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CS Professional · Banking and Insurance - Laws and Practice · Concept of Insurance

Suraksha Mutual Aid Pvt Ltd, a private limited company in Pune, plans to start selling life cover to the public as an insurer and has not been exempted by the Central Government. Under Section 2C of the Insurance Act, 1938, is it eligible to carry on insurance business in India?

A private limited company is not eligible. Under Section 2C of the Insurance Act, 1938, insurance business may be carried on only by a public company, a registered co-operative society, a statutory body created by Parliament, or a permitted foreign re-insurance branch, unless the Central Government exempts it.

  1. AYes, any registered company may carry on insurance business
  2. BNo, it must be a public company, a registered co-operative society or a statutory body set up by an Act of Parliament, or a permitted re-insurance branchCorrect
  3. CYes, if it has a branch in a Special Economic Zone
  4. DNo, only a company incorporated outside India may do so

Explanation

Section 2C(1) permits a person to carry on insurance business only if it is a public company, a co-operative society registered under the specified laws, a statutory body established by an Act of Parliament, or a foreign re-insurer with an India branch exclusively for re-insurance. A private limited company falls in none of these categories. The SEZ proviso applies only to an insurer already eligible.

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