The Insurance Times 2023, The Insurance Times August 2023

Trust with Law

Khaitan Legal Associates’ website succinctly proclaims, “We are a value-driven law firm. We value Integrity, Committed listening, Compassion and Thought leadership. We can be counted on for being a lifelong, trusted, and solution-oriented partner. We are a new paradigm in the practice of law”. The pioneer of this firm, Sakate Khaitan – the ebullient lawyer, lives up to every word and promise in the company of dynamic colleagues. Sakate’s legal journey started in the 1990s. In September 2014, a 7-lawyer corporate law firm was set up, laying the foundation for a litigation practice. Today, it is a 30-40 lawyers’ firm with offices in London, Mumbai, New Delhi and Bengaluru. Insurance, Regulatory and Dispute Resolutions are some of the distinctive fortes of Sakate and his firm.

Suave and sophisticated Sakate began his career at St. Paul’s School Darjeeling, where he completed his ICSE in 1989; completed his Higher Secondary at St.Xavier’s College, Calcutta, in 1990 and went on to finish his LLB from SCLC, Calcutta University in 1990 and MBA from London Business School in 2003.

Besides being a Senior Partner with Khaitan Legal Associates, Sakate shoulders many other responsibilities. He is Pratham- UK’s Board Member & Chairperson; Director and Sr President of ECE Industries Ltd (A BK Birla group of companies) and Board Member Board Member Birla Institute of Management Technology (BIMTECH).

One can envy Sakate’s humility as he is modest to a fault. An aficionado of golf and squash, Sakate also relishes writing. In a freewheeling interview with Prof. Abhijit K.Chattoraj, Sakate Khaitan candidly discussed issues close to his heart and unleashed many unknown facets of his chequered career.

AC–  The Insurance Act in India was amended in 2015 and 2022 to consider the changing dynamics in the Indian Insurance market. Yet, it did not look at many areas, particularly changes made in the contract in the UK Market. According to you, what are the missing dots ….?

SK– The amendment in 2015 and 2022 limited rejection by life insurers even basis fraud to three years and increased foreign ownership in Indian Insurers to 74%, respectively. These amendments did not address the issues that the 2015 amendment to the UK Insurance laws addressed, particularly the duty of fair presentation, abolition of “basis of contract” clauses and freedom of contract.

Currently, there are several missing dots, like the availability of alternative risk transfer products, the inability to premium finance and reinsurers treated the same as insurers and regulations being highly prescriptive. These missing pieces reduce flexibility in the insurance market and hurt market dynamics and penetration.

AC–  The insurance regulation in India is very much rule- or compliance-based. Do we need to move towards principle-based regulations with minimal standards?

SK-The answer has to be yes. The only caveat is that there must be uniformity of treatment for principle-based regulations, and the regulator must be open to issuing clarifications. It must be pointed out that, in my experience, the insurance regulator, IRDA, is quickly moving towards a principal-based approach and needs to be supported by the industry.

AC– Contract Certainty is an area of concern. Insurance terms and conditions are couched in conventional words, making it difficult for ordinary people to understand. It Is a complex and an abstruse product. According to you, what can be done to simplify this?

SK– For certain products, it is necessary to resort to conventional wording. In particular for commercial lines. The Indian market has generally adopted international wording and bars certain exceptions; such wording is not aligned with Indian circumstances, causing protracted litigation and ultimately resulting in a lack of trust in the market. The IRDA has now moved towards light touch regulation in terms of product launches, opening the market to the possibility of bespoke, simple wording and specific coverage of risks. There is now an opportunity for Insurers to design simple and easily understood products. In order to simplify insurance products, clear language of what is covered with minimal exclusions drafted in simple English is required. The IRDA is not oblivious to this and is pushing insurers to do precisely this to increase penetration and create trust in the industry.

AC- What, according to you, should be done to make our regulations outcome-based – for most of our regulations are prosaic and, as a result, lack credibility?

SK– Regulations should be less prescriptive and principle-based. The IRDA needs to take risks and not draft regulations for the lowest possible denominator, acknowledging that some will not adhere to regulations. In order to disincentivise the breaking of rules, penalties need to be increased. Further, the claims experience needs to improve with specialised tribunals dealing with insurance claims, reducing both the time taken for settlement of claims and also creating certainty of contract.

AC– India has yet to make strides toward risk-based capital and supervision. What kind of legal architecture is needed to help expedite this journey?

SK– India is making rapid strides towards risk-based capital (RBC). The key to this is certainty. The regulator ought to provide a standard model for determining risk-based capital such that there is certainty in how the RBC regime will operate and, as such, permit insurers to determine how they undertake underwriting and investments.

AC– Your strokes of serendipity.

SK– A few events that come to mind: Not wanting to work with my father, I first wanted to become a CA; when my father said Great, become my company secretary, I on the spot decided to choose law as a profession. I had no thought of anything else, just avoiding a professional working relationship with Dad.

  • Researching for an MBA degree for my sister-in-law and faced with the prospect of spending my career in Kolkata, I applied to 4 institutions for an MBA. I was admitted to London Business School. Fortunately, LBS did not request a CV at the time. Otherwise, I would have certainly been rejected – having never made a CV and not in the habit of seeking help, the first CV I made was quite embarrassing.
  • Having accepted a job in India in 2003, my wife did not want to leave London, so we stayed, and I joined ALMT as the 7th lawyer.
  • My first big client at ALMT was Aviva. I was later told that since I truthfully admitted that I had no clue about insurance, the Aviva team chose us. Twenty years later, I am now considered an expert, and Aviva remains a valued client.
  • AC– Your brush with squash and golf.
  • SK– My father was the first all-India junior golf champion. Golf runs in the family, and I have been playing since I was 5. The Indian Golf Union also offered me the opportunity to attend the David Lead better Academy. Seeing no prospect of a professional golf career, I refused.

I broke my arm in 1985/86. In order to strengthen my arm, I started playing squash. By the time I left Kolkata for London, I had played for my school team, represented my club in inter-club tournaments and was ranked at the Rackets Club (considered as the state rankings at the time)

AC-Influence of your boarding school at Darjeeling in shaping your life.

SK– School has influenced my entire being. I was packed off to St. Paul’s at the tender age of six. The school taught me discipline, to be authentic and truthful, to trust all, and to support those around me. These characteristics I find with all my mates from school. On the flip side, I am naive and innocent – various events have made me realise that I need to question and not take everything at face value. The school has also taught me to persevere and not give up.

AC-The defining moment of your life.

SK– The most defining moment of my life is my marriage to Pratibha. She is my rock and support. I would not be where I am without her. When I do not have her support, I feel completely lost.

The second most defining moment of my life was when I completed the Landmark forum and realized that I was blaming others for things that were not working for me. Things did not work for me, as my actions were contrary to the outcome I was seeking. A lot of it has to do with my inferiority complex and my attempt to cover it by being arrogant and belligerent. Having realised this, I can now work towards my stated outcome by reacting to situations that lead to my desired outcome rather than blaming circumstances or others.

AC–  How do you unwind?

SK -Movies, breakfast with Pratibha during weekends, playing golf and exercising.


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