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FCI tender norm favours one firm

Some insurance brokers in the Capital are alleging that a restrictive clause in FCI tender for marine insurance is deliberately aimed at letting the incumbent retain the business, report Teena Jain & Sangeeta Singh.

business Updated: Oct 01, 2007 01:18 IST

Some insurance brokers in the capital are alleging that a restrictive clause in a Food Corporation of India tender for marine insurance is deliberately aimed at letting the incumbent retain the business.

The tender covers insurance for goods, mainly wheat, that are transported by the state-owned FCI within India. FCI paid Rs 69 crore last year to obtain an insurance policy and has received claim reimbursements totalling Rs 65 crore against the policy.

At issue is a key clause in FCI’s tender: minimum eligibility qualification for a broker to bid for the business is experience in handling and settling at least 3,000 marine, or inland transit, insurance claims in a year.

Brokers point out that the only company that passes this qualification mark is the present incumbent — and that company obtained the requisite experience by working with FCI in the previous contract period!

The tender also stipulates that only Indian brokers having registered or corporate office in National Capital Region can apply, further limiting potential bids.

The previous contract, which came into effect from September 2005, was bought from The Oriental Insurance Co. Ltd. through a New Delhi-based insurance broker, A&M Insurance Brokers Pvt. Ltd. Devinder Kumar Jain, group head of A&M Insurance Brokers, refused to comment on this issue.

Jain insisted that Mint’s reporter was “biased” and threatened to sue HT Media, the publisher of Mint, as well as the reporter, if anything is written about him.

FCI had floated this tender previously, with a 5,000-claims-a-year qualification criterion, but that tender was scrapped because only one bidder qualified — A & M Insurance Brokers. But the new tender does not change the ground situation, brokers pointed out.

One FCI official claimed that 12-13 parties had responded to the tender, though it was unclear whether any of them fulfilled the eligibility criteria. He also said the FCI board had consulted the Insurance Regulatory and Development Authority (IRDA) and Central Vigilance Commission while approving the new tender norms.

However, insurance regulator IRDA denied any knowledge of the FCI consultations with his organisation. “Tenders of public sector companies do not come to us for approval,” said C.S. Rao, chairman of IRDA. “We don’t have any information about such tender.