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

Suraksha Mutual Ltd., a newly incorporated company, plans to begin selling motor insurance policies in India. It has not yet applied to IRDAI. Under Section 3 of the Insurance Act, 1938, what is the position?

The company cannot start motor insurance business until the Authority grants it a certificate of registration for that class. Section 3(1) prohibits beginning any class of insurance business without registration; the three-month window applied only to transitional cases, and merely applying does not permit commencement.

  1. AIt may begin business and apply for registration within three months
  2. BIt may not begin carrying on that class of insurance business until it obtains a certificate of registration from the Authority for that classCorrect
  3. CIt needs registration only if it sells life insurance, not general insurance
  4. DIt may begin once it files its application, without waiting for the certificate

Explanation

Section 3(1) bars any person from beginning any class of insurance business in India unless a certificate of registration for that particular class has been obtained from the Authority. The three-month grace was a transitional provision for existing insurers, not for new entrants. Filing an application alone does not authorise business.

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