NIA.100- LEGACY OF A LEADER

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TAKING OFF INTO SPACE

India has launched over 75 satellites until now, and one name that has been associated with the space programme throughout has been New India. It was the pioneer of satellite insurance in India and is still the only underwriter who issues satellite policies.

India's space programme dates back to the mid-1970s and the purpose was to develop indigenous rocket technology in the face of the sanctions imposed by Western nations consequent to its 1974 nuclear test in Pokhran.

Its experimental satellites started with the launch of Aryabhata, built by Indian Space Research Organisation (ISRO) in 1975, Bhaskara I and Bhaskara II in 1979 and 1981, followed by the Rohini series. In 1981 came Ariane Passenger PayLoad Experiment (APPLE) followed by INSAT-1A, the first operational satellite. The Indian space programme was taking off.

INSAT-1A was launched by a Delta rocket in the US in April 1982 but was abandoned in September when its attitude control propellant was exhausted. It had been insured since launch facilities abroad insist on insurance as part of their terms and conditions. New India paid the claim. It had, as always, protected itself fully with reinsurance.

Having experienced the comfort of insurance, the Government and ISRO started considering coverage for INSAT-1B. For the New India team in Bengaluru which had been pursuing the business, there was a breakthrough finally!

Securing India's Space Programme: The New India team led by Chairman cum Managing Director A C Mukherji during the handing over of the claim cheque of US$12 million for INSAT-1A to Chairman, Indian Space Research Organisation, Professor Satish Dhawan in 1983.

Manager, Reinsurance, B C K Menon and Bengaluru Regional Manager K K Menon would visit and revisit ISRO, the prospect. So did Bengaluru Regional Engineer Matthew Varghese. ISRO decided to insure, but only those launches from centres abroad. Later when INSAT-1C failed and INSAT-2D died in orbit, insurance was available as the safety net.

"The reinsurance was difficult to place at first because we were new," says O P Rana, who had returned from New India's Australia operations in the late sixties and was in the Reinsurance Department at Head Office.

To set things rolling the then Secretary, Department of Space, T N Seshan and A C Mukherji, then New India's Chairman cum Managing Director, travelled to London to conclude the reinsurance programme. They met many underwriters and the business was placed in two phases in London and in the US market.

For later programmes New India needed to go only to the main centres of London and Munich and then "the underwriters started to come to India to meet us!"

In the beginning it was a reinsurance-led development and the rates for India were very high. They were reduced as New India gained expertise. Of the subsequent ISRO programmes New India has insured GSAT-10, INSAT-3D and GSAT-7. It has also covered GSAT-16 launched in December 2014 and the pre-launch expenses of GSAT-15 scheduled to be launched in October 2015.

The satellite insurance programme has been a signature achievement for New India and a profitable business too.

A GRACIOUS GUEST

In the hectic 1980s, a sudden, sweet memory was created for the top management of New India.

J R D Tata graciously accepted an invitation to lunch at New India's Head Office and filled a couple of hours with his elegant, yet down-to-earth, presence.

It was 1989 and S V Mony was Chairman cum Managing Director. A decision was made to invite J R D Tata to lunch with the top management of the company. Some old-time New India executives including former Chairman J D Choksi and retired Chairman cum Managing Director V C Vaidya, as well as some clients were also invited.

On the appointed day, the entire Head Office was abuzz with excitement and preparations. Limited though the options were, the Ambassadors, the Marutis and the Premier Padminis were kept ready to bring over the special guest. R D Samarth, then General Manager in charge of the Tied Department, went to Bombay House to meet Tata and his biographer and colleague R M Lala, and escort them to Head Office, barely half a kilometre away.

"I was wondering if he would opt for those ordinary cars," recalls Samarth, as he asked which car Tata would prefer to ride in.

"Young man", said Tata, no doubt with a twinkle in his eye, "is something wrong with your legs?" "And we both walked from Bombay House to New India, just the two of us!" recalls Samarth, now retired at Pune.

"He merrily told me stories about how he would duck in through the side entrance of the New India building (where Air India had an office) to avoid those waiting for him at the main entrance, and how things were in the good old days before nationalisation".

HOSPITALISATION WITHOUT TEARS

In 1985, the then Prime Minister Rajiv Gandhi announced in Parliament that there would soon be Health insurance for individuals. It was a pleasant surprise for the nation, but it was a bigger surprise for the General insurance companies who made haste to create such a policy!

Any insurance policy is priced based on historical claims expenses, costs and profit. Reinsurers provided the data to calculate premium rates and also helped determine the scope and nature of the coverage.

This is how Mediclaim was born, and the Government blessed it with a tax deduction on premium for individuals. All the four public sector General insurance companies launched the policy, sharing the branding. Mediclaim is the sheet anchor of Indian individual hospitalisation insurance even today after 30 years.

The introduction of Mediclaim was an opportunity for New India to innovate again. Since it had a strong Corporate Health insurance portfolio even in the 1960s, it was familiar with this business and introduced new Group schemes. For example, one of the early, popular and much imitated group schemes was Group Mediclaim for Citibank for its credit card holders, a client that is in the New India's fold even today.

Citibank was virtually the only credit card issuer in India in the mid-1980s and had a wealthy and expanding client base. The policy served, in many ways, as the model on which subsequent group policies were based.

In the last decade and a half, Health insurance has been one of the fastest growing classes of business and New India's Health insurance premium in 2014-15 was R3,980.65 crore, a growth of 20.78 per cent over the 2013-14 figure of R3,295.79 crore. It has seen similar growth rates in this portfolio over the last five years.

New India has maintained its position as the largest Health insurer in the country with a 22.63 per cent market share. It is also the largest retail Health insurer in the country

NEW GEN FIRE INSURANCE

In the good old days, the Fire Tariff was given its due respect through market discipline. In 1968, the Tariff Advisory Committee was created. It had four regional committees, each with its own tariff. Then came the idea of one tariff for all of India.

Industrialisation was gathering pace in the country, recalls A S Karkhanis, who joined as Risk Engineer in the Head Office Fire Technical Department in 1959, and rose to head it as Manager in the 1970s. He retired as General Manager of New India.

"Each day there would be a new drawing on my table and we would pore over it to see what they were going to do and what they were not going to do.” Activity was high, he says, "I would travel 25 days a month!"

By the next decade, the nature of the industry underwent great change. Now began the era of mega-industrial plants. So Karkhanis, who had played a role in authoring the Fire Tariff, became part of the team that created the petrochemical tariff in the 1980s under the aegis of General Insurance Corporation of India (GIC). It was so well written that reinsurers were very appreciative!

"One year, we were running short of facultative reinsurance support for the industry as a whole. So GIC decided to send an engineer to visit leading reinsurers such as Munich Re, Swiss Re and Scor to make presentations and gather support," says Karkhanis. "After this visit it became easy," he says, "reinsurers started to contribute."

"In fact, one of the reinsurers had initially declined to participate at all in petrochemical risks. But once it heard the support we got, it wanted to, but we had completed our target."

"They underwrote the people, not the risk," says Karkhanis, underscoring a basic tenet of the General insurance business, especially reinsurance, that it is a relationship business.