The Securitisation Act may bring in windfalls for the insurance companies as banks and financial institutions (FIs) are rushing for a plethora of covers after sending notices to the defaulters.
They are seeking silent risk cover for the plants, public liability cover in the event of any damage to a third-party and Directors & Officers (D&O) liability cover to protect themselves. The third-party cover ensures protection against physical injury of the security guards for the acquired assets.
Institutional sources said even though the lengthy judicial procedure of attaching assets of wilful defaulters can be avoided now, there can be law-suits from various quarters on attachment of property, plants and machinery and corporate entity.
Many institutional lenders have gone in for Directors & Officers (D&O) liability cover against false and frivilous claims against neglect in discharging their duties as directors.