CS Professional · Banking and Insurance - Laws and Practice · Life Insurance
A life insurance company is in liquidation. The liquidator believes the policyholders' claims can be better handled by reducing policy amounts rather than paying in full. Under section 61 of the Insurance Act, 1938, who may make an order reducing the amount of the insurance contracts?
The Tribunal may make the reduction order. Under section 61(1) of the Insurance Act, 1938, where an insurance company is in liquidation, the Tribunal can reduce contract amounts on terms it thinks just, while the liquidator can only apply for it.
- AThe Tribunal, on such terms as it thinks justCorrect
- BThe Authority, acting on its own
- CThe Central Government by notification
- DThe Life Insurance Council
Explanation
Section 61(1) says that where an insurance company is in liquidation or another insurer is insolvent, the Tribunal may make an order reducing the amount of insurance contracts on terms it thinks just. The liquidator may apply but does not decide.
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