The General Insurance Business (Nationalisation) Act, 1972

THE GENERAL INSURANCE BUSINESS (NATIONALISATION) ACT, 1972

This Act provides for the acquisition and transfer of shares of Indian insurance companies and undertakings of other existing insurers to serve better the needs of the economy by securing the development of general insurance business in the best interests of the community. It aims to prevent concentration of wealth and ensure the operation of the economic system is not detrimental.

The Act has 40 sections, which can be broadly categorized into five chapters: Preliminary, Transfer to Public Ownership of General Insurance Business, General Insurance Corporation of India, Amounts to be Paid for Acquisitions, Scheme for Reorganisation of General Insurance Business.

Under this Act, all shares in the capital of every Indian insurance company stand transferred to and vested in the Central Government free of all trusts, liabilities, and encumbrances affecting them. The Central Government shall provide for the transfer of not less than ten shares of every such company to certain persons to enable the Indian insurance company to function as a Government company.

The Act also provides for the formation of General Insurance Corporation of India to superintend, control, and carry on general insurance business. The Corporation is authorized with an initial subscribed capital of ₹ 250 crores.

The Act specifies the amount payable to shareholders by the Central Government, which can be paid in cash, as a deduction in premium due at renewal of policy, or in three equal annual instalments.

In addition to the main provisions, this Act includes various subsidiary provisions related to service of officers and employees, functions of the Corporation, acquiring companies, miscellaneous matters, and more.