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 8 of 16

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Q71.
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.
Q72.
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.
Q73.
Which of the following is NOT considered an Approved Investment for Life Insurers?

a.

First mortgages on immovable property in another country

b.

Loans secured as required under the Act

c.

Bonds or debentures issued by companies rated AA or above

d.

Immovable property situated in another country

Discuss
Answer: (d).Immovable property situated in another country Explanation:Immovable property situated in another country is explicitly excluded as an Approved Investment for Life Insurers.
Q74.
What additional investments are deemed as approved by the Authority for Life Insurers under Section 27A of the Act?

a.

Only equity shares and preference shares

b.

Only bonds or debentures rated not less than AA

c.

Only loans secured as required under the Act

d.

Loans secured as required under the Act, rated debentures, equity shares, preference shares, and debt instruments issued by All India Financial Institutions recognized by RBI

Discuss
Answer: (d).Loans secured as required under the Act, rated debentures, equity shares, preference shares, and debt instruments issued by All India Financial Institutions recognized by RBI Explanation:Loans secured as required under the Act, rated debentures, equity shares, preference shares, and debt instruments issued by All India Financial Institutions recognized by RBI are deemed as approved investments by the Authority.
Q75.
According to Regulation 5, how should insurers carrying on Pension, Annuity, and group Business invest their assets?

a.

Only in government securities

b.

In any manner as per the discretion of the insurer

c.

In a manner specified in the regulation

d.

Exclusively in real estate investments

Discuss
Answer: (c).In a manner specified in the regulation Explanation:Regulation 5 specifies the manner in which insurers carrying on Pension, Annuity, and group Business should invest and keep invested their investment assets, without prejudice to certain provisions of the Insurance Act.
Q76.
What is the requirement for investment in Approved Investment for Unit-Linked Insurance Business as per Regulation 6?

a.

It should be more than 75% of segregated funds

b.

It should be less than 50% of segregated funds

c.

There is no specific requirement for Approved Investment

d.

It should be 100% of segregated funds

Discuss
Answer: (a).It should be more than 75% of segregated funds Explanation:Regulation 6 states that investment in Approved Investment for Unit-Linked Insurance Business should not be more than 75% of such funds in each segregated funds.
Q77.
What does Regulation 7 of the IRDA (Investment) (5th Amendment) Regulations 2013 specify for General Insurers (including Health Insurers)?

a.

Investment in real estate only

b.

The manner of investments for General Insurance Business

c.

No specific regulations for General Insurers

d.

Maximum premium rates for health insurance policies

Discuss
Answer: (b).The manner of investments for General Insurance Business Explanation:Regulation 7 outlines the manner of investments for General Insurers (including Health Insurers), specifying how they should invest and keep invested their investment assets.
Q78.
What is the significance of Regulation 7 of the IRDA (Investment) Regulations?

a.

To regulate the issuance of insurance policies

b.

To specify the maximum sum assured for life insurance policies

c.

To outline the manner of investments for General Insurers

d.

To set premium rates for health insurance policies

Discuss
Answer: (c).To outline the manner of investments for General Insurers Explanation:Regulation 7 specifies the manner of investments for General Insurers, providing guidelines on how they should invest and keep invested their investment assets.
Q79.
What does Regulation 8 specify for re-insurers carrying on reinsurance business in India?

a.

They are exempt from making investments

b.

They should invest in real estate only

c.

They should invest in the same manner as set out in Regulations 7

d.

They are not required to keep invested their investment assets

Discuss
Answer: (c).They should invest in the same manner as set out in Regulations 7 Explanation:Regulation 8 states that every re-insurer carrying on reinsurance business in India should invest and keep invested their investment assets in the same manner as set out in Regulations 7, which outlines the manner of investments for General Insurers.
Q80.
According to Regulation 9, what is the requirement for investments in instruments capable of being rated?

a.

Investments must not be rated

b.

Investments must be rated by any credit rating agency

c.

Investments must be rated by a credit rating agency registered under SEBI Regulations

d.

Investments must be rated by the Insurance Regulatory and Development Authority (IRDA)

Discuss
Answer: (c).Investments must be rated by a credit rating agency registered under SEBI Regulations Explanation:Regulation 9 specifies that all investments in assets or instruments, capable of being rated as per market practice, should be based on the credit rating of such assets or instruments. The rating must be done by a credit rating agency registered under SEBI (Credit Rating Agencies) Regulations 1999.
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