CMA Final · Risk Management in Banking and Insurance · Introduction to Insurance Business
Which statement correctly reflects Section 32D of the Insurance Act, 1938 on motor third party risks?
Every general insurer must underwrite a minimum percentage of motor third party business as specified by regulations. The Authority may exempt insurers primarily engaged in health, re-insurance, agriculture or export credit guarantee. The percentage is not fixed in the Act, and the duty does not apply to life insurers.
- AEvery insurer, including life insurers, must underwrite a fixed 50% of motor third party risks
- BEvery general insurer must underwrite a minimum percentage of third party motor business specified by the regulations, though the Authority may exempt insurers primarily in health, re-insurance, agriculture or export credit guaranteeCorrect
- COnly public sector general insurers are bound, and no exemption is possible
- DInsurers must underwrite third party motor business only if the Central Government issues a notice each year
Explanation
Section 32D requires every insurer carrying on general insurance business to underwrite the minimum percentage of third party motor business specified by the regulations. The proviso lets the Authority exempt insurers primarily engaged in health, re-insurance, agriculture or export credit guarantee. A fixed 50% and the no-exemption claim are not in the text.
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