Three general insurance companies - ICICI Lombard, Star Health Insurance and New India Assurance - have bid for a lucrative Maharashtra government health insurance scheme for poor, a scheme the general insurance council (GIC) said companies should 'desist' from because of a 'refund' clause.

The GIC is a statutory body under the Indian Insurance Act 1938 and represents all non-life insurers in the country.

There are 22 general insurance companies in India. Most of them abided by the GIC directive but others went ahead and submitted bids for the Rajiv Gandhi Jeevandayi Arogya Yojana (RGJAY) scheme of the Maharashtra government.

RGJAY's CEO, K Venkatesham confirmed to ET that ICICI Lombard, Star Health Insurance, and public sector New India Assurance, are the three final contenders.

ICICI Lombard's bid, ET learns, is the lowest.

Depending on the bid, the successful bidder will get a premium of about Rs 2,000 crore. In response to an ET query ICICI Lombard spokesperson clarified that the company received the GIC directive after it had submitted the bid.

"The communication from GI Council was received consequent to submission of our tender application for RSJY," ICICI Lombard spokesperson said.

The company also said that the directive was recommendatory.

"We would like to clarify that the said communication from GI Council was recommendatory," the spokesperson said.

"We request all the non-life insurance companies to desist from agreeing to the 'refund' clause 14 of Part 1, section A of the scheme," said SL Mohan, secretary general GIC in a letter to all non-life insurers.

The GIC had further referred to an IRDA circular which advise insurance firms not to agree to profit sharing while bidding for a tender.

Under the RGJAY scheme, the insurers would have to refund 90% of the left over surplus to the government after claims at the end of the policy period.

Other non-life insurers are not happy with some of the companies going ahead despite the GIC directive and have decided to take up the issue with the insurance regulator Insurance Regulatory and Development Authority (IRDA) and state government of Maharashtra.