UPSC Prelims Practice Questions — Insurance for All: Expanding Coverage, Strengthening Social Security

Q1. The 2025 hike in the foreign direct investment cap in Indian insurance companies is operationalised by which one of the following, acting as the nodal department?

  • A. Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry
  • B. Department of Financial Services, Ministry of Finance
  • C. Department of Economic Affairs, Ministry of Finance
  • D. Department of Revenue, Ministry of Finance

Q2. The foreign investment cap in Indian insurance companies was first raised from 26% to 49% exclusively through which one of the following?

  • A. The Insurance Regulatory and Development Authority Act, 1999
  • B. The Insurance Laws (Amendment) Act, 2015
  • C. The Insurance (Amendment) Act, 2021
  • D. The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025

Q3. Under the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, the power of 'disgorgement' conferred on IRDAI refers to which one of the following?

  • A. Recovery of wrongful gains made by insurers or intermediaries
  • B. Cancellation of an insurer's certificate of registration
  • C. Transfer of an insolvent insurer's assets to policyholders on winding up
  • D. Compulsory cession of catastrophic risks to a domestic reinsurer

Q4. The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 amends how many pre-existing Central Acts governing the insurance sector?

  • A. Two
  • B. Three
  • C. Four
  • D. Five

Q5. The Insurance Regulatory and Development Authority of India (IRDAI) functions as an autonomous statutory body under the administrative control of which one of the following?

  • A. Ministry of Corporate Affairs
  • B. Ministry of Finance
  • C. Ministry of Commerce and Industry
  • D. Ministry of Consumer Affairs, Food and Public Distribution

Q6. Consider the following year–milestone pairings in the evolution of India's insurance sector. Which one of the following is NOT correctly matched?

  1. 1938 – Enactment of the Insurance Act as the principal supervisory statute
  2. 1956 – Nationalisation of life insurance through the LIC Act
  3. 1972 – Nationalisation of general insurance through GIBNA
  4. 1999 – Opening of the sector to private players with an initial FDI cap of 74%
  • A. 1 and 2
  • B. 3 only
  • C. 4 only
  • D. 2 and 3

Q7. Under the Pradhan Mantri Suraksha Bima Yojana (PMSBY), the sum assured of ₹2 lakh becomes payable in which one of the following circumstances?

  • A. Accidental death or total permanent disability of the insured
  • B. Death of the insured due to any reason
  • C. Natural death of the insured after attaining 50 years
  • D. Reimbursement of hospitalisation expenses for illness

Q8. The estimate that the share of insurance and pension funds in household financial assets rose to 29.6% in FY25 from 28.6% in FY19 is drawn from which one of the following?

  • A. Reserve Bank of India Annual Report 2025-26
  • B. Economic Survey 2025-26
  • C. IRDAI Annual Report 2024-25
  • D. NITI Aayog SDG India Index 2025

Q9. In the context of the 2025 amendment reducing the requirement for foreign reinsurers from ₹5,000 crore to ₹1,000 crore, the term 'net owned fund' is best defined as which one of the following?

  • A. The aggregate of paid-up equity capital and free reserves, reduced by accumulated losses and deferred/intangible expenses
  • B. The total premium income collected by the reinsurer in a financial year
  • C. The solvency margin that the reinsurer must maintain with IRDAI at all times
  • D. The entire sum assured aggregated across all reinsurance treaties written