SwissRe and Howden Insurance brokers Ltd made their respective presentations at a seminar hosted by the Confederation of Indian Industry (CII) to convince Indian corporates to purchase a directors and officers liability (D&OL) cover for the officials of the companies to protect them from suits filed by various plaintiffs.
This concept of D&OL is still to pick up momentum in India but with more and more Indian companies getting listed on foreign bourses, it is likely to happen sooner than later.
Since this cover is still a new concept in the country, the repercussions of the absence of the cover were explained. For instance, a director or an officer of any company can provide wrongful information, can be liable for defective organisation and supervision or can do wrongful trading.
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In addition to this, circumstances as a result of downsizing or rightsizing or mergers and acquisitions or even raising an initial public offering can result in an alteration in the scrip price which may raise some doubts. If found guilty, it could result in suit being filed against the director for any of the above offences.
It is this then that the D&OL would come in handy as these companies would support all costs of the defendant(s) till proven guilty, which in India translates into even bearing the litigation costs.
Despite the obvious absence of this cover and suits under such a label, employees in India are still sued under various laws and statutes, which effectively results in the same damage.
There are corporates already in India who have a similar cover for their employees. With more and more Indian companies looking outside India for the raising of funds, this cover for employees should soon become essential.
SwissRe is one of the largest reinsurance companies in the world while Howden Insurance Brokers Ltd is the insurance broking arm of the Hyperion Insurance Group.