RACE FOR RPL COVER HOTS UP

Mumbai: Faced with cut-throat competition post-detariffing, the country's general insurers are vying to provide the first cover to Mukesh Ambani's Rs 22,000-crore Reliance Petroleum Ltd in Jamnagar.

The race among insurance Companies, which have slashed premia to poach rivals' business in the recent past to corner Reliance's refinery cover, has reached fever pitch. The refinery will be commissioned in December 2008, three years after its inception.

HDFC Ergo General Insurance, a relatively-new entrant in India's recently-privatised insurance industry, has thrown its gauntlet into the ring to bag the account. Ergo, a subsidiary of the world's second-largest reinsurer Munich Re, joined hands with HDFC after US-based Chubb quit an earlier joint venture - HDFC Chubb General Insurance.
HDFC Ergo's new chief executive officer, Ritesh Kumar, has led a top team of Reliance Industries officials and an insurance broker to Munich to seek a special arrangement with Munich Re for providing cover to this mega project.

The country's largest private sector general insurer,
ICICI Lombard General Insurance, is the leader in providing insurance cover to the main projects of Reliance Industries, which has the largest private sector insurable assets in the country. The general insurance company floated by the second largest bank in the country, ICICI Bank, had managed to snatch away the leadership position to provide covers to the RIL's three existing projects from state-owned New India Assurance in 2007-08.

Market sources point out that ICICI Lombard General is definitely in the race to bag the RPL portfolio and would also respond adequately to the emerging competition.
However, observers point out the role of Munich Re in the whole affair. Munich Re, which has been operating as a reinsurer in India and has been providing reinsurance support to Reliance Industries, is now having direct role as a possible insurer to RPL, as Ergo is its own subsidiary. Munich Re while bringing its subsidiary Ergo to India had assured the other insurers which normally have reinsurance arrangement with the company (Munich Re) that it will maintain a firewall against its reinsurance business and insurance business.

But the way HDFC Ergo has led a team of RIL officials to Munich Re's head office indicates that Munich Re is not standing by its own assurance to the Indian market.

Source: The Financial Express