Investment of Insurance Companies And IRDA Regulations MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Investment of Insurance Companies And IRDA Regulations, a fundamental topic in the field of IC 89 Management Accounting. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Investment of Insurance Companies And IRDA Regulations MCQs are designed to help you grasp the core concepts and excel in solving problems.

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Investment of Insurance Companies And IRDA Regulations MCQs | Page 6 of 16

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Q51.
What is the responsibility of the board regarding the Investment Risk Management System and process?

a.

Implement and certify

b.

Review and certify

c.

Design and implement

d.

Outsource and review

Discuss
Answer: (a).Implement and certify Explanation:The board shall implement the Investment Risk Management System and process mandated by the Authority, and the implementation shall be certified by a Chartered Accountant firm as per the procedure laid down in the Technical Guide on "Review and Certification of Investment Risk Management Systems and Process of Insurance Companies" issued by the Institute of Chartered Accountants of India.
Q52.
Who is typically expected to head the Audit Committee of the Board?

a.

Chief Executive Officer

b.

Chief of Finance

c.

Chartered Accountant

d.

Chief Investment Officer

Discuss
Answer: (c).Chartered Accountant Explanation:The Audit Committee of the Board shall be headed by a Chartered Accountant if he is a member of the Board of the insurer.
Q53.
What is the responsibility of the Internal or Concurrent Auditor with regard to investment transactions?

a.

Conducting a review of investment transactions

b.

Auditing investment transactions covering both shareholders and policyholders funds

c.

Recommending changes in investment transactions

d.

Managing investment transactions

Discuss
Answer: (b).Auditing investment transactions covering both shareholders and policyholders funds Explanation:The Internal or Concurrent Auditor is responsible for auditing investment transactions covering both shareholders and policyholders funds.
Q54.
What should be covered in the quarterly Internal/Concurrent audit report?

a.

Only policyholders funds

b.

Only shareholders funds

c.

Both shareholders and policyholders funds

d.

Only investment transactions

Discuss
Answer: (c).Both shareholders and policyholders funds Explanation:The quarterly Internal/Concurrent audit report should cover both shareholders and policyholders funds.
Q55.
What details should be included in the reports to be placed before the Board's Audit Committee?

a.

Investment Policy and its implementation status

b.

Investment Risk Management Systems and Process review

c.

Impact on investment operations, systems, and processes

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:The reports should include details such as Investment Policy, its implementation status, Investment Risk Management Systems and Process review, and the impact on investment operations, systems, and processes.
Q56.
What category of investments is an insurer expected to invest in?

a.

Any category of investments

b.

Categories listed in the regulations

c.

Categories listed in the Insurance Act of 1938

d.

Categories listed in the guidelines issued by the Authority

Discuss
Answer: (d).Categories listed in the guidelines issued by the Authority Explanation:An insurer is expected to invest in the exhaustive category of investments listed in the guidelines issued by the Authority.
Q57.
How should the accounting of investments be conducted according to Regulation 14(a)?

a.

Based on the insurer's preference

b.

According to the insurer's internal policies

c.

As per the guidelines issued under IRDA (Preparation of Financial Statements and Auditor's Report of Insurance Companies) Regulations 2000

d.

As per the insurer's financial advisors' recommendations

Discuss
Answer: (c).As per the guidelines issued under IRDA (Preparation of Financial Statements and Auditor's Report of Insurance Companies) Regulations 2000 Explanation:The accounting of investments should be as per the guidelines issued under IRDA (Preparation of Financial Statements and Auditor's Report of Insurance Companies) Regulations 2000.
Q58.
What authority does the IRDA have in modifying or changing regulations for insurers?

a.

No authority

b.

Authority to modify or change only on its own initiative

c.

Authority to modify or change only on application by insurers

d.

Authority to modify or change on its own or on application made to it

Discuss
Answer: (d).Authority to modify or change on its own or on application made to it Explanation:The IRDA may, by any general or special order, modify or change the application of certain regulations to any insurer either on its own or on an application made to it.
Q59.
What is the scope of dealing in financial derivatives for insurers according to Regulation 15(a)?

a.

Unlimited

b.

Only in the life insurance business

c.

Only in the general insurance business

d.

To the extent permitted and in accordance with guidelines issued by the Authority

Discuss
Answer: (d).To the extent permitted and in accordance with guidelines issued by the Authority Explanation:Insurers may deal in financial derivatives only to the extent permitted and in accordance with the guidelines issued by the Authority.
Q60.
How should margins or unamortized premiums paid in connection with financial derivatives be treated as per Regulation 15(b)?

a.

Always as "Approved Investments"

b.

Always as "Other than Approved Investments"

c.

As "Approved Investments" only when the derivatives position constitutes a hedge for the underlying investments or portfolio

d.

As "Other than Approved Investments" only when the derivatives position constitutes a hedge for the underlying investments or portfolio

Discuss
Answer: (c).As "Approved Investments" only when the derivatives position constitutes a hedge for the underlying investments or portfolio Explanation:Margins or unamortized premiums paid in connection with financial derivatives shall be treated as "Approved Investments" under certain conditions, specifically when the derivatives position constitutes a hedge for the underlying investments or portfolio.
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