CMA Final · Risk Management in Banking and Insurance · Insurance Intermediaries
Under Section 40 of the Insurance Act, 1938, a person who pays remuneration for soliciting or procuring insurance business in India may lawfully pay it to:
Remuneration or reward for soliciting or procuring insurance business in India may be paid only to an insurance agent, intermediary or insurance intermediary, and only in the manner specified by the regulations. Paying any other person, even a reasonable amount, is prohibited under Section 40.
- AAny person who introduces a client, provided the amount is reasonable
- BAn insurance agent or an intermediary or insurance intermediary, in the manner specified by the regulationsCorrect
- COnly an employee of the insurer, and never to an agent
- DAny policyholder, as a reward by way of rebate, without limit
Explanation
Section 40(1) prohibits paying any remuneration or reward, by way of commission or otherwise, for soliciting or procuring business to anyone except an insurance agent, intermediary or insurance intermediary, in the manner specified by regulations. Paying any introducer, even a reasonable amount, is therefore not permitted.
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