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

Suraksha General Insurance Ltd. was directed by the insurance regulator to stop writing a class of business, and it complied. A policy-seeker, Mr. Iyer, argues that he lost a profitable arrangement and claims contractual compensation from the insurer. Under the Insurance Act, 1938 (section 110D), what is the position?

Mr. Iyer has no right to compensation. Section 110D of the Insurance Act, 1938 says no person has any right, in contract or otherwise, to compensation for loss caused by operation of specified sections or by an insurer complying with an order or direction given under the Act.

  1. AHe can claim compensation in contract because the order was passed after the contract was made
  2. BHe can claim compensation only in tort and not in contract
  3. CHe has no right, in contract or otherwise, to compensation for loss caused by the insurer's compliance with an order or direction given under the ActCorrect
  4. DHe can claim compensation only if the Tribunal confirms the loss

Explanation

Section 110D bars any right, whether in contract or otherwise, to compensation for loss incurred by reason of operation of the listed sections or by an insurer's compliance with an order or direction given under the Act. Option A and B wrongly preserve a remedy in contract or tort.

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