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Privatise or be damned

Four months ago, I became a piece of statistics. It happened at a crossing near Lodhi Road, New Delhi. The same place where a drunken youth driving an unregistered BMW killed half a dozen people almost a year ago. It is a difficult crossing with sweeping turns and lateral vision restricted by trees planted on traffic islands. At night, it's a death-trap for every second driver in Delhi jumps the lights.

I was a pillion rider on a bike. A dark-green Esteem shot its blinding lights, and drove rally-style on the wrong side of the hidden bend at 100km/hr plus. With zero reaction time, my friend turned the bike 90 degrees. It spun. I was thrown off. He was trapped underneath. The Esteem shot through, missing us by six inches.

We were both wearing helmets. My friend was left with broken toes, a broken rib and a cut Achilles tendon. I had a smashed right wrist and two broken fingers on my left hand. At the hospital, they asked about Mediclaim coverage. This is the only Indian insurance policy that covers medicare.

But it made no difference. To be eligible for Mediclaim, we would have to stay overnight. The injuries were not "serious" enough. They plastered both my hands, my friend's foot, strapped up his ribs and discharged us.

A couple of days before my accident my nephew, who is studying in the USA, dislocated his shoulder. The ambulance service that picked him up had called the local hospitals in advance to ascertain their agreements with his specific insurer. They took him in, reset his shoulder, and let him loose. He received his claim cheque three days later.

My attitude to insurance changed that fateful night. Earlier, I had known, as a student of economic-history, that insurance was the highest-growing global business through a 150 year-period that spanned the entire 19th century and the early 20th. More than that, it had created enormous positive externalities by cushioning risky ventures like shipping and exploration that opened up world trade. Insurance, with its unique access to low-cost long-term funding, also financed the basic infrastructure of the developed world.

I knew that the Indian consumer had been ripped off by the Life Insurance Corporation's refusal to recalculate premiums and update tables through a decade when average life-expectancy grew by 3 years. I knew Indian claims took four months to process on average, whereas they took 48 hours elsewhere. I knew that Indian insurance did not have Y2K problems because it wasn't computerised. I knew that I couldn't buy a specific policy to cover a rail or air journey. I had argued that Indian infrastructure would remain a half-assed joke until insurance ceased to be a tax-dodge and started being a business.

That night imbibed knowledge turned into personal experience. I realised that the only medical cover I could possess would not cover injuries that crippled me for six weeks. I learnt that I might forgo my claim in an emergency if I was forced into a hospital that Mediclaim did not recognise. If I died, my widow would spend four months running around for her money.

It was inevitable that I would ponder about my own minor accident and the earlier BMW incident during my recovery. According to the Centralised Accident and Trauma Service (Cats) which runs the best ambulance service in New Delhi, 90 per cent of accidents are caused by human error from drivers under the influence of alcohol and/or other narcotics.

Now, insurance and third-party cover for a street-legal vehicle is mandatory in India. But a kid under-20 with a brand-new licence in a new BMW pays the same premium as a 45-year-old mother-of-two in a 10-year-old Maruti 800. The inherent anomaly is reflected in ice-cold statistics. Paris experienced five road fatalities the year Princess Di died, and New York morgues processed 22 fatal accident corpses the same year. Paris has five times as many registered vehicles as Delhi, New York has 16 times as many. Liquor is more freely and cheaply available in both these cities than in Delhi. But Delhi had 2,340 fatal accidents that same year. This year, about 1,500 have died so far.

In the civilised world, they take your licence away and refuse to pay future claims if you are caught driving under the influence of alcohol or drugs. The insurance companies charge differential premiums to cater to the fact that 45-year-old mothers in small cars tend to be more sober and drive more cautiously than 18-year-olds in fast vehicles. In the long run, fewer lives are lost.

The insurance companies are also a very powerful lobby in keeping industry clean. After insurers nearly went bust paying off asbestos-triggered cancer claims, they forced asbestos out of circulation. When the Exxon Valdez ran aground and spilled oil, they ceased to insure single-hulled tankers. Pollution-related asthma claims across Europe resulted in insurer-pressure on oil companies and car-manufacturers that led to cleaner emission.

Consider this. If accident insurance had been taken seriously, would Union Carbide have cut corners at Bhopal? The Uphaar movie-hall fire when a transformer exploded in a basement may also have been averted. Hot-spots like Sivakasi and Alang would be less dangerous places. Devastated Orissa would not wait a week for aid after the cyclone ended. And we would have better roads, ports and more reliable power supply as part of the bargain.

I hope that the drama over the Insurance Regulatory Authority doesn't turn into a sick reprise of the drama about the Telecom Regulatory Authority. There are, according to foreign insurer estimates, some 315 million insurable Indian citizens. Some 13 million Indians file Income Tax returns; about 11 million have life-insurance cover and 2 million subscribe to Mediclaim. Maybe the figure of 315 million is an over-estimate but there are a lot of people losing out on quality of life.

Hospitals, diagnostics, medical equipment and pharmaceuticals, tele-medicine and general medical care would be obvious beneficiaries of an open insurance sector. General infrastructure would see easier closures and smoother funding. The healthcare business could see 13 to15 per cent growth through the next decade and become a regional hub given India's advantage in cheap, skilled labour, according to a McKinsey study.

Dr Pratap Reddy of the Rs 350 crore Apollo Hospitals group reckons he can triple turnover in two years. The Indian healthcare industry currently does approximately Rs 61,000 crore turnover per annum and drugs and pharma does another Rs 12,000 crore. A conservative 13 per cent growth rate adds Rs 8,000 crore per year to healthcare alone.

There will be a lot of churning in other industries if the insurance sector is truly opened up. Of course, the insurance sector employees are screaming about the "anti-national" aspects of opening the sector. This argument is frankly beneath contempt as far as I am concerned. Is it anti-national to kill fewer citizens? I guess enough people have suffered to feel the same way I do. And I pray some of them are the same people who will make the key decisions.

Devangshu Datta

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