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

Under Section 34F(1), an insurer, Narmada General Insurance Ltd, receives an order to modify a reinsurance treaty at its next renewal but ignores it. What is the legal consequence stated in the section?

The insurer is deemed to have failed to comply with the provisions of the Insurance Act, 1938. The section does not make the treaty void; non-compliance with the Authority's order is treated as a statutory contravention.

  1. AThe treaty becomes void from the date of the order
  2. BThe insurer is deemed to have failed to comply with the provisions of the ActCorrect
  3. CThe Authority must wait for the General Insurance Council's recommendation before acting
  4. DThe order lapses if not renewed within the year

Explanation

Section 34F(1) states that if the insurer fails to comply with the order, it shall be deemed to have failed to comply with the provisions of the Act. It does not declare the treaty void or make the order lapse or subject to Council recommendation.

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