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

Suraksha General Insurance Ltd., a general insurer, has started rejecting small motor claims on flimsy grounds, harming policyholders. Under the Insurance Act, 1938, what can the Executive Committee of the General Insurance Council do about this conduct?

The Executive Committee can bring the insurer's prejudicial conduct to the notice of the Authority. It cannot cancel registration, levy penalties or order payment of claims itself, because its role under section 64L is advisory and reporting, with action left to the Authority.

  1. ABring the insurer's conduct to the notice of the AuthorityCorrect
  2. BCancel the insurer's registration directly
  3. CImpose a monetary penalty on the insurer itself
  4. DOrder the insurer to pay all rejected claims

Explanation

Section 64L(1)(c) lets the Executive Committee bring to the Authority's notice any general insurer acting prejudicially to policyholders' interests. It has no power to cancel registration, penalise or order payment; those lie with the Authority.

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