The year 2001-02 was a year of man-made disasters. 11th September 2001 would perhaps remain in the memories of insurers world over as the most unforgettable day in the annals of insurance. Not so much because it exposed the vulnerability of even super powers to the lingering threats of terrorism but because it necessitated the insurers to create special funds to meet catastrophic losses. The theory of Probable Maximum Loss was re-examined and the reinsurance market hardened even among recessionary trends. Whether it is 11th September or 13th December, one thing that clearly emerges is that the world has to meet the growing hands of terrorism and the insurers have to meet the growing demands of the insuring public to meet such catastrophic losses.

Our country did not have to face any serious natural disasters like the Gujarat Earthquake during 2000-01 or the Orissa Super Cyclone of the year before. Gujarat, however, remained in the news for the raging violence, which resulted in 597 claims for our Company involving a sum of Rs.31.83 crores up to 31st March 2002.

At a micro level, our Company’s performances in several spheres were excellent. The business of the Company grew at a healthy 11.2% and the claims experience in all segments except Motor remained well below the average level in the last few years. It is paradoxical that despite such stupendous performance, we should end up showing a net loss in our books. During 2001-02, an exercise was undertaken to compare the levels of outstanding provisions in Motor Third Party to the levels of Paid Claims. The study and the subsequent actuarial valuations revealed that there was a need to enhance the provisions, over and above what has been provided for by the Operating Offices, by about Rs.308 crores.

Similarly, fresh actuarial valuation reflected a need to provide an additional Rs.88.94 crores on account of Pension, Gratuity and Leave Salary, over and above the previous year’s levels.
All these have cumulatively led to a final loss of Rs.235.48 crores. Though declaration of a net loss reflects great concern from several quarters, at the end of the day, we have the satisfaction that all known liabilities have been adequately provided for.

Some of our Business Units are perennial loss making units and we have asked for a Management Audit of all perennial loss making Divisions to be done forthwith. The results of the audit, when finally compiled, are likely to throw certain interesting features in our underwriting pattern. This is the first time that a study of this nature is undertaken by our Company. With the help of the results of this audit, we plan to fine-tune our corporate strategy on underwriting. More such audits are underway not only to identify loss-making units, but also to look into the reasons for the loss and to rectify the faults in the system.

The current year 2002-03 promises to be good for our company. There is a good growth of premiums in absolute terms. The Incurred Claims have not shown any major deviation from the past. Within the current year, our project of obtaining and installing an Integrated Non-Life Insurance Application Software (INLIAS) will be making much headway. The overall efficiency standard at operational level is likely to grow by leaps and bounds. The implementation of the “Transfer and Mobility” Policy will ensure that there is equitable distribution of workforce in to more productive channels. Our attempts to enlist the support of banks and other financial institutions are expected to provide further impetus to the already good growth in premium.
We have identified three key areas for our company to concentrate upon in the current year, namely, 

1. Increased speed of documentation and setting claims,
2. Positive approach to customer grievance handling, and
3. Proper and impartial evaluation of the quality of services rendered by Surveyors and Panel Advocates.

A plan of action is being drawn out to implement the above. We are sure that implementation of the action plan on a war footing will enhance our Company’s image as a customer friendly Company. Growth and profitability do not come as a matter of chance but by design and execution only. Time has now come for all our employees in all cadres to unite in our action to enhance the prestige of our company. We recall the following verses in the ever-venerable Bhagavad-Gita:

“The right is to work only, but never to the fruits thereof. Be not instrumental in making your actions bear fruit, nor let your attachment be to inaction.”
“Therefore, go on efficiently doing your duty without attachment. Doing work without attachment, man attains the Supreme.”
These universally applicable verses are all the more relevant in the present context of our industry and our Company in particular.

Growth of Business
The Gross Premium has shown an increase from Rs.2247.10 crores during 2000-01 to Rs.2498.63 crores during 2001-02 thereby recording a growth of 11.19%. A Department-wise analysis shows that there is high growth of premiums in Marine Hull and Aviation, good growth rate in Fire, Workmen Compensation, Health and Liability and low growth or fall in premium in Marine Cargo, Motor, Engineering, Personal Accident and Other Miscellaneous Insurance.

Foreign Operations
The company’s foreign operations in Nepal, Dubai, Kuwait and the Run-off account in London together yielded a Gross Direct Premium of Rs.52.15 crores during the year 2001-02 as against Rs. 48.09 crores during the previous year. The net Premium was higher at Rs.58.12 crores as against Rs.50.59 crores last year and the net Incurred Claims during this year in respect of foreign operations were Rs.37.49 crores with a net Incurred Claims Ratio of 64.5% (Rs.41.74 crores at 82.5% for the last year).

Plans for 2002-03
During the current year 2002-03, as against the target of Rs.2750 crores (GDPI) budgeted by us, we have achieved a completion of Rs.1276 .21 crores up to August 2002 at a growth rate of 15.32% over the premium figures up to August 2001. Our target for 2002-03 envisages a growth rate of 12.41%. The growth scenario is quite encouraging.

The Company’s focus for 2002-03 will continue to be “Profitable Growth” and greater emphasis will be laid on acquiring the more profitable Fire, Marine and Engineering premiums. Although the claims experience in Mediclaim causes concern to us, we feel that the experience will improve when the market penetration expands. Our emphasis would continue to be on procuring more of personal lines and rural sector premiums as well.
We are sure that these concerted steps would automatically reduce dependence on Motor business.

During the current year, special Management Audits of selected chronic loss making offices were conducted. The results of these Audits, still under compilation, portray some interesting revelations that would be very helpful in sharpening the focus on the areas to concentrate upon. This study would also assist us in adjusting the prices of our products to the extent possible thereby making more profitable products more competitive. Cross-product subsidization would therefore get minimized. 

The year 2002-03 also saw the advent of Third Party Administrators (TPAs) in Health Insurance and cashless Mediclaims. Our Company has already engaged the services of a few TPAs in various Zones and this we feel would reduce the cost to us and increase the satisfaction to the customer.

We are also in the process of promoting tie-up with banks and other financial institutions for selling our products. Simultaneous efforts are also on to redeploy our manpower in more productive segments of work after skill development and upgradation training.