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CMA Final · Risk Management in Banking and Insurance · Introduction to Insurance Business

Which of the following is NOT a feature of section 2C of the Insurance Act, 1938 as reproduced?

A foreign company carrying on direct general insurance business through an Indian branch is not permitted. Under section 2C, a body incorporated abroad can carry on only re-insurance business in India. The name restrictions and the allowance for insurance co-operative societies are genuine features of the section.

  1. AA person other than an insurer may not use words such as 'insurance' or 'assurance' as part of its name
  2. BA person carrying on insurance business in India must use at least one specified word in its name
  3. CInsurance co-operative societies may carry on any class of insurance business in India
  4. DA foreign company may carry on direct general insurance business in India through a branchCorrect

Explanation

Section 2C(4) restricts use of insurance-related words to insurers and requires insurance businesses to use one such word, and section 2C(3) permits insurance co-operative societies. However, a proviso states that no company or body incorporated outside India shall carry on insurance business other than re-insurance, so direct general insurance by a foreign branch is not permitted.

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