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Under Section 22 of the Insurance Act 1938, when may the Authority order a re-valuation of an insurer's actuarial investigation?
A{'text': "At the insurer's discretion", 'letter': 'A'}
B{'text': 'Where the valuation does not properly indicate the condition of affairs due to faulty basis', 'letter': 'B'}
C{'text': 'Once every 5 years automatically', 'letter': 'C'}
D{'text': 'Only on receipt of a court order', 'letter': 'D'}
Answer & Solution
Correct answer: B. {'text': 'Where the valuation does not properly indicate the condition of affairs due to faulty basis', 'letter': 'B'}
1. Section 22 empowers the Authority to scrutinise actuarial valuations.
2. The trigger is a defective valuation method.
3. If it appears to the Authority that an investigation or valuation does not properly indicate the condition of the affairs of the insurer by reason of the faulty basis adopted ... he may cause an investigation and valuation.
_Source: Insurance Act 1938 (incorporating amendments till 2021), noc.irdai.gov.in — "If it appears to the Authority that an investigation or valuation to which section 13 refers does not properly indicate the condition of the affairs of the insurer by reason of the faulty basis adopted in the valuation, he may ... cause an investigation and valuation"_