HDFC Chubb enters liability insurance

HDFC Chubb General Insurance is foraying into specialised liability insurance business with a product for mid-sized companies. The product is looking at cashing in on the rush among companies to take cover as they comply with Clause 49 of the listing agreement.

The private sector general insurer will offer cover for six risks within a single limit under its new product called Forefront Portfolio. The risks include directors' and officers' liability, outside (independent) directors, employment practices, trustees, internet and employee theft.

With adherence to corporate governance norms becoming the new order of the day, and more independent directors being appointed on companies' boards, it has become crucial to have products designed to protect the personal liabilities of directors and officers, company sources said.

HDFC Chubb sees a huge market for its liability cover as there are nearly 5,000 mid-sized companies listed on the domestic stock exchanges. These are companies with a turnover of less than Rs 500 crore, the sources said.

The sources said the premium amount would vary on a case-to-case basis and would range from Rs 1 crore to Rs 15 crore.

The parameters, on the basis of which HDFC Chubb plans to fix premia, include corporate governance norms followed by the company, its financial position, number of years of existence and the litigation philosophy.

Liability insurance for directors and officers would typically include automatic cover for new subsidiaries. In case of employment practices, the policy would cover allegations of discrimination, retaliatory treatment and the definition would encompass even part-time, casual and seasonal employees.

Since it has been observed in the past that trustees can also be held personally liable for losses to a trust fund, the definition for wrongful acts under liability insurance for trustees has taken into consideration allegations of breach of fiduciary duty and errors and omissions. The employee theft insurance cover would also cover investigative costs.