Public sector insurance players are up in arms over the insurance renewal of Air-India's (A-I) 45-aircraft fleet. | |
| The state-owned general insurance companies "" the New India Assurance Company, Oriental Insurance Company, National Insurance "" allege that the General Insurance Corporation of India (GIC) does not meet the tender norms put out by A-I. |
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| The GIC, on the other hand, said it has not tied up with ICICI Lombard, but has simply given its quote to the private insurer for the $2.6 billion cover. |
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| "There is a technical objection in that GIC is not an internationally reputed insurer, which has been known to lead in the aviation market for aircraft the size of that of A-I's fleet," said the chairman and managing director of one of the public sector insurance companies. |
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| This was one of the technical conditions laid down in A-I's tender |
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| Though A-I's cover expired in March, it has been seeking a time extension every month and the final date given today is that the new cover has to be in place by June 1. |
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| This followed the Central Vigilance Commissioner (CVC) deciding to allow private insurance companies as well as public sector insurers to bid for the account. |
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| If ICICI Lombard wins the bid, this could set a precedent for the insurance industry and public sector players could well start losing their edge when it comes to underwriting large-sized policies. |
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| Though public sector insurers feel that GIC is not qualified to lead the A-I programme, industry sources said that GIC has been leading it nevertheless since the last 27 years "" from 1973 to 2000. |
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| So there is no question of GIC not having the experience, they added. |
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| The ultimate decision on awarding the cover will be based on the lowest price as is the norm in all government transactions. |
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| Though A-I has yet to announced the lowest bid, both the public sector players and sources close to GIC told Business Standard that the renewal of A-I's cover will be lower than last year's premium rate of $12 million. |
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| The market has softened and Air India has a very good track record, said New India officials. |
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