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

Suresh is a general insurer's compliance officer. A senior colleague says the Executive Committee of the General Insurance Council can advise the Authority on controlling insurers' commission and other expenses. Under Section 64L of the Insurance Act, 1938, which statement is correct?

The Executive Committee of the General Insurance Council renders advice to the Authority on controlling the expenses, including commission, of general insurers. The role is advisory; it has no power to bind insurers with rates or to cancel registrations.

  1. AIt can render advice to the Authority on controlling insurers' expenses, including commissionCorrect
  2. BIt can fix the commission rates that bind every insurer without reference to the Authority
  3. CIt can cancel the registration of an insurer that overspends on commission
  4. DIt can advise on expenses only of life insurers, not general insurers

Explanation

Section 64L(1)(b) gives the Executive Committee of the General Insurance Council the function of rendering advice to the Authority on controlling expenses of general insurers, including commission and other expenses. It is only an advisory role. It cannot fix binding rates or cancel registrations.

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