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CS Professional · Banking and Insurance - Laws and Practice · General and Health Insurance

Suraksha General Insurance Ltd carries on general insurance business in India and underwrites motor, fire and marine policies. Its board asks whether it must underwrite any motor third party risk business. Under Section 32D of the Insurance Act, 1938, what is the position?

Suraksha must underwrite the minimum percentage of motor third party risk business that the regulations specify. Section 32D places this obligation on every general insurer, so it cannot opt out, and the Council has no role in imposing it.

  1. AIt must underwrite the minimum percentage of third party motor risks specified by the regulationsCorrect
  2. BIt may decline all third party motor business because the Act only encourages it
  3. CIt must underwrite third party risks only for commercial vehicles
  4. DIt must underwrite such business only if the General Insurance Council directs it

Explanation

Section 32D requires every insurer carrying on general insurance business to underwrite a minimum percentage of insurance business in third party risks of motor vehicles, as specified by regulations. The duty is statutory and is not left to the insurer's choice or to a Council direction. It is not limited to commercial vehicles.

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