On July 26, 2019, CCI dismissed allegations made by Indian Chemical Council (‘Informant’) against General Insurance Corporation of India (‘GIC’) of contravention of the provisions of Section 4 of the Act. [1]

The allegations pertain to a circular issued by the GIC to all its ceding insurance companies with whom it has entered into reinsurance treaties, notifying certain amendments to the method of calculating premium within the fire insurance segment. This resulted in a very high charge of premium compared to the premium prior to the circular. The Informant further alleged that such amendments to the premium calculation parameters: (i) lacked reasonable justifications; (ii) had no link to the underlying costs of providing reinsurance services; (iii) lacked risk management practices and commercial logic; and (iv) were against the ‘Guidelines for pricing a risk’ issued by the Insurance Regulatory and Development Authority of India (‘IRDAI’).

CCI made a reference to IRDAI for seeking its opinion on the allegations. IRDAI gave its opinion that the circular is in consonance with the provisions of the Insurance Act, 1938 and the relevant regulations issued by IRDAI.

In its analysis of the allegations, CCI held that: (i) a pure pricing decision cannot be said to give rise to any competition concern unless it is a manifestation of abuse of dominant position; (ii) the circular, neither prevents a general insurance company/ insurer to offer premium at lower rates to a primary insured/ policy holder nor does it prevent general insurance company from opting for an alternate reinsurance company, other than GIC; and (iii) the general insurance companies have the freedom to decide their premium rates as well as their reinsurer, irrespective of the said circular.

Accordingly, CCI did not find any contravention of the provisions of Section 4 of the Act against GIC.

[1] Case N0. 12 of 2019.