Important MCQs

Insurance Laws
Part 2- The Insurance Act, 1938- A
1. The Controller of Insurance is appointed by
____________________ under the Insurance Act, 1938

A. IRDA
B. Authority
C. Central Government
D. Insurance Company
E. None of the above
Ans. C.
Section 2B- (1)If at any time, the Authority is superseded under section 19(1) of the
Insurance Regulatory and Development Authority Act, 1999, the Central Government
may, by notification in the Official Gazette, appoint a person to be the Controller of
Insurance till such time the Authority is reconstituted under section 19(3) of that Act
2. No insurer, as defined in section 2(9)(d), shall be registered
unless he has _______________

A. Net owned funds of rupees five thousand crore

B. Net owned funds of not less than rupees five thousand crore
C. Gross owned funds of not less than rupees five thousand crore
D. Either (a) or (c)
E. Either (b) or (c)

Ans. B.
Section 6 Requirements as to capital - (2) No insurer, as defined in sub-clause (d) of
clause (9) of section 2, shall be registered unless he has net owned funds of not less than
rupees five thousand crore
3. The audited accounts and statements and the abstract and
statement shall be printed, and four copies thereof shall be
furnished as returns to the Authority ____________

A. Within three months from the end of the period to which they refer
B. Within six months from the end of the period to which they refer
C. Within one year from the end of the period to which they refer
D. At its discretion
E. None of the above

Ans. B.
Section 15 Submission of returns- -(1) The audited accounts and statements referred to in section 11
or section 13(5) and the abstract and statement referred to in section 13 shall be printed, and four
copies thereof shall be furnished as returns to the Authority within six months from the end of the
period to which they refer
4. A transfer or assignment of a policy of insurance,
wholly or in part, whether with or without consideration,
may be made only by__________________

A. An endorsement upon the policy itself

B. An endorsement upon the policy itself or by a separate instrument, signed in either case by
the transferor or by the assignor or his duly authorised agent
C. Attested by at least one witness, specifically setting forth the fact of transfer or assignment
D. Both (a) & (c)
E. Both (b) & (c).

Ans. E.
Section 38 Assignment and transfer of insurance policies- (1) A transfer or assignment of a
policy of insurance, wholly or in part, whether with or without consideration, may be made only
by an endorsement upon the policy itself or by a separate instrument, signed in either case by
the transferor or by the assignor or his duly authorised agent and attested by at least one
witness, specifically setting forth the fact of transfer or assignment and the reasons thereof, the
antecedents of the assignee and the terms on which the assignment is made.
5. Who can nominate the person or persons to whom
the money secured by the policy shall be paid in the
event of the death of the policy holder as per the
Insurance Act, 1938?
A. Insurer
B. Policy holder
C. Nominee
D. Either of the above
E. Both (a) & (b)

Ans. B.
Section 39 Nomination by policy-holder- (1) The holder of a policy of life insurance on his
own life may, when effecting the policy or at any time before the policy matures for
payment, nominate the person or persons to whom the money secured by the policy shall
be paid in the event of his death
6. What shall be the duration of the Executive Committee of
the Life Insurance Council or the General Insurance Council as
per the Insurance Act, 1938?

A. Within one years from the date of its first meeting

B. Three years from the date of its constitution
C. Three years from the date of its first meeting on the expiry of which it shall stand dissolved
D. Either (b) or (c)
E. None of the above

Ans. C.
Section 64H. Duration and dissolution of Executive Committees- (1) The duration of the Executive
Committee of the Life Insurance Council or the General Insurance Council shall be three years from
the date of its first meeting on the expiry of which it shall stand dissolved and a new Executive
Committee constituted
7. The Authority with the previous approval of the Central
Government shall constitute an Advisory Committee consisting of
_______________
A. 2 persons having special knowledge and experience of the business of insurance
B. More than five persons having special knowledge and experience of the business of
insurance
C. Not more than five persons having special knowledge and experience of the business
of insurance
D. Not more than such number of persons as the Authority may specify after consultation
with the Central Government
E. None of the above
Ans. C.
Section 101B Advisory Committee- (1) The Authority with the previous approval of the
Central Government] shall, for the purposes of section 101 A, constitute an Advisory
Committee consisting of not more than five persons having special knowledge and
experience of the business of insurance
8. What is the penalty for default in complying with, or
act in contravention of the Insurance Act, 1938?

A. Penalty of one lakh rupees

B. Penalty of one lakh rupees or one crore rupees as the Authority may direct
C. Penalty of one lakh rupees for each day during which such failure continues or one crore
rupees, whichever is more
D. Penalty of one lakh rupees for each day during which such failure continues or one crore
rupees, whichever is less
E. None of the above
Ans. D.
Section 102 Penalty for default in complying with, or act in contravention of this Act- f any
person, who is required under this Act, or rules or regulations made thereunder, --(a) to furnish
any document, statement, account, return or report to the Authority, fails to furnish the same; or
(b) to comply with the directions, fails to comply with such directions; (c) to maintain solvency
margin, fails to maintain such solvency margin; (d) to comply with the directions on the
insurance treaties, fails to comply with such directions on the insurance treaties, he shall be
liable to a penalty of one lakh rupees for each day during which such failure continues or one
crore rupees, whichever is less.
9. According to section 105D of the Insurance Act what are the
factors to be taken into account by the adjudicating officer
while recommending the quantum of penalty under section
105C of the said Act?
A. Amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a
result of the default
B. Amount of loss caused to the policyholders as a result of the default
C. Repetitive nature of default
D. Either of the above
E. All the above
Ans. E.
Section 105D Factors to be taken into account by the adjudicating officer- While
recommending the quantum of penalty under section 105C, the adjudicating officer and
while imposing such penalty, the Authority shall have due regard to the following factors,
namely: -- (a) the amount of disproportionate gain or unfair advantage, wherever
quantifiable, made as a result of the default; (b) the amount of loss caused to the
policyholders as a result of the default; and (c) the repetitive nature of default
10. No person shall act as a surveyor or loss assessor in
respect of general insurance business ______________ unless
he, possesses such academic qualifications as may be
specified and is a member of, the Indian Institute of Insurance
Surveyors and Loss Assessors as per the Insurance Act, 1938
A. After the expiry of a period of one year from the commencement of the Insurance Laws
(Amendment) Act, 2015
B. Before the expiry of a period of one year from the commencement of the Insurance Laws
(Amendment) Act, 2015
C. On the expiry of a period of one year from the commencement of the Insurance Laws Act, 2015
D. Within a period of one year from the commencement of the Insurance Laws Act, 2015
E. None of the above
Ans. A.
Section 64UM Surveyors and loss assessors- (1) Save as otherwise provided in this section, no
person shall act as a surveyor or loss assessor in respect of general insurance business after the
expiry of a period of one year from the commencement of the Insurance Laws (Amendment) Act,
2015 (5 of 2015), unless he possesses such academic qualifications as may be specified by the
regulations made under this Act; and (b) is a member of a professional body of surveyors and loss
assessors, namely, the Indian Institute of Insurance Surveyors and Loss Assessors
11. Which section of the Insurance Act, delas with the
Prohibition of loans?

A. Section 19
B. Section 25
C. Section 27
D. Section 28
E. Section 29
Ans. E.
Section 29 Prohibition of loans- No insurer shall grant loans or temporary advances either
on hypothecation of property or on personal security or otherwise, except loans on life
insurance policies issued by him within their surrender value, to any director, manager,
actuary, auditor or officer of the insurer, if a company or to any other company or firm in
which any such director, manager, actuary or officer holds the position of a director,
manager, actuary, officer or partner
12. According to the Insurance Act, 1938 none of the assets in India of
any insurer shall, except in so far as assets are required to be vested in
trustees, be kept otherwise than_______________
A. In the name of a public officer approved by the Authority
B. In the corporate name of the undertaking, if a company or an insurance co-operative
society
C. Both (a) and (b)
D. Either (a) or (b)
E. Authority has been vested with the power to decide
Ans. D.
Section 31 Assets of insurer how to be kept- (1) None of the assets in India of any insurer
shall, except in so far as assets are required to be vested in trustees under sub-section (7)
of section 27, be kept otherwise than in the name of a public officer approved by the
Authority, or in the corporate name of the undertaking, if a company or an insurance co-
operative society, as the case may be
13. Who shall determine the market value of the securities
deposited with the RBI in pursuance of any of the provisions
of the Insurance Act, 1938?
A. Shall be determined by the Authority whose decision shall be final
B. Shall be determined by the SEBI whose decision shall be final
C. Shall be determined by the Reserve Bank of India whose decision shall be final
D. May be determined by the Central Government in consultation with the RBI
E. None of the above

Ans. C.
Section 120 Determination of market value of securities deposited under this Act- The
market value on the day of deposit of securities deposited in pursuance of any of the
provisions of this Act with the Reserve Bank of India shall be determined by the Reserve
Bank of India whose decision shall be final
14. No court shall take cognizance of any offence punishable
under the Insurance Act, 1938 or any rules or any regulations
made thereunder save________________

A. On a complaint made by an insurer

B. On a complaint made by an officer of the Authority
C. On a complaint made by any person authorised by it
D. All the above
E. Either (b) or (c)
Ans. E.
Section 109 Cognizance of offences- No court shall take cognizance of any offence
punishable under this Act or any rules or any regulations made thereunder, save on a
complaint made by an officer of the Authority or by any person authorised by it
15. As per section 2A of the Insurance Act,1938 words and
expressions used and not defined in this Act shall have the
meanings respectively assigned to them in_____________

A. Life Insurance Corporation Act, 1956

B. General Insurance Business (Nationalisation) Act, 1972
C. Insurance Regulatory and Development Authority Act, 1999
D. All the above
E. Both (a) and (b)
Ans. D.
Section 2A Interpretation of certain words and expressions- Words and expressions used
and not defined in this Act but defined in the Life Insurance Corporation Act, 1956, the
General Insurance Business (Nationalisation) Act, 1972 and the Insurance Regulatory and
Development Authority Act, 1999 shall have the meanings respectively assigned to them in
those Acts
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