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Section 40B of the Insurance Act 1938 places a limitation on:
A{'text': 'The amount of life-insurance premium an insurer can collect', 'letter': 'A'}
B{'text': 'Number of branches an insurer may open', 'letter': 'B'}
C{'text': 'Expenses of management in life insurance business', 'letter': 'C'}
D{'text': 'Foreign reinsurance ceded', 'letter': 'D'}
Answer & Solution
Correct answer: C. {'text': 'Expenses of management in life insurance business', 'letter': 'C'}
1. Sections 40B and 40C cap management expenses for life and non-life.
2. These caps are set by IRDAI regulations made under the Act.
3. Section 40B: Limitation of expenses of management in life insurance business.
_Source: Insurance Act 1938 (incorporating amendments till 2021), noc.irdai.gov.in — "40B. Limitation of expenses of management in life insurance business. -No insurer shall, in respect of insurance business transacted by him in India, spend as expenses of management in any financial year any amount exceeding the amount as may be specified by the regulations"_