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'Yashwant Sinha may allow the insurance industry to develop and see how things work out'

When everyone advocated flab-cutting to take on the challenge of private insurance players, insurance expert Debadatta Sengupta, 58, had other ideas.

As chairman of the General Insurance Corporation of India, the erstwhile parent of the four public sector general insurance companies, and before that as chairman of New India Assurance, Sengupta endeared himself to employees. The workforce should not be downsized but re-deployed in new businesses, he had advocated.

Just as he geared up to introduce innovative HRD practices, the government liberalised the insurance sector, and decided to demerge GIC subsidiaries and make the parent a pure reinsurance player in November 2000.

On the one hand, this meant Sengupta's domain of power shrunk dramatically; on the other, it brought forth a fresh challenge of making GIC a world-class global reinsurance player.

In an exclusive interview with Associate Editor Y Siva Sankar, Sengupta delineates GIC's global plans, looks at the evolving insurance industry in India, and recounts what went wrong -- and right -- with the State-controlled general insurance apparatus under GIC.

Budget 2001 is coming up. What are your expectations vis-a-vis the insurance industry?

If the finance minister let us alone as we are, I will be very happy myself. But it does not seem he will (do so) this time.

There are some apprehensions but I'd not like to open up now. But, yes, we don't have major problems.

I think the government has been more than kind to the insurance companies throughout.

I feel sometimes that the honourable Yashwant Sinha may allow the insurance industry to develop and see how things work out. If you go by past experience, you will realise that if you do too many things together, you may land in some other major problems unwittingly.

Has any of the private insurance players's approach to business impressed you?

I have not met with them as yet. I don't want to draw conclusions from secondary information like media reports.

I'd like to interact with them before forming an opinion. But I had occasion to look at the business plan of a private insurance company. And boy, it looked to me as very pragmatic.

If they pursue it in right earnest, at least one of the erstwhile subsidiaries would be in difficulty. For obvious reasons, I do not want to mention the names here.

Do you agree with the view that the Insurance Regulatory Development Authority is not fully in sync with the ground reality, that it tends to regulate the insurance industry too much?

It is an unfair thing to say. There are some exceptionally good practitioners of insurance business in IRDA. But, my personal feeling is that they are given to making too many rules in an era which is becoming liberalised, customised.

The kind of rules that are being made come from the old bureaucratic system of putting the red balls in the red box and the white balls in the white box. Business does not operate that way. You must give companies flexibility. The rules should allow that. If the rules prohibit that, how do you develop your market?

So you go into this nutshell, this closed atmosphere of maximising your profits, which is neither good for the company nor good for the market. But it is an evolving process, I'm sure it will change.

I feel IRDA can be a little more participative. I mean, IRDA somehow does not have confidence in the existing players or their ability to give right advice. So we have a large number of retired executives... maybe I'm a little biased against these people....

Wherever the general insurance market has progressed, flexible norms and rules have always prevailed there. The moment the rules were made too stringent, the market sank.

So much so that the country which has been doing insurance and reinsurance business for decades, and has still today the largest expertise, namely England, they have today demolished insurance regulatory service. They merged it with other financial services.

Coming to our country, you see SEBI. It is slowly evolving into a parent, an observer, rather than the earlier days of 'this can't be done, that can't be done', the hard taskmaster role. That is why we see development in equity market and other financial markets.

There is this Leon Festinger's theory of... I think that... to nurture a child for a productive growth is not to observe him 24 hours a day but to give him the correct dandas (canings) and laddus (sweets) at appropriate times, rather than laying down 'do this, do that' all the time.

That's my personal feeling. IRDA chairman N Rangachary is a much more experienced and knowledgeable person. I'm probably talking from the practitioner's point of view....

By and large, there is a consensus amongst the insurance industry, even the new players, that things are not bad.

What are you doing to realise your aspirations to become a global reinsurance player?

We will be going global by way of reinsurance transactions. Our first representative outside of India is being placed in London very soon, probably in the next 15 days.

We are going to Russia very soon to enter into an agreement of reinsurance exchanges between GIC and one of the large companies in Russia.

We have plans to expand our business in Malaysia, Thailand, Korea, Taiwan, the Middle East, Africa, South America, the erstwhile CCS countries as far as possible.

As we perceive, there is no point in trying to do any business in North America and Europe because very large companies are already present there for a long time and they are all strong financially, well established and well located.

In the areas that I have mentioned, we have some advantages which have to be exploited. But we will operate as a reinsurance company.

The erstwhile subsidiaries of GIC, particularly New India Assurance, have agreed to extend their co-operation in this matter from their overseas branches.

We want to benchmark ourselves with the world market. Within the world market, we will benchmark GIC with the Asian market. I've a very good benchmark coming up which we can use for the next 20 years -- China. Similarly protected market, similarly opening up. We are sort of adopting different routes.

I have all these rules and regulations (points to pillars of thick books and journals on his table); we are paying $ 10,000 per year to be updated all about rules and regulations.

You would be surprised to see the amount of expertise that we have within ourselves. Which is acknowledged by outside players but unfortunately not acknowledged by our own people.

I don't know why this is so. Rabindranath Tagore had to go out to publish his books to become a Nobel laureate and then get into India's Hall of Fame. I suppose it's inherent in India.

I know for a fact that the whole of the Middle East is manned by Indian colleagues. They have replaced the earlier expatriates from England, Germany and other places. And they are doing an excellent job.

And I also know for a fact that in Switzerland or Germany, Indian insurance experts, provided they know the local language, are lapped up like lollipops. They have extremely high regard for Indian expertise. Indians are very dynamic; they are not bound by one-track specialisation.

A street-side automobile mechanic in India can repair a Fiat of 1950 and can also repair a 1988 Hyundai. But if you take it to a mechanic in England or elsewhere in Europe, they will say, 'Go to that dealer, he knows Hyundai'. So there are two ways of looking at everything.

Part II: 'The potential of the Indian market is totally untapped'

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