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

The Executive Committee of the General Insurance Council observes that Nirmaan General Insurance Ltd has repeatedly delayed claim settlements, harming holders of general insurance policies. Under the Insurance Act, 1938, what is the function of the Executive Committee in this situation?

The Executive Committee should bring the insurer's prejudicial conduct to the notice of the Authority. Its role is advisory and reporting; it cannot cancel registration, impose penalties or order winding up, which lie with the Authority.

  1. ACancel the insurer's registration
  2. BImpose a monetary penalty on the insurer directly
  3. CBring the insurer's conduct to the notice of the AuthorityCorrect
  4. DOrder the insurer to wind up its general business

Explanation

Under section 64L(1)(c), the Executive Committee brings to the notice of the Authority the case of any such insurer acting in a manner prejudicial to the interests of holders of general insurance policies. It has no power to cancel registration or penalise directly, so the other options are wrong.

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