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III IC-99 study materials
III IC-99 study resources

III IC-99: Insurance Ethics and Fiduciary Responsibilities

III IC-99 · Work through your exam, one topic at a time.

All guide sections

Insurance Ethics and Fiduciary Responsibilities

Scope

This domain tests the standards expected of insurers and intermediaries: disclosure, suitability, handling of money, conflicts of interest, confidentiality and fraud control. Questions are scenario-based and often ask "what should the intermediary do next?".

Core rules

  • An intermediary owes fiduciary duties: act in the client's interest, place cover that meets the stated need, disclose remuneration and any conflict, remit premium promptly and keep client money separate.
  • Rebating is prohibited by Section 41 of the Insurance Act, 1938; inducements, false comparisons and misrepresentation of policy terms are conduct breaches under IRDAI's code of conduct for insurers, agents and brokers.
  • Section 64VB requires premium to be received before risk is assumed - an intermediary who holds premium and delays creates an uninsured gap.
  • KYC/AML obligations under the PMLA framework require identity verification, source-of-funds checks and suspicious-transaction reporting.
  • Confidentiality and data protection govern client information; fraud indicators must be escalated, not used to pressure a claimant. Fair treatment includes plain-language explanation of exclusions and prompt grievance handling.

Worked example

A broker receives a ₹4 lakh fire premium in March, uses it as working capital, and remits in April. A fire occurs in March and the insurer repudiates for non-receipt of premium. Reasoning. Under Section 64VB the insurer had not assumed the risk when the loss occurred, and the broker breached its fiduciary duty by commingling client money. The client's remedy lies against the broker for negligence and breach of duty; the broker's registration is also at risk. The practical fix - immediate remittance and a receipted premium record - is the exam's expected answer.

Traps

Equating "legal" with "ethical". Assuming commission disclosure is optional. Believing an intermediary may keep premium in its own account "temporarily". Treating client data as an insurer asset.