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

Sunrise Textiles Ltd of Surat lodges a fire claim with a general insurer. The loss occurred in India, is payable in India, and equals or exceeds the amount fixed by IRDAI regulations. The insurer's claims team wants to settle it on its own internal estimate without any surveyor's report, and no IRDAI direction or class exemption applies. Under Section 64UM of the Insurance Act, 1938, what is the position?

The insurer cannot admit or settle the claim without a report from an approved surveyor or loss assessor. Section 64UM(4) makes such a report mandatory for losses in India at or above the specified amount, unless the Authority directs otherwise, so internal estimates or insured consent are insufficient.

  1. AThe insurer may settle it, because the surveyor's report is only optional for fire losses
  2. BThe insurer may not admit for payment or settle the claim unless it has obtained a report from an approved surveyor or loss assessorCorrect
  3. CThe insurer may settle it if the insured gives written consent to skip the survey
  4. DThe insurer may settle it if its own Principal Officer certifies the loss

Explanation

Sub-section (4) bars an insurer from admitting or settling a claim at or above the regulation-specified amount unless it holds a report from a licensed (approved) surveyor or loss assessor. Consent of the insured or an internal certificate does not replace this requirement, and the Authority's direction or a class exemption is absent here.

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