DOF orders selection of 2 winners in Napocor insurance policy bidding

The Department of Finance (DOF) has issued an order saying that there should be two winning brokers in the public bidding for the $6.5-billion main industrial all-risk policy reinsurance contract off the National Power Corp. (Napocor).

Sources said Finance Secretary Isidro Camacho instructed the bidding committee to select two brokers from the bidders of the contract "to create a competitive environment... allowing for competitive conditions of the reinsurance policy."

Camacho, who is also the chairman of the DOF-Napocor-GSIS joint bidding committee, further instructed that insurance companies and/or brokers "whose local affiliates have standing cases in the Philippines are disqualified."

The same sources said two brokers could create an environment wherein they could get better deals with international reinsurance companies. "Opportunities for collusion or corruption might be reduced if not altogether eliminated," finance officials reportedly added.

The awarding of the $6.5-billion all-risk policy contract has been delayed due to a squabble between the Government Security and Insurance System (GSIS) and Napocor. The GSIS is mandated by law to act as insurer of all government assets.

However, the GSIS does not have the resources to pay claims should anything happen to Napocor’s assets. While it was agreed that international reinsurers would be tapped, the Napocor wanted to have a direct hand in the bidding process, which the GSIS rejected.

The conflict was later resolved by forming a joint bidding committee among the three government entities. The Insurance Commission (IC) likewise had been invited as an observer.

The original contract expired early last year and a one-year reinsurance contract was negotiated with Heath Lambert of the UK.

So far, the new contract had not been awarded as a "failure of bid" was declared last Jan. 23. The second bidding process is scheduled today, Jan. 27.

Brokers that had earlier participated in the bidding process were Jardine Lloyd Thompson Insurance Brokers, GTS Insurance and Reinsurance Brokers Inc., Aon Reinsurance Brokers Asia PTE Ltd., Hubertus Clausius Insurance and Reinsurance Brokers Inc., PWS East Asia PTE Ltd. Singapore, Alexander Forbes Philippines Risk Services Inc., Marsh Philippines, and Ultraman Reinsurance Brokers Inc.