The Quint Impact: J&K Govt Scraps Reliance General Insurance Deal

It appears that J&K govt favoured Reliance Insurance over other, more eligible bidders in a recent contract. 

7 min read
The Quint Impact: J&K Govt Scraps Reliance General Insurance Deal

(This story was originally published on The Quint on 4 October. It is being republished in light of the deal of Jammu and Kashmir Group Medical Insurance Policy for government employees with Anil Ambani’s Reliance General Insurance, being scrapped by the J&K government, exactly 20 days after this story was published.)

J&K Governor Satya Pal Malik announced the scrapping of the deal saying “it was full of frauds” which has been established and officers involved identified. Malik said that the entire process has been carried out in a quiet manner and even the tenders were opened on holiday to suit a company, a Kashmir daily reported.


The Group Mediclaim Insurance contract to cover around 400,000 government employees and pensioners was allotted by Governor Satya Pal Malik’s administration to Reliance General Insurance Company (RGIC) at a time when its promoter Anil Ambani was embroiled in the Rs 59,000-crore Rafale deal controversy.

Until September 2018, people in Jammu and Kashmir had their curiosity confined to the purported funding of a French film by one of Ambani’s companies for which the shooting was to be facilitated at the exquisite locales of Ladakh.

MoU Between Private Broker and J&K Govt Missing

It had been widely reported in international media that one company of Ambani’s group had been made the offset partner of the French fighter aircraft manufacturer Dassault Aviation. This was after a French partner of Reliance, VisVires Capital, had financed 15 percent (1.48 million Euros) budget of Rouge International’s film Tout La-Haut, released in December 2017. Rouge International happened to be the production house of the then French President Francois Hollande’s partner, actress Julie Gayet.

A host of reasons generated suspicions of the Jammu and Kashmir government’s insurance contract being pushed for RGIC by Prime Minister Narendra Modi’s establishment in New Delhi.

The contract, that had been left under wraps for months by former Governor NN Vohra, was approved on 31 August 2018 in the first State Administrative Council (SAC) meeting chaired by Governor Malik.

Even as all the major government tenders are floated online on behalf of the Governor or President of India, the Group Mediclaim Insurance was advertised by a private broker, M/S Trinity Reinsurance Brokers Ltd, poorly in a couple of newspapers. IRDA-recognised Trinity was engaged by the J&K government to “design and implement” the Chief Minister’s Group Mediclaim Insurance Policy. All the related documents are available on the Finance Department’s website. The Memorandum of Understanding (MoU) between Trinity and J&K government is conspicuously missing.

Pricing Fixed to Make ‘Reliance’ Eligible

Officials haven’t responded to these questions:

  1. why the insurance tender had not been uploaded on the government portals for e-tenders
  2. why it had not been widely publicised
  3. why it had been floated by a private broker
  4. why the bidders had been asked to send their technical and financial quotations “by hand, courier, speed post or registered post in sealed envelopes”
They won’t even comment on the allegations of the government employees who insist that eligibility criterion in the notification dated 1 June 2018 was lowered from Rs 5,000 crore turnover to Rs 3,000 crore “only to make RGIC eligible”.

The previous notification dated 16 February 2018 which was cancelled in March, had mentioned that only the insurance companies having a footprint in J&K and turnover of Rs 5,000 crore in the financial year 2017-18, would be eligible for participation in the competition.

“There was only one company in the Rs 3,000 crore – Rs 4,000 crore category. The criterion was obviously lowered to make it eligible. It was entertained even as it had no footprint in J&K. Why didn’t they bring it down to Rs 1,000 crore? It would have spurred better competition and the premium per employee would have been not more than Rs 3,000 a year,” a trade union leader who wishes to stay anonymous, argued.


India’s “Best Ever” Health Insurance Policy

The government has allotted the mediclaim insurance contract to RGIC on its quoted premium of Rs 8,776.84 per employee and Rs 22,228 per pensioner. The company has the obligation of providing cashless treatment at 4,700 government-run and private hospitals across India to employees and pensioners of the J&K government to the cap of Rs 6 lakh a year. The policy holder with five dependent family members will be entitled to reimbursement of the expenditure of up to Rs 6 lakh, during hospitalisation.

As the scheme has been made compulsory for all serving employees, they will be getting Rs 3,600 in premium from the government, but it will be optional for the retired employees. Employees of public sector undertakings, autonomous bodies and universities, besides accredited journalists (without any premium support from the government) are also entitled to get themselves plus five dependent family members insured under this policy.

Principal Secretary Finance, Navin Kumar Choudhary, claimed that this was the “best ever” health insurance policy with the “most competitive premium” for employees of any government in India.

“Media has been pretty unfair and much of the coverage about this scheme has been subjective. It’s being projected as if we have given this contract to Reliance on a platter without floating tenders. I was worried that the company shouldn’t back out. Our previous vendor ICICI Lombard had reportedly suffered losses over premium of around Rs 6,200. This time they had quoted as high as Rs 17,692,” Mr Choudhary told The Quint.

What the Principal Secretary of Finance Has to Say

According to Mr Choudhary, three private insurance companies and four PSUs of the Government of India participated in the competition. Two of the PSUs got disqualified in the technical evaluation. The rest of the five bidders quoted the following premium rates:

  1. Reliance General Insurance Company: Rs 8,776.84 (L-1)
  2. National Insurance Company: Rs 11,918.00 (L-2)
  3. ICICI Lombard: Rs 17,691.74 (L-3)
  4. Bajaj Allianz: Rs 23,476.10 (L-4)
  5. United India Assurance: Rs 27,225.00 (L-5)

“Most of the perceptions and judgments in such matters, as also resultant criticism, happen to be wrong. We have put out an exhaustive policy document. It contains a host of conditions and parameters. The number and quality of the empaneled hospitals, number of the family members to be benefitted, whether it is Rs 5 lakh or Rs 6 lakh a year, quality of the services at call centre and web portal, promptness in settling claims and much more is assessed before selecting a vendor. We assess the rates in realm of totality to the best satisfaction of our analysts. We are fully convinced that we have struck the best deal,” Mr Choudhary asserted.


A “Fool-Proof” Exercise

In response to a question over the non-existence of the tender notice on e-tender portals of the J&K government and the poor publicity given to it, Mr Choudhary said: “These big insurance companies are not based in small towns of our state. We called all the majors for a pre-bid meeting and they all had full knowledge of our NIT. They offered different suggestions which we considered on merit. It’s a fully transparent and fool-proof exercise,” he asserted.

Mr Choudhary further claimed that Governor Vohra was never lukewarm or lackadaisical in approving the contract to Reliance. “He has approved it on file. The new governor (Satya Pal Malik) just carried it forward to its logical conclusion,” he said.

One official in the Finance Department added, “Politics is being played on it unnecessarily.” He said a Congress activist had tweeted that it was Rs 11,000-crore contract. This, he claimed, “was just Rs 310 crore a year contract, but extendable to three years”.

Discrepancies are still galore in different claims of the officials in the J&K government. The Principal Secretary of Finance asserted that as many 4,700 government and private hospitals had been empanelled for providing cashless treatment to the insured. The operator on the service provider’s call centre put the number at “around 3,500”, while adding that the process was still in progress. A list of the hospitals provided to accredited journalists mentions just 123 hospitals, mostly the government hospitals at district and sub-district level in the state. The Finance Department’s website carries a list of only 20 private hospitals—just two in Srinagar.

RGIC – A Habitual Defaulter

Leaders of Employees Joint Action Committee (EJAC) claimed that RGIC had no presence in the health insurance sector in J&K. They said that the company had been admonished for its bad track record by different states, particularly the Government of Haryana. In a brazen violation of the contract, it had rejected 1,423 claims.

“It was only after Haryana Chief Minister Manohar Lal Khattar passed orders, blacklisting and initiating proceedings against it through IRDA that the company settled 886 claims and deposited an amount of Rs 8.69 crore with the Haryana government earlier this year. Around the same time, IRDA held back the final approval certificate (R-3 Certificate) without which the company cannot carry out health and medical insurance schemes,” one of the EJAC leaders claimed.

He said that during UPA rule, IRDA had once imposed a fine of Rs 17,500 crore on this company for selling five lakh insurance policies without its knowledge and approval which was subsequently whittled down to Rs 20 lakh.

A Grossly Flawed System

EJAC Jammu President Balwinder Singh has raised questions over the annual premium being THE same (Rs 5,177 by employee and Rs 3,600 by government) for a class-IV employee who takes home just Rs 20,000 and the Chief Secretary whose gross monthly salary was around Rs 3 lakh. Trade union leaders’ demand was enhancement in the monthly medical allowance from Rs 300 to Rs 1,000. It has been fully subsumed in the premium to be paid to RGIC.

“Medical allowance of Rs 300 would take care of our monthly expenditure on routine medicines. This insurance scheme is fully focused on the treatment to be provided during hospitalisation. It’s grossly flawed. How can the company charge Rs 22,228 from pensioners. It should have been equal for all, just Rs 3,000 to 4,000 a month,” said Mohammad Saleem, a middle rung official.

(The writer is a Srinagar-based journalist. He can be reached @ahmedalifayyaz.)

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