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

Suraksha General Insurance Ltd has been found by trade bodies to be acting in a manner prejudicial to the interests of its general insurance policyholders. Under the Insurance Act, 1938, what is the Executive Committee of the General Insurance Council expected to do?

The Executive Committee should bring the insurer's prejudicial conduct to the notice of the Authority. Section 64L(1)(c) gives it this reporting function. It cannot itself cancel registration, levy penalties or order winding up, which are matters for the Authority.

  1. ABring the matter to the notice of the AuthorityCorrect
  2. BCancel the registration of the insurer itself
  3. CImpose a monetary penalty on the insurer directly
  4. DDirect the insurer to wind up its general business

Explanation

Section 64L(1)(c) makes it a function of the Executive Committee to bring to the notice of the Authority the case of any insurer acting prejudicially to policyholders. The Committee has no power to cancel registration or penalise; those lie with the Authority.

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