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CMA Final · Risk Management in Banking and Insurance · Managing Risk in Insurance Business

Under Section 32B of the Insurance Act, 1938, what obligation is placed on every insurer?

Every insurer must undertake the percentages of life and general insurance business in the rural and social sectors that the Authority specifies in the Official Gazette. Section 32B leaves the actual percentages to the Authority rather than fixing them in the Act.

  1. ATo invest all its funds in rural projects
  2. BTo undertake such percentages of life and general insurance business in the rural and social sectors as may be specified in the Official Gazette by the AuthorityCorrect
  3. CTo maintain a fixed 50% of premium income from rural areas under the Act itself
  4. DTo appoint rural agents only in each district

Explanation

Section 32B requires every insurer to undertake percentages of life and general insurance business in the rural and social sectors, as specified in the Official Gazette by the Authority. The Act itself does not fix the percentages, so a fixed 50% is wrong.

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