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

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

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

How is GIC shaping up for the new framework in India?

As of November 7, 2000 GIC has, under the instructions from the Government of India, dissociated itself from matters pertaining to personnel, investment and insurance of the four public sector general insurance companies.

Therefore, we are not involved in giving any directions or laying down policies for the four companies.

We are now trying to plan as to how we can evolve ourselves into a national insurer to which level we have been elevated by the pronouncement of the government through a gazette notification.

We have to therefore necessarily look to the development of the indirect business in India by the four government-owned companies as also the new players. We have to try and ensure the government's objective of compliance with rules and maximum retention within the country, to at least the level achieved in 1999-2000 which was about 91 per cent.

In this regard, the rules and regulations of the IRDA will be very important. And if there is any failure in this regard, it will necessarily be the result of inadequacies within ourselves as also within the rules and regulations framed by the IRDA.

So GIC is actively trying to discuss with the IRDA and its members, and drawing the attention of the members to the concerns we have about the consequences of the rules and regulations.

There was a time when you were the superboss, so to say, of all the four public sector general insurance companies. How does it feel when the media interprets that your powers have been curtailed?

I think it's part of life. It's part of the growing up process. It's like personal life: the other day, my children were small. I used to say, 'Hey sit down', 'Hey don't go out', 'Go and have your dinner', 'Wash your hands'. Now they are grown up, educated, working. I can't dare talk to them like that. Quite often, I have to listen to them and agree with them rather than dictating my own wishes.

Likewise in career do. I'm quite happy with this new role. There is a tremendous amount of challenge in front of me -- to market the GIC outside India where I've to fight it out, bereft of government patronage, bereft of knowledge of the society and the familiar environment.

I've to fight it out without resources and men, and create some standing... I think that's a great challenge.

What would be your fatherly advice to the four insurance companies?

Financially, they are very strong. They must take advantage of it. I do believe there is a necessity of looking very closely at their human resources development and deployment.

I do not think the structure that we have as on date on placement of human resources can survive the test of time today. You can't possibly have 7-8-9-10 layers. Decision-making gets slowed down. I do not think we can have a large number of people who are not empowered and who are not contributing to the productivity in the real sense of the term.

They have to really look at computerisation, not in yesterday's context but in the context of tomorrow and the day after. The opportunities that are being created with optic fibre, cable networking, etc, where you can transfer voice, data and image in a few seconds at a minimal cost, would necessarily have to make them look at the channels that they have had.

I don't think having 2,000 offices is going to be a strength. They also have to look at as early as possible the segmentation of the business. What business, when, where, how, what rate, how much to retain, how much to pass on.... So managing the business rather than procuring the business only, looking at the bottomline rather than the volume...that's what they should be doing.

I wouldn't say they have nothing to fear as foreign companies enter India. It takes a long time to build up this strength. But it takes a very short time to lose this strength.

I'm quite confident that they have the necessary capabilities to face the challenge.

How do you look back on the government's response to proposals for restructuring GIC?

I don't think there is any point in discussing all this. Now it is past. The government has taken a decision. Whether individually one is happy or unhappy is irrelevant. We have to see that these decisions are complied with.

The government must have considered all the pros and cons. They have taken a decision. So there is no point in discussing this now.

Financials institutions like IDBI and ICICI talk of transforming themselves into one-stop financial supermarkets. A few FIs have in fact obtained licences, so to say, to start insurance business. Why has GIC abandoned plans to foray into banking?

We are a reinsurance company. We have no intention of doing anything of that sort, including being a direct company. I'm totally ruling it out.

The reinsurance business itself is a very complicated field and requires a very high level of core expertise. I don't think that core expertise gives us any leverage to enter banking or any other financial service.

Yes, when GIC was the holding company, we did have such plans. As a direct company, for the purpose of maximising the marketing channels, and particularly if you have to focus on a consumer, you have to centralise your marketing efforts with the consumer as the centre. And all your activities have to revolved around the consumer.

Then, it is always advisable to have all these financial services -- banking, sharebroking, mutual funds, housing loans, car loans -- that the consumer requires. So, if you want to be a major player in the market, then you take your expertise to a client and focus that on the client so that he does not go out of your ambit of customisation

I believe there is a proposal to bring LIC on the boards of the four general insurance companies. What could be the rationale behind the move?

LIC? I've not heard about such a proposal. The LIC chairman is on the GIC board. And the GIC chairman is on the LIC board.

The rationale behind such a move, if there is one, would be the customer focus. LIC has a tremendous customer base and a huge agency force. Exchange of views and understanding how things are managed on either side is always helpful to direct companies.

There was a time when the GIC family had 150 products among which only 12 or so sold really well. When you look back, what do you think went wrong and why?

We were driven by certain different motivations. We were driven by the need of the government, rather Parliament and parliamentarians, than business needs.

For example, we created a policy called Farmers Package Policy at the behest of one of the then central ministers. The idea was very good. The idea was to offer a package policy to each farmer so that he can in one policy get all the insurance benefits.

What happened was the farmers had no ability to purchase such products. More than that, the needs of farmers were not looked into. So we tried to sell size 11 to every farmer without considering whether their pockets will allow it, or whether their feet would fit in to the shoes. It was a flop.

A beautiful policy was created for the benefit of musicians who play instruments. We figured out that if an instrumental player loses his one hand or fingers, he actually loses all his earning capacity for the rest of his life. So the hand should be looked at as a prime supporter of life-giving means and create a policy for that.

I guess only ten policies were sold over five years. But the cost of producing that policy and maintaining that policy was enormous.

I can go on giving hundreds of examples. There were television policies, race horse policies... We did not go into the details of who and where is the customer. Somebody wanted something to be done, so we created them (policies) and made them available to all our offices.

Introduction of a product is a difficult proposition. But in our case withdrawal of a product is more difficult. Your instructions have to go to each and every office which is not the fastest way to do things.

And each and every office had to abide by these instructions. Any such a move requires a certain amount of additional effort which does not give them any result. So certain amount of regulation is required.

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