Search the Internet           Tips

'The potential of the Indian market is totally untapped'

Part I: 'Yashwant Sinha should allow the insurance industry to develop and see how things work out'

As an exclusive reinsurer, what do you see as your major challenges?

In the context of the Indian market, I will have to try and see that I work as a consultant by way of determining the pricing, by way of transfer of knowledge in the areas of product and by way of transfer of risks to the direct players.

We have to also ensure that the natural retention within the country is maximised so that the capacity is available for anybody who requires the insurance or transfer of their own risks for the insurer.

We will also have to do other market information supply services for risk inspection, risk transfer technologies. In due course of time, we will gather sufficient expertise in any of the alternative risk transfer technologies.

It is not always possible to raise the funds in your balance sheet -- so you may have to create situations where you can create capacities outside your balance sheet, particularly in the area of catastrophic risk management and other things. So we have to develop all these areas and be useful to direct insurers to the extent possible.

Do you think GIC is well placed to rise to these challenges? Or, are you expecting any help from the government in term of funds, etc?

We don't need much finance. But, of course, additional funding is always welcome to anyone. For immediate requirements in the Indian market, I don't think there is a need for more finance. But we will need hard currency financing outside India.

We would need a lot of support from the government to encourage our workforce to go to various parts of the world, or any part which can give us knowledge, acquire it, and learn to utilise it in the Indian context. We will have to send a large number of people to various parts of the world to pick up expertise.

You have done that in the past. What are the results?

Capabilities have been enhanced a lot. Unfortunately, most of these people who, due to my efforts, have been trained in various technical areas like energy, aviation, marketing, statistical analysis, reinsurance... most of them have now gone to private players.

Some of them come and thank me for offering them an opportunity to learn these things. But then we have a large number of people who are intelligent, sharp, who have the ability to grasp new concepts.

You are known for your anti-downsizing stance, so to say. Do you still hold the stance?

I've to say something about the market before I answer your question.

The potential of the Indian market is totally untapped. Our efforts to do crop insurance have been very laudable, but a lot more can be done, because we are basically an agricultural country.

Healthcare segment is practically untapped. Whatever indemnity health insurance exists, it is in metro areas and large towns. But a large section of population lives outside metros and towns.

I believe viable, profitable health schemes can be developed. I always give the example of cattle insurance. When we forayed into that segment, everybody said it is an unviable proposition and we should not start it.

Thanks to our predecessors, we started this. And then, we lost a lot of money in the first two, three years. But then we learned how to tackle the business. Things like taking advantage of veterinary doctors's expertise, branding of various cattle, considering the life-span of an animal... and now, after years, cattle insurance is a very profitable business. It still is.

If that can be done for cattle which do not speak any language, I think I have a much better chance in succeeding in health insurance for human beings.

India has a billion people. Theoretically, if every person spends about 20 rupees a year, we would have a premium of Rs 20 billion. I don't know the total cost of health management today but whatever it is, with appropriate changes in premium rates as the surplus increases, we can manage it very successfully for everyone concerned. But you need to have a health service acceptable to the people.

Coming back to your question, we need people to do this. But then, these people must be properly trained and focused and given the necessary level of empowerment.

But look at our structure. We have a large structure of what we call Class III, which is the clerical level. When we go to recruit them -- and this has been my point all along; the Class III feels I'm their supporter which I'm, at the same time I'm doing it for the organisation -- I find we have a large number of people who are all educated. We insist on each of them being at least a graduate.

Through these all-India recruitment processes, we do a lot of selections. By and large, these people are excellent with tremendous motivation. These people are meritorious, and we pay them well. They are not complaining about wages. What they complain about is that they are all educated, young people who have joined the industry with zeal but now are being used as just another equipment.

Today, they do the basic work. But we have not empowered them to take decisions. This is what prompted me to propose the use of clerical cadre employees for marketing. We have a problem. The number of people in marketing is decreasing because of death, resignations or retirement.

Yesterday, we could manage the whole of Maharashtra, most of Gujarat, from an office in Bombay. As the market expands, today everybody wants insurance at their doorstep.

So we don't have enough marketing people. Now I've got this people who are not doing anything substantial, who are frustrated, who are capable of doing things. And I say, 'Hey, do you want to go to the marketing side? If you succeed, here is what you can earn. But listen, if you fail, don't come back.'

Some 10,000 people responded voluntarily. There was no force. They are prepared to take the challenges. Whatever I've been saying is fully supported by this response. People are prepared to take up challenges to earn along with opportunities. So if you have this kind of people, what are you worried about? Why should you get rid of the people?

I got the proposal passed by the board. We had a lot of lobbying, thinking, explaining to do. We issued the instructions. But then, someone got a legal stay order from Madras on a very limited issue which dragged on, in my opinion, unnecessarily for more than a year. It was released only three months ago.

New India Assurance has implemented it immediately because it has done all the preparation by then, unlike other companies.

As an issue, I think that was a tremendous solution to the problems that we have -- using the same resources to solve the problems of resources, without going in for additional resources, and making all of them productive.

Right from the time I was a junior officer, I believed that success or failure of an office or a company depends not so much on brilliant people as it does on the number of productive people you have.

Part III: 'I don't think having 2,000 offices is going to be a strength'

From RediffSearch: Insurance sites

Money

Interviews

Tell us what you think of this interview