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CMA Final · Risk Management in Banking and Insurance · General Insurance

Under the Insurance Act, 1938, what must every insurer transacting insurance business in India do regarding expenses of management?

Every insurer transacting business in India must furnish the Authority with details of its expenses of management, in the manner and form specified by regulations made under the Act. The provision does not fix a percentage cap in the Act or require Council approval.

  1. AFurnish the details of expenses of management to the Authority in the manner and form specified by regulationsCorrect
  2. BKeep expenses below a fixed percentage of premium set in the Act
  3. CObtain prior approval of the General Insurance Council for each expense
  4. DPublish expenses only in the annual report to shareholders

Explanation

Section 40C, as substituted in 2015, requires every insurer to furnish details of expenses of management to the Authority in the manner and form specified by regulations. It does not set a fixed percentage limit in the Act itself.

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