Competition Commission rejects complaint against General Insurance Corporation of India

New Delhi: Competition Commission of India (CCI) has rejected multiple allegations of unfair business practices made against General Insurance Corporation of India NSE 0.34 % (GIC Re), including those relating to premiums. The watchdog considered 'market for provision of reinsurance services in India' as the relevant one for assessing the allegations.

One of the primary grievance in the complaint filed by the Automotive Tyres Manufacturers Association was about alleged increase in reinsurance premium charged to general insurance companies. In its 11-page order passed on Wednesday, the regulator said the informant has merely alleged increase in premium rates by GIC Re as "excessive pricing" without providing any basis.

"Setting of premium rates for reinsurance policies would be based on many factors and without proper evidence being furnished before the Commission, the allegations of 'excessive pricing/ unfair pricing' cannot be analysed. Therefore, no case is made out against GIC Re on this count," it said. The watchdog also rejected allegations that the company was indulging in resale price maintenance practice, saying it appears that the insurance companies have commercial freedom to price their policy as they deem fit according to the market conditions and GIC Re has not placed any restriction.

"Accordingly, the Commission is of the view that allegations of resale price maintenance on the part of the OP, in terms of Section 3(4)(e) of the Act, are not established," the order noted. Section 3 of the Competition Act pertains to anti-competitive agreements.

Another allegation was that GIC Re recently directed insurance companies to not cover any direct or indirect losses caused by reasons related to contagious disease like COVID-19. However, GIC Re submitted that exclusion of any direct or indirect loss by infectious or contagious disease existed even prior to the onset of the COVID-19 pandemic.

According to the regulator, it appears that the the position pre and post COVID-19 pandemic remains unchanged as far as the exclusion of contagious diseases is concerned and the insurance companies are entirely free to offer any kind of insurance to the policyholders. "Therefore, any decision by GIC Re in this regard cannot be termed as 'refusal to deal' in terms of Section 3(4)(d) of the Act," it noted.

As per the watchdog, the informant has failed to adduce any material in support of its allegation that insurance companies are using the GIC Re as a platform to exchange sensitive information, including information on prices which may facilitate price fixing or GIC Re is otherwise facilitating any price fixing between the insurance companies. "GIC has categorically stated that the insurance companies have commercial freedom to price their policy as they deem fit and GIC has not placed any restriction on them in terms of price or coverage of risk.

"Therefore, the allegation of cartel arrangement between GIC Re and insurance companies is also not made out," CCI said.

Sorce: The Economic Times