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CMA Final · Risk Management in Banking and Insurance · Concept and Types of Health Insurance Policies

Under Section 40C of the Insurance Act, 1938 (as substituted in 2015), what must every insurer transacting general, health insurance and re-insurance business in India do regarding expenses of management?

Every insurer must furnish the Authority the details of its expenses of management, in the manner and form specified by the regulations. The substituted Section 40C sets no fixed percentage ceiling in the Act itself and does not require Council approval.

  1. AKeep expenses below a fixed percentage of premium set in the Act itself
  2. BFurnish details of expenses of management to the Authority in the manner and form specified by regulationsCorrect
  3. CObtain approval of the General Insurance Council before incurring such expenses
  4. DPublish expenses only in the annual report of the Council

Explanation

Section 40C as substituted requires every insurer to furnish to the Authority the details of expenses of management in the manner and form specified by regulations. It no longer fixes a percentage limit in the Act, so the first option is wrong.

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