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

The General Insurance Council passes a resolution waiving collection of fees for a particular year. The Authority has not yet approved it. The Executive Committee has the bye-law power to collect fees from general insurers to discharge its functions. Which statement is correct under the Insurance Act, 1938?

The Committee is barred from collecting fees for that year only after the Authority approves the Council's waiver resolution. Under the proviso to section 64L(2), passing the resolution is not enough; Authority approval makes the waiver effective, and fees follow the Council's bye-laws otherwise.

  1. AThe Committee stops collecting immediately because the resolution is passed
  2. BThe Committee shall not collect fees for that year only once the resolution has been approved by the AuthorityCorrect
  3. CThe Authority's approval is needed only for life insurers
  4. DThe Committee must collect fees but refund them at year end

Explanation

The proviso to section 64L(2) says the waiver applies where the resolution has been approved by the Authority; only then shall the Committee not collect fees for that year. Without approval, the waiver is not effective, so option A is wrong.

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