KSLU Solved Question Papers
Insurance Law
Previous Year Question Paper with Solution
B.A. LL.B. (Five Years) · Sem 8
2015 Dec Examination
munotes.in
Mumbai
B.A. LL.B. (Five Years) Sem 8 Insurance Law 2015 Dec Question Paper with Solutions
First published on munotes.in on 21 October 2026.
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The question paper reproduced here is the paper as set by Karnataka State Law University at the 2015 Dec examination.
Contents
The questions below are the paper as Karnataka State Law University set it at the 2015 Dec examination, in the order it was set.
MarksPage
MarksPage
The Paper as Set
The questions in this volume are the questions asked at the 2015 Dec examination, reproduced as Karnataka State Law University set them, in the order it set them. Long reading passages are shortened to their first and last lines and our summary; the original paper prints them in full. Only the answers are ours. See the original question paper.
Duration 3 hours · Total marks 80 · 20 questions answered
Instructions printed on the paper
- N.B. (1) Answer all 5 questions. (2) Figures to the right indicate marks.
How to use this volume
Solve the paper first, under exam conditions and against the clock. Then read the answers here and mark your own. Reading a solution before attempting the question feels productive and teaches very little, because recognising an answer is not the same as being able to write one.
Q1
(a)Trace the development of Insurance Law in India.[10]
Answer
For full marks, cover: risk sharing in ancient India; British and Indian companies (1818, 1870, 1906); the statutes of 1912, 1928 and 1938; nationalisation of life insurance (1956) and general insurance (1971 and 1972); Rustom Cavasjee Cooper v. Union of India; the Malhotra Committee and the IRDA Act, 1999; reopening and foreign investment (26, 49, 74 and 100 per cent); the 2015 and 2025 amendments; the General Insurance Corporation as re-insurer; a timeline.
Before modern insurance
India shared risk long before it had insurance companies. The joint family spread the cost of a death or illness across the household. Village and caste funds met the cost of funerals and disasters. Merchants shared commercial risk through guilds and the hundi system. Texts such as the Manusmriti and the Arthasastra discuss pooling losses and rates on risky loans. But there was no insurer carrying risk as a business for a premium.
The arrival of insurance companies
- 1818. The Oriental Life Insurance Company was set up at Calcutta, the first insurance company in India. It insured mostly European lives and failed in 1834.
- 1870. The Bombay Mutual Life Assurance Society was the first Indian office to insure Indian lives at ordinary rates. British offices had charged Indians an extra premium.
- 1906. The National Insurance Company was founded. It is the oldest general insurer still operating in India.
- The swadeshi years. Indian life and general insurers multiplied, and by the 1930s there were well over a hundred, many of them small.
The first statutes
- Indian Life Assurance Companies Act, 1912. The first statute of general application. Life offices had to make deposits and have their liabilities valued by an actuary.
- Indian Insurance Companies Act, 1928. Insurers had to file statistical returns.
- Insurance Act, 1938. The first comprehensive statute, still the principal Act. It brought registration, capital and deposit rules, a separate life fund, controlled investments, limits on commission, control of agents, and a Controller of Insurance.
Nationalisation
Life insurance, 1956. Many life offices failed, and policyholders lost their savings. The State also wanted long-term savings for development. The Central Government took over management by Ordinance on 19 January 1956. The Life Insurance Corporation Act, 1956 then vested the life business of every insurer in the new Life Insurance Corporation of India.
General insurance, 1971 and 1972. The General Insurance (Emergency Provisions) Act, 1971 placed the management of general insurers with the Government. The General Insurance Business (Nationalisation) Act, 1972 then took over the business of one hundred and seven insurers. It vested them in four companies held by the General Insurance Corporation of India: the National, New India, Oriental and United India.
The constitutional limit. Nationalisation must respect property rights and pay fair compensation. In Rustom Cavasjee Cooper v. Union of India, (1970) 1 SCC 248, the Supreme Court struck down the bank nationalisation law because its compensation was not just. The LIC Act paid compensation on the principles in its First Schedule, and a Tribunal settled disputes (sections 16 and 17). The 1972 Act paid the fixed amounts set out in its Schedule (section 11).
The public duty. In Life Insurance Corporation of India v. Consumer Education and Research Centre, (1995) 5 SCC 482, the Court held the nationalised insurer an instrumentality of the State. It could not confine its cheapest policy to employees of Government bodies and reputed firms.
Reopening the market
- 1994. The Malhotra Committee recommended letting private insurers in, under an independent regulator.
- 1996. An Interim Insurance Regulatory Authority was set up by resolution.
- 1999 and 2000. The IRDA Act, 1999 came into force on 19 April 2000. It created the Authority and ended the monopolies of the Life Insurance Corporation and the General Insurance Corporation. The market reopened in August 2000, with foreign holding up to twenty-six per cent.
- 2003. The shares of the four public sector general insurers passed to the Central Government, and the General Insurance Corporation became India's national re-insurer.
- 2015. The Insurance Laws (Amendment) Act, 2015 raised foreign holding to forty-nine per cent and reformed agents, nomination, assignment and section 45.
- 2021. Foreign holding rose to seventy-four per cent, and the LIC Act was amended to allow public shareholding.
- 2026. The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 came into force on 5 February 2026. It allows foreign holding up to one hundred per cent.
Timeline
| Year | Event |
|---|---|
| 1818 | Oriental Life, Calcutta |
| 1906 | National Insurance Company |
| 1912 and 1938 | First statute; the Insurance Act |
| 1956 | Life insurance nationalised |
| 1972 | General insurance nationalised |
| 1999 and 2000 | IRDA Act; private insurers return |
| 2026 | Foreign holding up to 100 per cent |
Conclusion. Insurance in India moved from family and caste risk sharing to British and Indian companies in the nineteenth and early twentieth centuries. It was brought under the Insurance Act, 1938 and nationalised in 1956 (life) and 1972 (general). From 2000 it was reopened to private and foreign insurers under the IRDA Act, 1999, with foreign holding now up to one hundred per cent. Nationalisation was bounded by the Constitution (Rustom Cavasjee Cooper), and the State insurer's duty to the public is enforceable (Consumer Education and Research Centre).
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