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

Under Section 34A of the Insurance Act, 1938, which of the following insurer actions takes effect only with the previous approval of the Authority?

Appointment, reappointment or termination of a managing or whole-time director, manager or chief executive officer needs the Authority's previous approval under Section 34A. Without it the action has no effect, though acts already done in good faith are not invalidated.

  1. AAppointment, reappointment or termination of appointment of a managing or whole-time director, manager or chief executive officerCorrect
  2. BAppointment of a statutory auditor of the insurer
  3. COpening of a new branch office in a metropolitan city
  4. DDeclaration of an interim dividend by the Board

Explanation

Section 34A(1)(b) states that no appointment, reappointment or termination of appointment of a managing or whole-time director, or a manager or chief executive officer, has effect without the previous approval of the Authority. The other actions are not covered by this section. The Explanation also treats perquisites and benefits as remuneration, so amendments to them need approval too.

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