ICICI Lombard scores over HDFC Ergo

(Disclosure:I am market making in the shares of ICICI Lombard)
Given the stringent criteria set forth by national carrier Air India while inviting technical bids, a consortium of four state owned non-life insurers and private insurer ICICI Lombard General Insurance Company have qualified for providing insurance cover to it. Theseinsurers will have to submit financial bids by next month. Private insurer HDFC Ergo General Insurance failed to qualify for the technical bidding. The four state owned non-life insurers namely New India Assurance, Oriental Insurance, United India Insurance and National Insurance Company bid as a consortium. Unlike previous years where private and public sector general insurers formed separate groups to bid, and the overall group’s financial strength was evaluated, this time, the national carrier developed a detailed score system to evaluate each insurer’s financial strength.

“We were asked to submit details including networth, investments, assets under management, liquid assets, gross premium underwritten, market share, retention capacity, solvency margin. On every parameter, an insurer was given a score. Till last year, the overall score of a consortium (of insurers) was counted. But this year they said that the average score of a consortium would be counted. So the average score of ICICI Lombard would fall if another private insurer’s score is less. Therefore ICICI Lombard did not bid in a consortium with HDFC Ergo General Insurance but bid alone,” an industry official tod Financial Chronicle.

A senior official of HDFC Ergo General Insurance confirmed that the insurer has failed to qualify for the technical bidding. The airlines will now be sharing information on passenger growth they are projecting, growth in fleet size etc. Insurers would be appointing brokers to conduct road shows in the overseas reinsurance market. The financial bids have to be done by September said another insurance official.

Air India insurance policy is the country’s largest aviation policy and is due for renewal on October 1.-from DigitalFC

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