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

Sunrise General Insurance Ltd, a Mumbai insurer, wants to know whether any statutory provision requires it to report its expenses of management on general, health and reinsurance business. Under the Insurance Act, 1938 as given in the official text, what is the requirement?

Under Section 40C, every insurer transacting insurance business in India must furnish details of its expenses of management to the Authority, in the manner and form specified by the regulations made under the Act. The duty runs to the Authority, not merely to an industry council.

  1. AIt must furnish details of expenses of management to the Authority in the manner and form specified by regulationsCorrect
  2. BIt must obtain prior approval of the Central Government for every item of expense
  3. CIt need only report such expenses to the General Insurance Council, not to the Authority
  4. DIt is exempt from reporting if its premium income is below a prescribed limit

Explanation

Section 40C, as substituted in 2015, requires every insurer transacting insurance business in India to furnish details of expenses of management to the Authority in the manner and form specified by regulations. Reporting only to the Council is wrong because the duty is to the Authority.

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