CCI imposes Rs 671-cr penalty on four public sector general insurers

They were found manipulating the bidding process initiated by Govt of Kerala for selecting an insurance service provider for Rashtriya Swasthya Bima Yojna

The Competition Commission of India has imposed a total penalty of Rs 671.05 crores on four public sector insurance companies for manipulating the bidding process initiated by the Kerala government for selecting the service provider for the Rashtriya Swasthya Bima Yojna (RSBY) for 2010-11, 2011-12 and 2012-13.

The final order was passed by the regulator on July 10 in a matter, which was taken up suo moto following an anonymous complaint received by the Commission. This complaint was against National Insurance, New India Assurance, Oriental Insurance and United India Insurance alleging contravention of the provisions of the Act, which deals with anti-competitive agreements, including bid rigging.

RSBY is a government-sponsored health insurance scheme for those living below the poverty line (BPL). Beneficiaries under the scheme are entitled to hospitalisation coverage up to Rs 30,000. Beneficiaries need to pay only Rs 30 as registration fee, while Central and state governments pay the premium to the insurer selected in a bidding.

The commission said the conduct of these companies could have resulted in manipulation of the bidding process in contravention of the provisions of the Act. Sources said these insurers will offer their clarifications and would appeal against this order.

While imposing the penalties, CCI noted, in the present case related to bid rigging in public procurement for social welfare schemes, the beneficiaries of which were BPL families and as such the same was taken as an aggravating factor.

Penalties of Rs 162.80 crores, Rs  251.07 crores, Rs 100.56 crores and Rs 156.62 crores were imposed on National Insurance, New India Assurance, Oriental Insurance and United India Insurance, respectively. It would also meet regularly to monitor the facilitation process and issue directions to the authorities concerned.