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

Sunrise General Insurance Ltd. has been paying agents commission and incurring other expenses in a way that the General Insurance Council's Executive Committee believes is harming policyholders. Under the Insurance Act, 1938, what is the Executive Committee's function in this situation?

The Executive Committee should bring the insurer's prejudicial conduct to the notice of the Authority. Section 64L(1)(c) gives it this reporting role. It cannot cancel registration, fine the insurer or take over management, which are matters for the Authority.

  1. ATo bring the insurer's conduct to the notice of the AuthorityCorrect
  2. BTo cancel the insurer's registration directly
  3. CTo impose a monetary penalty on the insurer
  4. DTo take over the insurer's management

Explanation

Under section 64L(1)(c), the Executive Committee brings to the notice of the Authority any insurer acting in a manner prejudicial to the interests of general insurance policyholders. It has no power to cancel registration, penalise or take over management; those lie with the Authority.

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