To Star and beyond: V Jagannathan's Midas touch made Star Health 'sparkle'

As he gears up to launch an insurance start-up at 79, Jagannathan has the energy of a 30-year-old and the confidence of a veteran, writes Shine Jacob

Chennai’s Poes Garden is a tony neighbourhood and home to Tamil Nadu’s who’s who. The larger-than-life Rajinikanth lives here and the sprawling residence of the late J Jayalalithaa, the state’s former chief minister, is also located here. I am headed to one of Poes Garden’s upscale homes for a coffee with its owner, Venkatasamy Jagannathan, the man who founded India’s first standalone health insurance firm, Star Health and Allied Insurance Company.

The complex is called Le Grand Trianon after the château Louis XIV, the king of France, got built in Versailles in the late 17th century. Its architecture is also inspired by the château’s French Baroque style.

Jagannathan and his wife, Vasanthi, are both there to welcome me into their home, their smiles warm and their ways reminiscent of old-world courtesy. They have dressed for the meeting, she in a traditional red saree and he in a white shirt and black pants.

They lead me into the living room, which is rich with artworks, among them a six-foot Rajasthani folk painting. The collection, says Jagannathan, has been put together by his wife.

It has been a month since Jagannathan resigned as the non-executive chairman and director of Star Health, but the 79-year-old is as busy as ever. The tall, lean man is gearing up for his next venture, an insurance start-up, with the energy of a 30-year-old and the confidence of a veteran.

The conviction comes from past successes. In his first innings, Jagannathan, who has been in the industry for 53 long years, had scripted a turnaround for public sector major United India Insurance Company. When he took charge of United India as chairman and managing director (CMD) in 2001, it had posted a loss of around Rs 50 lakh. In three years, Jagannathan turned a profit of over Rs 400 crore. His Midas touch made Star Health sparkle as well.

At this point, his staff, dressed in a white uniform, enters the room with coffee. The aroma of samosas and pakoras (fritters) precedes them. “This is all homemade,” Vasanthi Jagannathan tells me as the snacks are served. She then leaves us to continue with our conversation over coffee and crispy snacks flavoured with southern spices and curry leaves.

We dig in. Nothing – really nothing – can match piping hot samosas and pakoras in the rain.

Jagannathan’s childhood was spent in an agrarian family in a village called Nagampatti, now in Tuticorin. He came to Chennai for a BA in economics from the Government Arts College and followed it with an MA from Annamalai University.

He started his first job, at Hercules Insurance Company, on June 3, 1969, and later joined United India during nationalisation as an administrative officer. From day one, he dreamed of becoming United India’s chairman. “My wife would tease me and say, ‘You just go and sit in the chairman’s chair when he is not there’,” Jagannathan laughs. Three decades on, he did just that – officially.

When he got into the insurance sector, not one person in Nagampatti was insured. Even today, besides government insurance, barely 6 per cent of the people in his village are insured, he says.

He credits the then DMK government for ensuring that people in Tamil Nadu had access to emergency medical care at any hospital through a comprehensive health insurance scheme, Kalaignar Kapitu Thittam.

Once he retired, Jagannathan hoped he would get a government appointment. That didn’t happen. Instead, ETA Star Group approached him to start Star Health, which he did in May 2006.

“When I talked about standalone health insurance, everyone was sceptical,” he recalls. “Then, we got two government health insurance programmes, first in Andhra Pradesh and later in Tamil Nadu, after which people started reposing faith in Star Health.”

A firm that started out from a small office rented for Rs 30,000 a month on Madha Church Road in Chennai today has a market capitalisation of over Rs 36,700 crore. With 800 offices across India, it is among the country’s leading health insurance firms.

Jagannathan looked at the middle-income group as the target audience, launched an advertising blitz and also built Star Health’s own group of doctors who would closely scan every hospital bill.

Within the company, he introduced employee-friendly initiatives such as daily lunch and employee stock ownership plans (ESOPs) at branch manager level, going against the practice of restricting ESOPs to only senior-level executives.

“In the new company, the staff will be the rulers,” Jagannathan says, biting into a pakoda. The new venture’s name will be registered by September, he adds, but does not divulge what it would be.

Star Health is his baby. The new venture will be his second kid. How does he feel about the two competing against each other? Jagannathan turns philosophical, smiles, and then says there is “enough fish in the ocean” to feed everyone. 

According to industry estimates, around 75 per cent of Indians pay for medical services from their pocket and are not covered by any government or private health insurance scheme.

“I don’t think they will compete; they will complement,” he says. “Insurance penetration is less as is the knowledge about insurance. Where is the competition? There is room for a lot of companies.”

However, while Jagannathan is young enough to launch a start-up, according to new rules of the Insurance Regulatory and Development Authority of India (IRDAI), he is too old to be chairman, MD or board member in the new company. So, he intends to appoint a team of professionals to run the venture, while he continues as an investor. He indicates that his family will hold the majority shares in the new company and he will choose a management whose vision matches his.

Jagannathan likes to push himself. He does so every day, at work and in the gym, where he spends at least an hour following the instructions of his two personal trainers. His frail frame belies his quiet strength.

Long journeys, though, can sometimes cause fatigue. Like now, when he has just returned from Shirdi. He is a little unwell and gratefully takes the medicine his staff brings him.

Jagannathan’s devotion to the Shirdi Sai Baba is well-known. When he retired, the employees and management of Star Health gifted him two statues of the Sai Baba. One he presented to the new CEO of the company and the other to one of the departments. “If God is willing, the new company will be on track by this time next year,” he says.

Jagannathan and his family – wife, son (Sai Satish, a cardiologist) and daughter (Sunanda) – still hold around 1-1.5 per cent stake in Star Health. Asked about a complete exit, he says an “appropriate decision will be taken at an appropriate time”.

On that note, I take leave. His wife returns to the living room and together the couple sees me off to the gate with another warm invitation: “Come back soon.” Old-world courtesy.