Optima Insurance Brokers Pvt. Ltd.

Archive for the ‘Insights-Legal Liabiliities’ Category

Public Liability Insurance – Act Only

Posted on: November 7th, 2019 by shiv No Comments

Public Liability Insurance Act 1991 provides compensation to victims of an accident which occurs as a result of handling of any hazardous substance. The Act applies to all owners associated with the production or handling of any hazardous chemicals.

Public Liability Insurance (Act Only) covers the risk of compensation to be paid under the Act.

It is important to understand who is the “Owner” as the Act directly makes them responsible for providing the accident relief. As per the Act the “Owner” means any person who owns, or has control over handling any hazardous substance at the time of accident and includes;

(i) in the case of firm, any of its partners;
(ii) in the case or a company, any of its directors, managers, secretaries or other officers who is directly in charge of & is responsible to the company for the conduct of the business of the company

As per the Act:

1.The Liability of the Owner, per accident,is equal to Paid Up Capital of the firm or company with maximum liability up to Rs. 5 Cr.
2.The Liability of the Owner, per year, is upto a maximum of Rs. 15 Cr.
3.In case of a claim by any Third Party, the claimant is not required to prove any negligence or fault of the owner.
4.Apart from death the Act also imposes penalty for “Injury” which includes permanent total or permanent partial disability or sickness resulting out of an accident.
5.The claim award and settling authority is the District Collector.

 

Some of the industries which have to take Public Liability Insurance (Act Only) are:

1.Chemicals & fertilisers
2.Pharmaceuticals
3.Industries using bulk LPG in tanks like Engineering workshops, food manufacturing, textiles
4.Distilleries
5.Thermal Power plants
6.Refineries of various types
7.LPG Plants
8.Petroleum based industries
9.Industrial gas manufacturers and storage facilities
10.Logistics, storage & distributors handling any of the substances above
11.Glass & Ceramics mfg industries
12.Basic metals like Steel, Aluminium, Copper mfg
13.Cement mfg
14.Foundaries
15.Coal handling & using plants

 

Does your business fall with the PLI (Act) ? Please contact us if you would like to know more.


Download pdf

Cyber Crime and Insurance

Posted on: November 7th, 2019 by shiv No Comments

Digitalization is exposing organizations to cybercrime. The scale of cyber crime is increasing manifold daily. It is estimated that 500 cybercrimes take place every minute and INR 7 crore is lost by organization every minute.

Cybercrime has emerged as the top risk for organizations.

Common types of Cybercrime Faced By Organizations

  • Cyber-Extortion – Organized crime gangs gain access to target’s computer or website and steals the sensitive information and data to extort money.
  • Email Spam and phishing – Criminals imitate a legit site or send messages or email impersonating a legit business to get the personal and financial details of the target.
  • Ransomware – Ransomware is a virus that infects the system of the target with malicious software. It can be used to steal the data or lock their system until a ransom is paid to the perpetrators.

Cybercrime Creates two kinds of losses for organization

  • Loss of its own revenue or data, damage to its system, networks and the subsequent costs incurred to restore the systems.
  • Compensation demanded by third parties like customers, government etc. for the data breach or losses suffered by them due to a cybercrime perpetrated on an organization.

First Party Cyber Risk Exposures

  • Theft of money and digital assets: Direct monetary losses from electronic theft of funds/money from the organization by hacking or other types of cybercrime.
  • Loss or damage to digital assets: Loss or damage to data or software programs, resulting in costs incurred through restoring, updating, recreating or replacing these assets to the same condition they were in prior to the loss or damage.
  • Business interruption from network downtime: Interruption, degradation in service, or failure of the network, resulting in loss of income, increased cost of operation and/or costs incurred by mitigating and investigating the loss.
  • Cyber extortion: Attempts to extort money by threatening to damage or restrict the network, release data obtained from the network, and/or communicate with the customer base under false pretenses to obtain personal information.
  • Reputational Damage and Harm : : Legal, postage, and advertising expenses where there is a legal or regulatory requirement to notify of a security or privacy breach, including PR media assistance

Third Party Cyber Risk Exposures

  • Security and privacy breaches: Investigations and civil damages associated with security breaches, transmissions of malicious code, or breaches of third-party or employee privacy rights or confidentiality, including failures by outsourced service providers.
  • Defense Costs: The fees and other expenses incurred to defend against claim by a third party.
  • Investigation of privacy breach: Forensics investigations, defense costs, regulatory penalties and fines (may not be insurable in certain geographies) resulting from an investigation or enforcement action by a regulator as a result of security and privacy liability.
  • Customer notification/Public Relations expenses: Legal, postage, and advertising expenses where there is a legal or regulatory requirement to notify individuals of a security or privacy breach, including credit monitoring program costs and PR media assistance.
  • Multi-media liability: Investigations, defense costs and civil damages arising from defamation, breach of privacy, negligence in publication of any content in electronic or print media, as well as infringement of the intellectual property of a third-party.
  • Loss of third-party data: Liability for damage to, or corruption/loss of, third-party data or information, including payment of compensation to customers for denial of access, failure of software, data errors and system security failure.
  • Impaired Access Liability: Claims by the customers due to failure to access the organization’s system because of temporary suspension of systems by the organization during cyber threat.
  • Third-party contractual indemnification: Financial obligations to third-parties due to a security or data breach incident.

How can cyber insurance help?

A well-structured cyber liability policy can help the organizations in withstanding the financial losses due to such cybercrimes. The policy can cover and pay for both First Party and Third-Party Losses.

Cosmos Bank lost Rs.94 crores on 11th August’18 and 13th August’18 to a malware attack on its ATM server. The bank’s Visa and Rupay debit cards were cloned and used to fraudulently withdraw through various ATMs located across 28 countries.

In the above scenario, cyber insurance policy can pay for

  • INR 94 crores that were siphoned off.
  • Cost of cleaning the malware and reinstating the software.
  • Losses because of business interruption due to network downtime.
  • Cost associated with the forensic investigation ordered by the regulator.
  • Cost of informing the customers and public relation expenses to manage the reputation.

As Stephanne Nappo, the Global Chief Information Security Officer at Société Générale International Banking says “It takes 20 years to build a reputation and few seconds of cyber-incident to ruin it.”

Cyber Insurance helps to manage this risk.


Download pdf

Product Liability Insurance-Understanding the Fine Print

Posted on: November 7th, 2019 by shiv No Comments

This intersection between policy deductibles and the number of claims or occurrences results in a significant impact on insurance coverage, and on how, whether and when insurance money will be available from the insurer. Most policies have a deductible, which can be written on a “per claim” or “per occurrence” basis. A “per claim” deductible means that the deductible applies separately to each individual that brings a claim against the company, and is usually very disadvantageous for the insured. For example, assume that a product injures 10,000 people, and that each person’s injury claim amounts to $30,000. If the policy at issue has a per occurrence deductible of $50,000, each claim would fall within the deductible, and the insured would have no coverage. As a result, the insureds should seek a “per occurrence” deductible, assuming that all similar claims arising out of a single product will be deemed one occurrence. However it is possible that the court may not treat multiple claims as a single occurrence. Hence a per occurrence deductible essentially becomes the same as a per claim deductible.

The typical “batch clause,” however, may not provide sufficient protection, because the policy deductible applies to each “batch,” and this can easily lead to litigation over what constitutes a “batch.” For example, an insurer is likely to argue that each day’s production is a separate “batch” to which a separate deductible applies. Batch clauses are designed to group losses arising from related incidents into a single claim covered by one policy period and one policy limit, for which the insured pays one deductible. But batch clause language varies from one policy to the next. One policy might limit a batch to products that “can be distinguished by the specific date of production or by a batch number, lot number or control number.” Another might more broadly define a batch as claims arising from “two or more person, that are attributable directly, indirectly or allegedly to the same event, defect, hazard, condition, cause, decision or advice in the design, formulation, manufacturing, distribution, sale, use, testing, handling, repair, replacement, maintenance or disposal of your product.”

Maximizing coverage under batch clauses depends on the facts particular to each circumstance particularly the number and type of claims at issue and the language in each applicable insuring agreement. It is therefore critical to read the proverbial “small print” of a batch clause in a product liability policy to know what language is incorporated. This will significantly impact the coverage available, may dictate how an insured provides notice of a claim, and could determine how to maximize coverage. Therefore insurance professionals should carefully craft a policy’s batch clause..


Download pdf

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.


Download pdf

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


Download pdf

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.


Download pdf

Professional Indemnity Insurance for Civil Contractors

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

The exposures faced by contractors have become more complicated as a result of changes in project delivery systems over the past 20 years. This has forced construction executives to examine professional liability coverage—a complex and often misunderstood type of coverage.

While a Public Liability policy covers physical activities that result in bodily injury and physical damage, professional liability claims often come from issues relating to faulty design, cost overruns or a delay in completing the project due to professional negligence.

In construction litigation, professional negligence is usually defined as failure to perform duties according to the rules or standard of care or practice that would have been expected of another professional performing a similar task in the same region or location.

“Professional” Defined

A professional is defined as someone who possesses specialized skills and experience and a higher level of competence resulting from acquired learning. A crane operator may have specialized skills and experience, but operating a crane would not be considered a professional service. It would be considered “means and methods.” Similarly, if a contractor uses detailed design for the temporary foundation of the crane and performs studies of the load bearing or handling capacity of the crane, these activities are considered means and methods. On the other hand, an engineering firm could potentially incur professional liability if the firm designs the supporting structures for the crane or offers opinions about the crane’s operating capacity but do not actually operate the crane as they would be acting within the capacity of a “professional.”

Professional Liability Coverage for Contractors

A professional liability policy broadly covers design claims. To the extent the construction manager acted negligently, they incur professional liability. Construction companies can take the following kinds of insurance coverage for financial protection.

Defensive Coverage

Professional liability policies are defensive in nature. Contractors should purchase protective indemnity coverage if they enter a design-­‐build contract and provide design and construction services while subcontracting the design portion of the work.

Protective Indemnity

If the design firm is at fault and their professional liability insurance is not adequate, protective indemnity coverage will pay the contractor for such a loss in excess of the designer’s availability insurances. Such insurance is essential in design/build as it may be the only recourse available to help the contractor defray the costs of fixing the project. Since protective indemnity only pays for established losses, it typically takes some time to vet out its value.

Mitigation

Mitigating damage is a more proactive insurance coverage for a project, especially for design claims discovered during the course of the construction or warranty period. The coverage looks at the significant project design problems early on. If the problems require immediate attention, the coverage brings all parties to the table without litigation, while potentially providing immediate funds to remedy the design problems.

The issue of fault can be resolved later after the project meets the owner’s satisfaction. Once full design liability has been established through mediation or litigation, the contractor and his or her insurer jointly look to recover mitigation of damage advance payments that have been made from the negligent third-­‐party designer.

A contractor who subcontracts design or provides design-­‐build or construction management services should purchase a professional liability policy. The Public Liability policy does not cover the risks involved in these contracts.

In some cases, design liability is inadvertently assumed on an indirect basis (e.g., fire protection, life safety/lighting, signage, roofing, mechanical, electrical, curtain walls, etc.) when the contractor subcontracts the activity to a non-­‐professional entity. This entity may also subcontract design services. Claims have arisen when a critical part of the job had a design-­‐build component that resulted in a professional liability loss despite the fact that the contract for work was a general construction lump sum agreement.


Download pdf



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.

  • Follow Us:  
  •  
  •  

Corporate Office

M6, M Block Market, Greater Kailash-II, New Delhi-110 048
+91-11-40 50 51 52, +91-11-40 50 51 53

Registered Office

M4, Greater Kailash-II, New Delhi-100 048
+91-11-40505159
info@optima.co.in

IRDA Registration Number 326  |  CIN : U66030DL2000PTC103603  |  Category : Direct Broker (Life and Non-Life)  |  License period : 22-03-21 to 21-03-24
© 2021 Copyrights, Optima Insurance Brokers Pvt. Ltd.