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

Suraksha Mutual Ltd., a company incorporated in Singapore, wants to open a branch in India to sell motor and fire policies directly to Indian customers. Under the Insurance Act, 1938 as given in the official text, what is the position?

A foreign-incorporated company can set up an Indian branch only for re-insurance. Section 2C bars bodies incorporated outside India from carrying on any class of insurance business other than re-insurance, so selling direct motor and fire policies to Indian customers is not permitted.

  1. AIt may do so if it opens a branch and obtains a Central Government exemption notification valid for three years
  2. BIt may carry on only re-insurance business through an Indian branch, not direct general insuranceCorrect
  3. CIt may carry on direct general insurance if it is a public company in Singapore
  4. DIt may carry on any class of insurance in a Special Economic Zone only

Explanation

Section 2C provides that no company or body incorporated outside India shall carry on any class of insurance business other than re-insurance. A foreign re-insurer may establish a branch in India exclusively for re-insurance. The exemption proviso cannot be used to let a foreign body write direct insurance.

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