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Archive for the ‘Expert Opinion’ Category

Diesel Generator Set Insurance

Posted on: December 26th, 2019 by shiv No Comments

Generators are a commonly used power backup source in India and are immensely helpful in case of power cuts or grid failures and in places that have no electric connection to ensure uninterrupted power supply.

DG Sets have also emerged as the best alternative for standby and emergency power generation. Therefore, almost all industries have and use D.G. Sets.

In the attached publication, we have discussed about following:

  • Composition & working of D.G. Set,
  • How to insure them,
  • How to select the proper sum insured and
  • Precautions to be taken before taking an insurance policy.

If you would like to know more about ‘how to insure a D.G. set’ or if you have a DG set claim that you would like to discuss, please get in touch with us on info@optima.co.in.


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Marine Insurance Claims

Posted on: November 6th, 2019 by shiv No Comments

We all know, irrespective of the transportation mode chosen, there are tremendous risk involved in transporting cargo from one place to another. Tempestuous seas, maritime perils, weathered railway tracks, pothole-ridden roads, natural calamities, mishandling of cargo, unpredictable and man-made situations may damage, destroy or affect the cargo transported. Marine Cargo insurance safeguards against various types of losses or damages that may arise during cargo transportation.

In the eventuality when goods are damaged, destroyed or stolen, a marine insurance claim needs to be filed with the insurance company. However, just having the insurance is not enough if you don’t know how to file a claim and what procedure and practice to follow. So, to help you out here is a complete procedure which is to be followed at the time of marine claim

 

Please refer our attached publication which will take you through the complete procedure to be followed at the time of marine claims.


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Workmen’s Compensation Claim Process

Posted on: November 6th, 2019 by shiv No Comments

Immediate action after accident:

  • Give immediate written notice to the insurance company about the death or disablement of the employer.
  • Intimation of Accident to Factory Inspector if the accident happens in a manufacturing plant.
  • Furnish all information and documentary evidence as the insurance company may require.
  • Deposit the compensation payable to the employee with Workmen Compensation Commissioner. Obtain their receipt and submit the same to Insurance Company.
  • If any notice is received from W.C. Commissioner, send the same to Insurance Company.
  • To collect the relevant data with the objective to quantify reasonable and just compensation, a trained investigator is appointed by the insurance company.
  • At the same time you should be submit claim form along with relevant documents.

Basic Documents:

  • General for all type of claims
    • Claim Form duly filled in & signed.
    • Claim Bill.
  • Temporary Disablement Claims:
    • Medical Certificate regarding Cause & Duration of Disablement.
    • Medical Bills.
  • Permanent Disablement Claims:
    • Medical Certificate regarding Disablement.
    • Memorandum of Agreement as per W.C Act between Insured and the injured workman.
  • Fatal Claims:
    • Death certificate.
    • Copy of post Mortem report.
    • F.I.R / Final Investigation report
    • Form A of W.C Act duly completed by the Insured.
    • Statement of Witnesses,if any

Write to us on claims@optima.co.in for any queries or support.


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Why is Errors & Omissions Cover Necessary?

Posted on: November 6th, 2019 by shiv No Comments

Professionals owe certain duties to their clients by virtue of the special skills, knowledge, and expertise that characterize their chosen occupations.

The need for professional liability insurance stems from these duties which may be based in tort law, contract law, or statutory law.

Tort Law: A professional has to exercise a standard of care that would be considered reasonable for people in his or her profession. However despite having best of the systems, negligence in providing the professional services can creep in.

Negligence can arise in the act of rendering professional services or advice, in which case it would be classified as an act of commission or an error.

Negligence can also result from the failure to render professional services or advice, in which case it would be classified as an omission.

To prove negligence in an E&O claim, a plaintiff must prove four things.

  • The defendant owed a legal duty to the plaintiff.
  • The defendant breached that duty.
  • The plaintiff suffered actual financial harm.
  • The financial damage was proximately caused by the breach of
    duty.

Disproving any one of the four elements creates a successful defense against a negligence claim. For example, a design firm may argue that it did not breach its duty to the client because its work was performed at a level similar to what would be expected of other professional design firms. Other common defense used by professional to fight negligence claims include following:

  • Contributory or comparative negligence: if the party bringing the claim can be shown to have contributed to his or her own damages, a decrease the size of the judgment to the plaintiff.
  • Assumption of risk: in some cases, clients may have knowingly and voluntarily taken on a risk. They cannot come back and sue for damages if the risk they assumed comes back to bite them.
  • Statues of limitations: allegations of professional liability must be brought within a specified time from when the alleged negligent action occurred. The actual time frame varies from state to state and by the type of negligence alleged.

Contract Law: when professional agree to take on a job for a client, they create a contract with legal obligations related to the performance of the service or services. If the professionals fail to uphold their end of the contract and the client suffers harm, a lawsuit can be brought seeking damages, which can be categorized as one of the following:

  • Compensatory damages: These are meant to make the plaintiff whole. In other words, the damages should equal the actual value of the plaintiff’s loss.
  • Consequential damages: These arise as a consequence of the error or omission, such as lose of profits when software malfunctions and prevents a business from accessing key data.
  • Liquidated damages: These are stipulated in the contract, specifying how much will be awarded if the contract’s terms are not met. Agreeing in advance to what damages would be paid is one way to help prevent disputes from going to court, but could raise coverage issue in an E&O policy as will be discussed later in this report.

Statutory Law: Historically, statutory law has not been a major factor in E&O liability, but that is changing. The Sarbanes-Oxley Act of 2002, for example, was passed following a number of high-profile corporate scandals and is likely to have a significant effect on the relationships that accountants, lawyers, and financial professional have with their client. Sarbanes-Oxley and other measures that have been proposed in response to the various corporate scandals of the past few years also target the role of corporate directors and officers. Some disputes are likely to arise as insurers – and, ultimately, the courts- decide whether particular cases are rightfully matters concerning E&O coverage or directors and officers (D&O) coverage.


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Directors & Officers Liability Insurance

Posted on: November 6th, 2019 by shiv No Comments

CLAIM EXAMPLES

Selling Of A Subsidiary

The buyer of the concerned subsidiary accused a medical device company of misrepresentation of financial information. The buyer had accused such misrepresentation had led to financial loss.

The verdict was in favor of the buyer and the medical device company had to pay defense cost in excess of Rs 25 million and damages worth Rs 22 million.

Dismissing of Senior Employees

A MNC company had hired two senior bankers and they were made to understand that they were to head the new subsidiary.

The setting up of the subsidiary kept getting delayed which soured relationships between the employees and employers. After two years, the company dismissed both of them citing incompetence and absenteeism as the reason.

Both the dismissed employees filed criminal cases for damages of Rs 80 crores against all the directors of the company alleging cheating, fraudulent misrepresentations about the job profile, remuneration, failing to fulfill terms of employment contract and defamation by press release.

A prolonged legal battle followed and the defense cost incurred by the directors was advanced to them.

Bank Loan Default by a Company

A bank had filed a criminal case against company and managing director of the company for default on loan account.

A prolonged legal battle followed the case. The case was dismissed by the lower court and has been appealed in a higher court.

The insurer advanced the defense cost incurred by the director.

Subsidiary v/s Promoter Company

A subsidiary company of the promoter group was engaged in niche area of software. The promoter company along with fund managers entered into a subscription cum shareholders agreement with the subsidiary company stipulating that any opportunity offered to them in the area of specialization of the subsidiary company shall only be pursued by the subsidiary or its wholly owned subsidiary.

In due course of time the promoter company entered into various ventures, which encroached upon the specialization of the subsidiary.

The shareholders of the subsidiary sued the promoter company for violation of the agreement and sought damages worth Rs3000 crore.

Former M.D. Faces Prosecution over Security

The former managing director of an MNCs subsidiary in India is being prosecuted by the state government for not providing adequate security to an employee who was raped and murdered when traveling to work for the night shift on company-provided transport.

The prosecution of Director could have far-reaching consequences for employee security in the Indian call-center and BPO (business process outsourcing) industry. The female employee of the XXX BPO center was raped and murdered, allegedly by a taxi driver. The subsidiary, XXX and Director are liable because proper security measures were not taken to prevent the crime, the local state government alleged in its case before the court.

The legal expenses will be covered by the policy.


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Free Covers in C.A.R. Insurance

Posted on: November 6th, 2019 by shiv No Comments

Insurers give certain free covers in the C.A.R. policy if the sum insured is more than Rs 100 crores (INR 1 billion). Recently some insurers have started offering these covers even if the sum insured is more than Rs 50 crores (INR 500 million)

The important free covers and there description are given below for the insurance buyers’ easy understanding:

Waiver of Subrogation

This clause means that insurers will not be proceeding against any of the parties who are associated with the project and covered under policy, for recovery. e.g. If sub contractor’s negligence has resulted in loss, insurance company can normally proceed against them for recovery following payment to Principal. But if this waiver has been agreed, they will not

50:50 Clause

This clause comes into play, when there is a doubt whether the claim will fall under marine or erection. Under such circumstances, loss is contributed 50:50 by both the policies.

Waiver of Contribution

This clause provides for waiver of applicability of contribution clause between Principal and the Contractor (only) i.e. if there are more than one project policies covering the same interest, then the policy carrying this waiver would become the primary policy and in case of any loss, would pay up without waiting for contribution from the other policies.

Loss Minimization Expenses

Upto the limit specified on the face of the policy, the policy pays for all expenses incurred to reduce/ minimize the loss (over and above the main loss payable under the policy) e.g. there is water inundation in the project site, the client will incur expenses for removing sound equipment to a safer location. The policy will pay such expenses because if the equipment were allowed to remain on site then they would have suffered higher losses.

Automatic Reinstatement Of Sum Insured

Subsequent to the payment of a claim the insured is supposed to reinstate the sum insured to the extent of loss paid else it may suffer under insurance for future losses .Under this clause, upto the limit specified the sum insured is automatically reinstated , following settlement of a claim, without any additional premium being paid .


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Dewatering Warranties & Exclusions

Posted on: November 6th, 2019 by shiv No Comments

A dewatering warranty or exclusion is commonly added to the C.A.R. policy – especially if the policy concerns a civil or infrastructure project. This article sets out to explain the reasons behind this provision and provides a clear illustration of the term “dewatering”.

What is dewatering?

Dewatering can be defined in two ways. It is the process of lowering the water table level at and around a particular contract site. Dewatering also refers to the removal of groundwater usually by pumping or evaporation, which then allows the contractor to carry out the works specified in a relatively dry environment.

Dewatering is not, as some believe, removing water from a hole that has been dug as part of the construction process or from the construction site now filled with rainwater.

To illustrate this, consider an example. Sharma Contractors have been employed to construct a five level building which incorporates two basement levels. The two basement levels will be constructed six meters below ground level, however the site borders a river and the water table is only one meter below ground level.

If Sharma Contractors excavate to six meters, this will result in a six meter hole filled with water to five meters. This water can enter the hole in a number of ways but primarily by leaching through the walls of the excavation and perimeter piling installed to hold back the earth. The piling is not intended to be waterproof, so a dewatering system is required. Independent project engineers design a pump system to continually pump water out of the site to allow the basement to be constructed. By taking the water out of the hole, the water level in the surrounding ground will also be reduced to varying levels depending on soil type and distance from the hole. This process is called “dewatering” and lasts until construction is completed to above ground level where dewatering ceases and, in the majority of cases, the water table naturally returns to normal.

How does this apply to contract works insurance?

A contract works policy principally provides cover for sudden and unforeseen loss or damage to the works being constructed. It does not guarantee the accuracy of project engineers’ assumptions and/or subsequent work. In the example above, if the engineer miscalculated the number of pumps needed to continually pump the water out of the construction area of the basement levels, resulting in damage and delay to construction, then the responsibility lies with that engineer. Due to the dewatering warranty or exclusion there will be no cover for such loss under the contract works policy. However if, for example, water damage was incurred to the site or building as a result of the dewatering pumps being stolen or faulty, the contract works policy may provide cover because this loss was sudden and unforeseen.

What if there is an influx of water for example, in the case of a rain storm?

A contract works policy will usually respond to this situation. The C.A.R. excludes the additional expenses incurred in dewatering. However, this does not include “dewatering” costs directly caused by insured perils. In other words if the engineer anticipated that two pumps were needed instead of five to dewater, due to this being a professional miscalculation, the policy would not provide cover for the additional cost associated with this. However, a storm is not related to assumptions made by the engineer so if the site is flooded the policy will normally respond.

What about getting water out of a hole?

In the example outlined above, part of the contract may be to dig footings for veranda posts just 500 millimeters below the original ground level. Once the footings have been dug, the hole will fill with water if it rains overnight. In order for construction to continue this water will need to be extracted. This process is getting water out of a hole – and not classed as dewatering. Other provisions of the policy would then come into play in the normal manner.


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Cyber Liability for Hospital

Posted on: November 6th, 2019 by shiv No Comments

Digital data collection, storage and transmission are a must today. But these activities present new risks and challenges for the healthcare industry.

With the growth of electronic record keeping and digital communications, it is common for hospitals and other healthcare operations to amass a great deal of confidential information about their employees, patients, procedures, research, and financial status. Most of this information is collected, processed, and stored on computers and transmitted digitally to other computers across networks both internal and external

The integrity of computer systems can be breached even with firewalls, virus detection, and many other safeguards in place. A breach can even result from a simple mistake such as a misplaced laptop or inadvertently unprotected back-­‐up media. An email could result in the crash of another party’s network or transmit a computer virus or other type of malware. Such breaches can lead to large-­‐ scale theft, pilferage or alteration of sensitive data.

Such challenges to a system can come from distant hackers or those close to facility’s operation. Even if state-­‐of-­‐the-­‐ art security controls are in place, there is still a risk from a determined criminal element that can bring operations to a halt. However, a large proportion of data breaches are not unknown hackers with criminal intent or a desire to cause vandalism to the system, but employees, former employees, or even business partners. Whether because of internal incompetence, malicious intent, or the desire to extort money, computer systems and the information they hold can be damaged, pilfered, or held hostage.

Protecting the privacy of patients is basic to the operations of any healthcare facility. That privacy can be compromised; personal information can be obtained in many ways and used inappropriately. The risks are not only that the information will be damaged, stolen, or misused but the actual or implied theft of improperly protected electronic data also can result in an extortion threat. The financial cost and cost of distraction of a hacker’s extortion demand that threatens to shut down an entity’s system or to expose confidential information can be enormous.

Hospitals and their risk managers should assess their cyber liability exposure and explore suitable insurance products for comprehensive risk coverage.

Other cyber risks include inadvertent wrongful disclosure of confidential information, an email, web file, or blog or forum posting t h a t could result in allegations of defamation. Legal actions against healthcare entities can also be related intellectual property theft, trademark or copyright infringement, libel or other defamation, and even product disparagement.

Risk Mitigation and insurance Coverage Are Essential

Organizations often fail to realize that exposure to cyber liability affects the bottom line as well as damages relationships with customers, vendors, and partners. Confidential information, content, knowledge, and business intelligence are vital information assets that must be protected. The establishment of an information security policy, constant vigilance, and the use of sound practices and industry-­‐recognized safeguard processes and technologies create a balance between the technological and procedural aspects of information security management. But the ongoing process of exercising due care and due diligence to protect information and information systems from unauthorized access, use, disclosure, destruction, modification, or disruption is not the only indispensable part of protecting 4 2 operations.

Business interruption resulting from a security failure, a cyber extortion threat and the costs related to privacy notification, the management of an information security failure, and the resulting disaster recovery costs are all challenges to a facility’s continued viability.

A cyber liability insurance policy is an indispensable part of any healthcare operation’s risk management program. With coverage’s tailored to meet the unique and evolving cyber insurance needs of hospitals and other healthcare organizations, appropriate insurance and the accompanying risk management services eliminate gaps in insurance coverage and position an entity for continued productivity.

Cyber Liability Coverage

A Cyber Liability policy covers the following:

  • Disclosure injury: lawsuits alleging unauthorized access to or dissemination of the plaintiff’s private information.
  • Content injury: legal actions arising from intellectual property infringement, including patent, trademark, and copyright infringement.
  • Reputational injury: allegations of the disparagement of products or services or of libel, slander, defamation, and invasion of privacy.
  • Conduit injury: demands for remedies for harm to third-­‐party systems allegedly resulting from system security failures.
  • Impaired-­‐access injury: suits, civil fines, and penalties arising from system security failure resulting in the computer systems of business partners or others being unavailable for use.

The policy can also provide the following riders:

  • Forensic costs: costs to determine how the breach occurred.
  • Crisis management and reward expenses: 3 including the cost of public relations consultants to maintain the reputation of the business.
  • E-­‐threat or cyber extortion: including the cost of a professional negotiator and ransom payment to stop cyber attacks caused by malicious hackers.
  • E-­‐Vandalism expenses: paying the costs of malicious damage even when an employee causes such vandalism.

Optima Insurance Brokers Pvt. Ltd. is a leading insurance broking company based in Delhi and has a pan –India presence.

Optima manages insurance for more than 125 well-­‐known companies including GE, Honeywell, Nat Geo, E&Y, India Bulls etc. With a team of more than 100 accomplished professionals we are geared to handle the most complex insurance needs of our clients. For more information on this policy, contact us on info@optima.co.in


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Design Defect Cover in C.A.R.

Posted on: November 6th, 2019 by shiv No Comments

There are five DE exclusions and they fall in three categories; Outright Exclusion, Cover for Consequential Damage, Exclusion for Betterment & Improvement

  • Table has a design defect in one of its leg The defective table leg buckles and the table falls on the computer. The table, vase, phone and the computer are damaged.
  • Flower Vase is placed on the table
  • Computer is installed next to the table
  • Leg is the defective item
  • Table is the defective property

The defective table leg buckles and the table falls on the computer. The table, vase, phone and the computer are damaged.

DE1

Excludes all damages due to design defect. Any damage to table leg, table, flower vase as well as the computer is excluded if these items were damaged due to design defect of the table legs.

DE2

Permits cover for damage to the property of the insured (which does not rely upon the defective property for support) surrounding the defective property. Hence damage to computer is covered but damages to table, vase and phone are not covered since they rely upon the defective property for support.

DE3

Permits cover for the damage to all the insured’s surrounding property whether relying upon the defective property for support or not. Hence damage to computer, vase and phone is covered. Damages to table are not covered

DE4

It is similar to DE3 but is intended to apply in respect of machinery rather than building work.

DE5

Covers damages to the defective property (table) also alongwith the coverage available in DE2 and DE3. But excludes any cost for betterment of the defective item (table leg) or improvement in the specification of the defective property (table).

For more information on Contractor’s All Risk Policy or other insurance products to cover construction risks, write to us on info@optima.co.in


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Increasing Risk of Professional Indemnity in Hospitals

Posted on: November 6th, 2019 by shiv No Comments

A sudden and unpleasant attention has been focussed on the Indian healthcare sector with reports of high numbers of sepsis cases being reported in the ICUs of our country’s hospitals. A leading cause of deaths in hospitals globally, the infection caused by sepsis is not something commonly known in our country.

However, a recent nationwide study on the subject throws up some shockers. It claims that sepsis is contracted by one fourth of all patients admitted in ICUs. More jarring is the claim that half of those who contract the infection in India ultimately lose their battle with this deadly disease which induces massive organ failure. Interestingly the same study reveals that the major causes of theinfection are poor hospital hygiene and misuse of antibiotics.

Hospitals have been traditionally viewed with a sense of awe and utter dependency by the ordinary Indian. The hand of the doctor was almost equal to the hand of god and rare was the case when an Indian medical practitioner was accused for the death of a patient let alone held guilty and punished for it. However, growing awareness levels and the general economic upswing in the life of the average Indian has changed the traditional doctor-patient relationship in the Increasing Risk of Professional Indemnity in Hospitals Optima Insurance Brokers country. According to a newspaper report in January, the average number of cases dealt by Consumer Disputes Redressal Forums related to medical negligence and malpractice has seen a surge in the recent years. In some states it has arisen by a staggering 26 times within a timespan of merely five years. Hospitals and medical practitioners are not only being questioned and challenged by those dependent on their skills but are also being held accountable for their actions with repercussions that can be extremely trying both professionally and financially. A recent example was seen in the month of May this year, when AMRI hospitals of Kolkata, already reeling under the effects of the disastrous fire on their premises that killed 90 patients, paid a sum of Rs 1.7 crore in damages for the death of a visiting NRI more than 14 years ago in a case of medical negligence. What is more, despite this staggering sum, which is incidentally the highest in Indian medico-legal history, the hospital is being sued further in the highest court of the land for a sum of over Rs 200 crore.

Traditionally such cases are covered by the hospital management under Professional Indemnity Insurance(PI). This insurance covers legal liabilityarising from errors and omissions on the part of Registered Medical Practitioners while rendering professional service. It applies to claims arising out of bodily injury and/or death of any patient caused by or alleged to have been caused by error, omission or negligence in professional service rendered or which should have been rendered by the insured. Medical establishments and their staff including doctors, consulting doctors, management and even the unqualified staff like peons and sweepers are protected against legal claims made by any of their patients by this Optima Insurance Brokers policy. PI also pays for the cost incurred in defending the case. However the PI policy, on which many hospitals depend, can have some shortcoming and loopholes which if not addressed may not provide financial protection desired by the hospital management.

Firstly, many hospitals neither assess the value (sum insured) of the policy to be taken nor is this value revised periodically in line with inflation and the recent court awards. This leads to a dangerous situation where in most hospitals today have nominal PI policies of not more than Rs 25-50 lakhs whereas any future litigation against them in modern India is bound to run up in several crores.The traditional PI policies are woefully inadequate in these times of increased social awareness, close media scrutiny and increasing individual incomes

Secondly, the PI policy treads a thin line when dealing with negligence on the part of the insured, in this case the hospital or the doctor. It covers for negligence but states that if the insured is guilty of wilful negligence the claim will not be reimbursed. Any non- complaince with laid down norms or generally accepted industry practices can be construed as wilful negligence. Any cost cutting by the hospital that can be linked to reduction in patient safety can be termed as wilful negligence. A low doctors or nurses to bed ratio can be considered as wilful negligence.

Thirdly, the insurance policy demands that the insured party continues to behave as if “not insured”. Almost every case pending in courts of law today claims that the doctor/hospital resorted to unnecessary procedures and thereby the increased risk in handling of the patient. If the Optima Insurance Brokers insurer is able to prove in the court that the increased risk was taken by the insured because he was being given financial protection by insurance, the insurer can refuse to reimburse the claim.

With changing socio-economic profile of patients and their families it becomes important for the hospitals and health professionals to review their risk periodically.

Optima Insurance Brokers Pvt. Ltd. is a leading insurance broking company based in Delhi with a pan India presence.We manage insurance for hospitals, clinic chains, healthcare consultants, ambulance services and NGOs in healthcare sector.

With a team of more than 150 accomplished professionals we are geared to handle the most complex insurance needs of our clients. For any query please contact us on

For any query please contact us on info@optima.co.in. Visit us at www.optima.co.in for more information on us.


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Optima’s core group has more than 100 man-years of experience in insurance. Our experience has trained us in reading the fine print of insurance policies, understanding it and applying it for the benefit of our clients.

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