee of the General Insurance Council applies most directly to bringing this conduct to the regulator?

The Executive Committee of the General Insurance Council brings to the Authority's notice any general insurer acting prejudicially to policyholders' interests. It does not fix expense limits itself or cancel registrations. Its role is advisory and reporting under section 64L(1)(c).

  1. AFixing the limit on expenses of management for the insurer under section 40C
  2. BBringing to the notice of the Authority any insurer acting in a manner prejudicial to the interests of general insurance policyholdersCorrect
  3. CAppointing the Authority's officers to investigate the insurer
  4. DCancelling the insurer's registration for poor service

Explanation

Section 64L(1)(c) makes it a function of the Executive Committee to bring to the Authority's notice any insurer acting in a manner prejudicial to holders of general insurance policies. The Committee has no power to fix expense limits (that is the Authority's, on advice) or to cancel registration, so the other options are wrong.

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