Raising the level of competition among private insurance players for the railway insurance scheme, the Railways has invited as many as 20 parties to bid for providing insurance cover during the next one year.

Last year, ICICI [Get Quote] Lombard had bagged the offer, battling five other private players.

This year's tenders will be opened on September 1, sources in the Railway Ministry said, adding that invitations have been sent to about 20 companies this time.

The insurance cover will be from September 20 this year to September 19 next year.

The passenger insurance scheme of Indian Railways covers railway passengers against death or injury resulting from rail accidents or untoward incidents as per the Railway Act of 1989.

The Railways began inviting private parties to provide insurance cover about three years back in keeping with its mandate.

At present, compensation payable in case of death is Rs 400,000 and in case of injury Rs 32,000 to Rs 400,000 depending on the nature of injury.

The scheme will extend to Indian Railways, Metro Railway (Kolkata) and Konkan Railway Corporation [Get Quote] Limited.

Railway passengers holding a valid ticket, railway pass, platform ticket and railway men on duty will be covered under the scheme.

Besides, children below five years of age travelling with bonafide ticket holder, pass holders, platform ticket holders in waiting rooms, cloak rooms, booking offices and railway platforms who become victims of untoward incidents will also be covered. 

The insurance company selected will be liable to pay only compensation.

Interest, if any, awarded by the Railway Claims Tribunal, or compensation for loss of luggage or compensation enhanced to more than Rs 400,000 will not be covered under the insurance scheme.

The total premium to be paid to the insurance company will be based on number of passengers travelling on Indian Railways, Metro Rail (Kolkata) and Konkan Railway during the preceding year and number of platform ticket issued over Indian Railways and Konkan Railway during the period.

According to Railways, some 683.31 crore (Rs 6.83 billion) passengers bought tickets, including platform tickets in 2007-08.