Section 27 of The General Insurance Business (Nationalisation) Act, 1972 in hindi
An acquiring company may, having regard to its financial condition on the 13th day of May, 1971 or the financial condition on the said date of any existing insurer whose undertaking has been transferred to and vested in it under this Act reduce the liabilities which have arisen under contracts of general insurance entered into before the said date in such manner and subject to such conditions as it thinks fit: Provided that no such reduction shall be made except in accordance with specific proposals made by the acquiring company in this behalf and approved by the Central Government.
Summary
- An acquiring company can reduce the money it owes to people under old general insurance contracts.
- This only applies to contracts made before May 13, 1971.
- The decision to reduce payments must be based on the financial weakness of the company on May 13, 1971.
- The company cannot just reduce payments on its own, as it needs to make specific proposals and get approval from the Central Government first.
Practical examples
FAQ
1. Can the company reduce payouts for a policy I buy today?
No, this only applies to contracts entered into before May 13, 1971.
2. Does the company have to reduce the payouts?
No, the law says the company "may" reduce liabilities, meaning it is an option, not a requirement.
3. Who decides if the reduction is fair?
The Central Government must approve the specific proposals made by the acquiring company.
Test yourself
Q1.Under Section 27 of The General Insurance Business (Nationalisation) Act, 1972, what cutoff date determines if an insurance contract's payout can be reduced?
Q2.Under Section 27 of The General Insurance Business (Nationalisation) Act, 1972, what must an acquiring company look at when deciding whether to reduce contract liabilities?
Q3.Under Section 27 of The General Insurance Business (Nationalisation) Act, 1972, what is the final step required before an acquiring company can actually reduce the amounts it pays out?
Q4.Under Section 27 of The General Insurance Business (Nationalisation) Act, 1972, who must make the initial proposals to reduce the insurance amounts?