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B.A. LL.B. (Five Years) Sem 8 Insurance Law 2023 Mar Question Paper with Solutions - KSLU

KSLU Solved Question Papers

Insurance Law

Previous Year Question Paper with Solution

B.A. LL.B. (Five Years) · Sem 8

2023 Mar Examination

munotes.in

Mumbai

First published on munotes.in on 21 October 2026.

Published by munotes.in, Mumbai.

Model answers written and edited by the munotes.in editorial desk.

Passages from this volume may be quoted, in print, online or by an AI system, with credit: name munotes.in and link to this volume's page. The volume may not be reproduced as a whole. Full terms at munotes.in/content-license.

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The University does not publish an official answer key for this paper. The answers in this volume are model answers, written to show how a full-mark answer is built. They are a study aid, not an authority on what an examiner marked.

The question paper reproduced here is the paper as set by Karnataka State Law University at the 2023 Mar examination.

The Paper as Set

The questions in this volume are the questions asked at the 2023 Mar 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 five Units. (2) One essay type question and short note/problems is compulsory from each Unit. (3) Figures to the right indicate marks. (4) Answers should be written either in English or Kannada completely.

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.

Read the original question paper

Q1

Unit I

(a)Explain briefly the provisions of Insurance Act, 1938.[10]

Answer

For full marks, cover: the purpose and structure of the Insurance Act, 1938; who may carry on insurance business and registration (sections 2C, 3, 3AA); accounts, actuary and investments; management controls; the policyholder sections (38, 39, 41, 45, 47, 64VB); surveyors and solvency; penalties and appeals; the 2015 and 2025 amendments; Mahaveer Sharma and Deddappa.

The Act and its purpose

The Insurance Act, 1938 is the main law regulating insurance business in India. It came into force on 1 July 1939. It replaced the separate Acts on life and other insurance with one code. It controls who may carry on insurance business, how insurers keep their money and accounts, and how policies are dealt with.

Since 2000 the Act is administered by the Insurance Regulatory and Development Authority of India (IRDAI). The Insurance Laws (Amendment) Act, 2015 rewrote large parts of it. The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 amended it again from 5 February 2026.

Part I: preliminary

Section 2 contains the definitions. Since 2026 it defines "insurance business" and, for the first time, an "insurance contract" (section 2(6D)). It also defines "premium" (section 2(13BC)) as the consideration paid to the insurer for a contract of insurance. An "insurer" is a person who carries on insurance business (section 2(9)).

Part II: control of insurers

Who may carry on business (section 2C). The section allows a public company and a co-operative society. It also allows a statutory body set up by Parliament to carry on insurance, and a foreign re-insurer's Indian branch. Since 2000, a new direct insurer must be an Indian insurance company.
Registration (section 3). No person may carry on any class of insurance business in India without a certificate of registration from the Authority. The certificate is for a particular class of business. It can be suspended or cancelled on the grounds in the section.

Foreign investment (section 3AA). Since 5 February 2026, foreign investors may hold up to one hundred per cent of an Indian insurance company's paid-up equity. Prescribed conditions apply. The earlier limit was seventy-four per cent.
Capital (section 6). A life, general or health insurer needs a paid-up equity capital of one hundred crore rupees. A re-insurer needs two hundred crore rupees.

Accounts, actuary and investments

Separate funds (section 10). An insurer carrying on more than one class of business keeps separate accounts and funds for each.
Accounts, audit and actuary (sections 11 to 13). Accounts are prepared in the specified form and audited. An actuary investigates the financial condition of the life business every year (section 13).
Record of policies and claims (section 14). Every insurer keeps a record of its policies and claims.
Investments (section 27). Assets must be invested as section 27 and the regulations require. Sections 27A to 27D were omitted in 2026. Funds of policyholders may not be invested outside India (section 27E).
No loans to directors (section 29). An insurer may not lend to its directors or their firms.

Management and supervision

The Authority may inspect and investigate an insurer (section 33). It may issue directions (section 34) and remove managerial persons (section 34B). It may appoint an Administrator to manage an insurer whose affairs are run against policyholders' interests (section 52A).

The sections that protect policyholders

Assignment (section 38). A policy may be transferred by an endorsement or a separate instrument, and notice must be given to the insurer.
Nomination (section 39). A life policyholder may nominate persons to receive the money on his death.
No rebates (section 41). No person may offer a rebate of commission or premium as an inducement to take a policy.
Indisputability (section 45). No life policy can be called in question on any ground after three years from the date of the policy, revival or rider. Within three years it can be avoided only for fraud or for a material misstatement. The insurer bears the burden of proof.

Payment into court (section 47). Where there are rival claimants, the insurer may pay the money into court and obtain a discharge.
Premium in advance (section 64VB). No insurer may assume any risk unless the premium is received in advance or guaranteed in the prescribed way.

Surveyors, solvency and re-insurance

Some general insurance claims need a licensed surveyor's report before payment (section 64UM). The money limit is fixed by the Authority's regulations. Every insurer must keep its assets above its liabilities by the required solvency margin (section 64VA). Insurers must re-insure a part of their business with Indian re-insurers (section 101A).

Penalties and appeals

Under section 102, as substituted in 2026, failing to file returns, follow directions or keep the solvency margin attracts a penalty. It can reach one lakh rupees a day, up to ten crore rupees. Carrying on business without registration attracts a penalty up to twenty-five crore rupees and imprisonment up to ten years (section 103). An adjudicating officer decides penalties (section 105C). Appeals from the Authority's orders lie to the Securities Appellate Tribunal (section 110).

Two cases on the Act's key sections

Mahaveer Sharma v. Exide Life Insurance Co. Ltd., 2025 INSC 268, applied section 45. A man took a term policy for twenty-five lakh rupees in 2014 and died in an accident in 2015. The insurer repudiated because three older policies were not disclosed. The Supreme Court held that the disclosure was substantial. The insurer could assess the risk from what was disclosed, and it bore the burden of proving suppression. All benefits were released.

Deddappa v. Branch Manager, National Insurance Co. Ltd., (2008) 2 SCC 595, applied section 64VB. The owner's premium cheque was dishonoured. The insurer cancelled the policy and told the owner and the transport office before the accident. The Supreme Court held that the insurer was not liable, because a valid policy rests on receipt of the premium.

Conclusion. The Insurance Act, 1938 is the core code of Indian insurance law. It decides who may carry on business and on what capital (sections 2C, 3, 3AA and 6). It controls accounts, investments and management, and gives the IRDAI wide supervisory powers. It also protects policyholders through sections 38, 39, 41, 45, 47 and 64VB. The 2015 and 2025 amendments modernised it, most recently with one hundred per cent foreign investment and higher penalties.

B.A. LL.B. (Five Years) Sem 8 Insurance Law 2023 Mar Question Paper with Solutions

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