The discovery of major irregularities in the delivery of Centrally sponsored insurance and health schemes for farmers and artisans by ICICI Lombard GIC Ltd. suggests poor supervision of key welfare programmes intended for the rural poor is leading to the ‘direct cash transfer’ of money from the exchequer to private insurance companies.

Departmental inquiries have established that ICICI Lombard — India’s largest private sector insurance company — floated ghost beneficiaries under various welfare schemes of the Textiles Ministry, the Rashtriya Swasthya Bima Yojana (RSBY) and the Weather Based Crop Insurance Scheme (WBCIS) of the Agriculture Ministry. The losses, though not yet fully computed, are believed to run into crores of rupees.

The Textiles Ministry has already directed ICICI Lombard to settle claims and return the premiums that had been paid by the government for a large number of bogus beneficiaries.

ICICI Lombard was awarded a contract to implement various government schemes, including the Rajiv Gandhi Shilpi Swasthya Bima Yojana (RGSSBY), the Comprehensive Health Insurance Scheme (HIS), the RSBY and the WBCIS, following a competitive bidding process.

Under these schemes, 75-90 per cent of the premium is paid by the Central government, and the balance by the beneficiaries; in some cases, the beneficiary share is paid by the State governments. Eligible individuals are identified by ICICI Lombard and are certified by the government. As per policy guidelines, the implementing agency, ICICI Lombard in this case, was given a target of enrolling a minimum number of people within a year. It becomes important for the agency to achieve the target to make it eligible and competitive for next year’s bidding process.

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