Competition Commission Shocks Insurance Firms With Huge Fines

<p>State-run insurance companies – National Insurance, New India Assurance, Oriental Insurance and United India Insurance – are shocked by the collective financial penalty of Rs 671 crore slapped by the fair trade regulator – Competition Commission of India (CCI) – which found them guilty of bid rigging and manipulating the bidding process initiated by Kerala for selecting insurance service provider for Rashtriya Swasthya Bima Yojna for the years 2010-11, 2011-12 and 2012-13.<br><br>While an official reaction from each of the individual insurance firms is awaited, sources said these firms will individually appeal against the CCI order before the Competition Appellate Tribunal within the stipulated 60-day period.<br><br>"The question of cartelisation arises only when there was some profit involved... we don't make any money on any of the government-run schemes. There is something wrong with the CCI order," said a senior executive of General Insurance (Public Sector) Association (GIPSA), the apex body of public sector insurance companies.<br><br>The CCI, however, said that it had initiated the probe against these state-run insurance companies based on anonymous information received by it.<br><br>It said in its order dated July 10th that its investigations found that there was manipulation of the bidding process in contravention of the provisions of the Competition Act.<br><br>While imposing penalties, the Commission noted that the present case related to bid rigging in public procurement for social welfare schemes, the beneficiaries of which were BPL and poor families and as such the same was taken as an aggravating factor.<br><br>Accordingly, penalties of Rs. 162.80 crores, Rs 251.07 crores, Rs 100.56 crores and Rs 156.62 crores were imposed upon National Insurance Co. Ltd., New India Assurance Co. Ltd., Oriental Insurance Co. Ltd. and United India Insurance Co. Ltd.<br><br>(BW Online Bureau)</p>