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CS Professional · Banking and Insurance - Laws and Practice · Regulatory Framework in Insurance

Suraksha Life Insurance Ltd, registered after the IRDA Act, 1999 came into force, argues that it need not write any policies for villagers because it sells only urban group products. Under the Insurance Act, 1938, what is the correct position?

Every insurer must undertake the percentages of life and general insurance business in the rural and social sectors that the Authority specifies in the Official Gazette. The obligation is not optional and has no exemption for private or urban-focused insurers.

  1. AIt must undertake the percentages of life insurance business in the rural and social sectors that the Authority specifies in the Official GazetteCorrect
  2. BIt is exempt because rural business is optional for private insurers
  3. CIt need only do rural business if the Central Government directs it individually each year
  4. DIt must undertake rural business only if its premium income exceeds a limit fixed by the Companies Act

Explanation

Section 32B requires every insurer, after the commencement of the IRDA Act, 1999, to undertake specified percentages of life and general insurance business in the rural and social sectors. The percentages are specified by the Authority in the Official Gazette. No exemption exists for urban-focused or private insurers.

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