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CMA Final · Risk Management in Banking and Insurance · Introduction to Insurance Business

Under Section 32B of the Insurance Act, 1938, as reproduced in the study text, every insurer must undertake a percentage of life and general insurance business in a particular area. Who specifies that percentage, and for which sectors?

The Authority specifies the percentage through a notification in the Official Gazette, and it applies to the rural and social sectors. Every insurer must undertake that share of both life and general insurance business, so the insurer itself does not decide the quota.

  1. AThe insurer's own board, for urban and corporate sectors
  2. BThe Authority, by notification in the Official Gazette, for rural and social sectorsCorrect
  3. CThe Central Government, by notification in Parliament, for export and agriculture sectors only
  4. DThe General Insurance Council, by circular, for the health and motor sectors

Explanation

Section 32B requires every insurer to undertake such percentages of life and general insurance business in the rural and social sectors as the Authority specifies in the Official Gazette. The insurer's board has no power to set it. The Central Government and the Council are not the specifying body under this section.

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