Indian insurance sees potential in directors & officers liability cover
24 September 2003
Mumbai: Indian corporates may be far behind their US counterparts in buying directors and officers (D&O) liability cover from the general insurance agencies as a means of safeguarding themselves. But the trend is picking up. The buzzword in the insurance business today is D&O insurance, against the severity and size of litigation and settlement values.
Tata AIG General Insurance Company, the leading player in this segment, has already sold around 75 to 80 D&O policies. The company has earned a premium income of around Rs 200 crore during the last financial year as against Rs 85 crore in the financial year 2001-02, say senior company officials.
Tata AIG vice-president Uttara Vaid says directors and officers can be liable for their decisions that affect shareholder value. "Any company, listed or otherwise, from a closely held company to a joint venture company having operations in India or on a global scale is a potential client for us. Our strategy is to reach out to one and all and offer them the protection in the new business environment, which is highly influenced by western or corporate economics."
A New India Assurance company official says directors and senior officers of corporates ought to be taking the D&O liability cover, particularly because the stringent corporate governance measures expose them to several risks. "The insurance will help them at least cover their defence expenses."
"Non-life companies are slowly realising that D&O covers issued to software companies are a costly affair. With most of them catering to the US market where litigation costs are killing, companies such as Infosys has made claims for legal charges in the harassment case filed against its former executive, Phaneesh Murthy. D&O cover has assumed more importance after the Polaris Software episode," says an industry source.