The Hindu Business Line : Bajaj Allianz General out of race for FACT cover

BAJAJ Allianz General Insurance Company is out of the race for providing fire insurance cover for the plant and machinery as well as building of the Fertiliser and Chemicals Travancore Ltd (FACT) ammonia complex.

The insurance company, which had quoted the lowest premium of around Rs 80 lakh, had won the insurance contract for the current year.

However, the competitors who were outbid in the process took the matter to the Insurance Regulatory and Development Authority (IRDA). The Tariff Advisory Committee (TAC) had ruled that the bid was lower than the norms stipulated for the sector, an official spokesperson for FACT said.

Bajaj Allianz has withdrawn from the insurance contract and agreed to repay the proportionate premium amount to FACT. It has also withdrawn from the fresh bidding process, the spokesperson said.

Four of the public sector general insurance companies and two private sector companies have bid in the second round. The bids have been opened and scrutinised, recommendations have been made and the company is awaiting the final approval before announcing the next insurance contract.

"This goes to show the extent of competition and underquoting which is taking place in the general insurance sector," Mr P.P. Mohanan, General Secretary of General Insurance Officers All India Association, said.

The public sector general insurance companies had been consistently winning the insurance contract from FACT until three years ago and had been quoting around Rs 1 crore premium.

Three years ago, IFFCO TOKIO General Insurance bagged the contract, outbidding the public insurance companies. Last year, IFFCO TOKIO won the contract in association with public sector companies.

There was keen competition and the premium fell further as Bajaj Allianz outbid both the public sector companies and IFFCO TOKIO for the contract.

Indications are that the premium is likely to revert to over Rs 1 crore and FACT will be shelling out close to Rs 25 lakh more than for the contract with Bajaj Allianz.

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