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Commercial General Liability Insurance

Posted on: November 8th, 2019 by shiv No Comments

What is a CGL policy?

CGL covers Third party Liabilities arising from various business exposures such as those arising from Premises, Products, Advertising and Personal injury. E.g. injury sustained by a potential customer whilst at the premises of the insured. The injury would be due to a fall on a freshly mopped floor, slipping down the stairs or due to a fire incident in the premises.

Why is Commercial General Liability (CGL) policy required?

Consumers and customers in the upper income strata are increasing getting aware of their legal rights and are exercising them without qualms.

In this scenario it becomes important for large corporations and big brands to protect themselves from alleged and real claims with can cause financial outgo.

What does the policy cover?

The policy is split up into 3 coverages as follows:

  • Coverage A – This covers the damages because of bodily injury and property damage claims that may be made on the insured.
  • Coverage B – Under this section, the insurance company pays those sums that the Insured becomes legally obligated to pay because of Personal and Advertising injury liability.
  • Coverage C – extends to Medical Payments wherein the insurance company agrees to pay medical expenses upto a particular limit for bodily injury caused by an accident on the premises owned or rented by the insured or because of his operations.  These payments are made regardless of fault.

The policy covers businesses against:

  • Legal liability of the insured towards damages to the third party in respect of accidental death, bodily injury or loss of or damage to property.
  • Legal costs and expenses incurred by the Insured with prior consent of the Company.

Limit of Liability:

The total liability of the insurer has two limits: Per Claim Limit called AOA limit (Any One Accident) and Per Annum Limit called AOY Limit (Any One Year)

Major Exclusions are:

  • Pure financial losses and insolvency
  • Product Guarantees
  • Damage to own property
  • Contractual Liability
  • Punitive & Exemplary damages
  • Political risks
  • War, civil war, terrorism & sabotage
  • Prior acts and pending litigation

Directors’ and Officers’ (D&O) Liability Insurance

Posted on: November 8th, 2019 by shiv No Comments

Directors & Officers Liability is the liability of corporate board members and officers arising out of their actions pertaining to their management duties of the company.

Directors’ & Officers’ Liability Insurance insures the personal assets of directors and officers from lawsuits arising out of their capacity as directors or officers of the company.

Some of the heads of officer liability – allegations and offences that can invite legal action are:

Hostile Work Environment
A female employee at a family-owned company claimed that a male supervisor offered to improve her performance evaluation in exchange for sexual favors. According to the employee, after she refused, her evaluations worsened and she ultimately was fired. She sued both the company and its CEO. She claimed that the CEO was personally liable for damages because he knew or should have known about past incidents of sexual harassment by the male employee, and failed to terminate or otherwise discipline him. Rather than face the expense and risk of trial, the company and the CEO settled all claims against them for Rs. 90 lakhs. In addition, defense costs incurred were Rs. 50 lakhs.
  • Breach of fiduciary duties
  • Inaccurate financial statements
  • Mismanaging corporate assets
  • Fraud and dishonesty
  • Misuse of insider information
  • Environmental and pollution claims
  • Product liability
  • Conflicts of interest
  • Wrongful dismissal of employees
  • Breach of health and safety standards
  • Anti-trust violations
  • Sexual discrimination and harassment; disability discrimination
  • Corporate Manslaughter – management failures that result in death
  • Irregularities in Securities issues
  • Tax evasion, tax liabilities and penalties
  • Unauthorized or imprudent loans and investments
  • mismanaging mergers and takeovers
  • Insolvency actions
  • Breach of minority shareholder rights

Litigation can come from:

  • Shareholders and other investors
  • Creditors
  • Lenders
  • Customers
  • Statutory Authorities
  • Employees
  • Competitors

The policy pays for the legal expenses and the court awards against the directors and officers.

Workmen’s Compensation Insurance

Posted on: November 8th, 2019 by shiv No Comments

Purpose

Employer shall be liable before the Court of Law to pay compensation, in accordance with the provisions of Workmen Compensation Act, 1923, for personal injury or death or disease contracted specified therein as an occupational disease peculiar to that employment in Part A Schedule III of Workmen Compensation Act 1923, caused to a workman by accident arising out of and in the course of employment.

‘Personal injury’ under the Act means physiological injury. It may be external, or it can be internal also.

Workmen:

All employees working for the employer/ insured. In case of contract labour the liability of the principal is absolute though he may not be the actual employer. e.g For The Security Gaurds provided by a security agency, the liability under WC Act also falls on the Principal.

Wages:

For purpose of calculating any claim the monthly wage taken into account are the actual wages subject to maximum of Rs.4,000/. Wages includes all allowances and cost of perks.

Legal Liability may arise due to:

  • Breach of, any of the, statutory regulations provided for ensuring safety to workers inside the factory premises.
  • Negligence of co-employees.
  • Injury or Accidental Injury to workers while performing their duties

Policy covers is subject to

  • Workmen’s Compensation Act, 1923
  • Fatal Accidents Act, 1855
  • Any other Common Law

Employer is liable to pay compensation for:

  • Death
  • Permanent total disablement
  • Permanent partial disablement
  • Temporary disablement whether total or partial

The Employer need not pay compensation – in respect of any injury caused by an accident which is directly attributable to

  • The workman having been at the time under the influence of drink or drugs.
    Or
  • Willful disobedience by the workman of orders and rules expressly given to secure the safety of the workmen
    Or
  • Willful removal or disregard by the workman of any safety devices provided for the safety of workmen

In cases of death or permanent Total Disablement of a workman, the above defences are not available to Employer.

If any disease is prescribed in the Act as “Occupational Disease”, the illness is deemed to be an injury. If the Employer defends the Claim, such expenses are also payable.

Extension of cover

Policy may be extended to cover Medical expenses incurred by the employer by payment of additional premium as per Workmen Compensation policy.

The Company shall not be liable under the policy in respect of:

  • Any injury by accident or disease directly attributable to war invasion act of foreign enemy hostilities (whether war be declared or not) civil war, mutiny, insurrection, rebellion, revolution or military or usurped power.
  • Liability towards employees of the contractor.
  • Liability of the insured which attaches by virtue of an agreement but which would not have attached in the absence of such agreement.
  • Sum which the Insured would have been entitled to recover from any party but for an agreement between the Insured and such party.

When does a claim arise under WC ACT:

The Claim under WC Act arises in case of any injury (fatal & non-fatal) / decease arising out of and in course of his employment.

IN case of an accident invoking liability under WC  ACT the employer/insured needs to take following steps:

  • Inform the incident to WC Commissioner in whose jurisdiction the accident occurs.
  • Inform Police of the incident.
  • Inform us of the accident.

Claims Procedure

For preferring a claim he needs to submit us the following Documents to enable us to proceed with investigation of the case:

  • Claim Form duly filled and signed (A specimen blank copy enclosed)
  • Submit proof of employee/ Employer relationship.
  • Police FIR/ PMR (In case of fatal accidents)
  • Internal/ Dept Enquiry report.
  • Report from Labour Dept.
  • Copy of letter informing WC Commissioner of Accident.
  • Medical record / reports showing nature & extent of Disability in case of Permanent Disability cases.
  • Medical records/ reports evidencing the medical expenses and period of temporary disability.
  • Leave record of the employee in case of  WC Claim.

The investigator is appointed to verify the records wage Bills/ Employment records and any shortfall  in premium (i.e under-declaration of Wage Bill or No. of employees) till date plus  a reasonable premium for future  needs to be necessarily deposited before the claim is settled. In case of glaring difference between the initial declaration and the actual figures are detected, the claim may even be prejudiced.

In the event of claim, the Insured must inform the insurer in writing & request for a Claim Form

In Case of death of employee

  • Claim form
  • Confirmation that the accident has happened in the course of employment
  • Age proof for the deceased employee
  • Complete Medical Papers
  • Post Mortem Certificate
  • Copy of Order of the WC Commissioner for the award passed
  • Statement of Wages
  • Muster Roll of the employees

Proof of payment In case of Permanent Total Disablement and Permanent Partial Disablement

  • Claim form
  • Confirmation that the accident has happened in the course of employment
  • Age proof for the disabled employee
  • Complete Medical Papers
  • Disability Certificate of the attending doctor
  • Copy of Order of the WC Commissioner for the award passed
  • Statement of Wages
  • Muster Roll of the employee
  • Proof for Payment.

In case of death and Permanent disablement claims, the claim would be processed only after the full compensation is deposited before the Commissioner

In case of Temporary Total Disablement

  • Claim form
  • Confirmation that the accident has happened in the course of employment
  • Complete Medical Papers
  • Fitness Certificate from the attending doctor
  • Statement of Wages
  • Muster Roll of the employee
  • Complete list of workers employed as on Date of Accident under all categories
  • The Company reserves the right for appointing of an investigator for the claim.
  • On receipt of the above documents by the Insured, the claim will be processed.
  • Earnings, Wages and Salaries

Shall mean the employees total remuneration paid or fallen due for payment including overtime, value of board and/or lodging, housing accommodation bonuses and all other perquisite privileges or benefits in kind or money, received by the employees from the employer in connection with their employment.

Or

As specified under Workmen Compensation Act, 1923.

Or

The Sum insured available under the policy. Whichever is less.

Quantum of Claim:

The amount of claim payable under WC Policy is strictly governed by the WC ACT  and depends upon two factors:

  • Monthly wages of the employee.
  • Age of the Employee. Based upon the age the WC ACT specifies a Factor Multiplier Table which is appended with this note.

When Death results from the injury:

An amount equal to 50% of the monthly wages of the deceased workman multiplied by the relevant factor.

Or

An amount of Rupees eighty thousand whichever is more.

When permanent total Disablement results from the Injury:

An amount equal to 60% of the monthly wages of the injured workman multiplied by the relevant factor.

Or

An amount of Rupees Ninety Thousand whichever is more.

When permanent Partial Disablement results from the injury:

In case of an injury specified in the ACT, such percentage of the compensation which would have been payable in case of Permanent Total Disablement as is specified therein as being the percentage of the loss of earning capacity caused by that injury.

And

In case the injury is not specified in ACT, such percentage of the compensation payable in case of permanent total disability as is proportionate to the loss of earning capacity(as assessed by the qualified medical practitioner) permanently caused by the injury.

(where more injuries than one are caused by the same accident, the amount of compensation under this head shall be aggregate but not so in any case as to exceed the amount which would have been payable if permanent total disablement had resulted from the injuries.)

Where Temporary Disablement whether total or partial results from the Injury:

A half monthly payment of the sum equivalent to 25% of the monthly wages of the workmen, if the disablement is for more than 3days. This will continue during the period of disablement or 5yrs. whichever is shorter.

THE WC Claim needs to be deposited necessarily with WC Commissioner of the Area, unless order to the contrary are obtained from him. The discharge of WC Commissioner is sufficient discharge for us.

 

 

Crime Insurance

Posted on: November 8th, 2019 by shiv No Comments

Crime insurance covers the losses resulting from criminal acts such as robbery, burglary and other forms of theft either by employees or third parties. It is a superior replacement for ‘Fidelity Guarantee Insurance’.

It covers acts by employees, third parties, temp or seasonal staff, contractors and outsourcing operations. Other than compensation for established losses the policy can reimburse fraud investigations costs.

This policy can cover any or all of the following risks:

  • Employee Theft
  • Forgery or Alteration
  • Inside the Premises – theft of money and securities
  • Inside the Premises – robbery or Safe burglary of other property
  • Computer Fraud
  • Funds Transfer Fraud
  • Money Orders and Counterfeit money

Some insurance companies can also provide the following extensions:

  • Client loss
- Where the insured is responsible for the care, custody and 
control of clients’ money, securities or property; and such 
has been lost under the main cover
  • Fees, costs and expenses
    • Auditor fees or investigation costs to identify covered losses
    • Legal fees in defense of demands or claims resulting from 
a covered loss
    • Fair and reasonable costs to restore the insured computers 
following a covered loss
  • Automatic Cover for Acquisitions 
- Cover provided if gross turnover and number of employees is each less than 15% and the business is not materially different from the insured’s current business
  • Discovery period
- If an insured decides to discontinue a commercial crime 
policy a discovery option is available to cover unknown loss

Money Insurance

Posted on: November 8th, 2019 by shiv No Comments

Highlights

Money Insurance policy provides cover for loss of money in transit between the insured’s premises, bank, vendors, customers, post office or other specified places due by robbery, theft or any other fortuitous cause.

The policy also covers loss by burglary or housebreaking whilst money is retained at Insured’s premises in safe(s) or strong room.

Scope of Cover

  • Section I: Covers money in transit including cash like instruments like Bank Drafts, Currency Notes, Treasury Notes, Cheques, Postal Orders and current Postage Stamps.
  • Section II: Covers money in safe, counter, till or on premises

Basis of Sum Insured

Two amounts are specified in the policy for the purpose of premium computation and liability:

  • Limits of liability for any one loss (i.e. maximum liability of the Company)
  • Estimated amount that will be carried between any two points during the year

Extensions

This policy can be extended to include

  • The risk of embezzlement by employees
  • Terrorism
  • Compensation to employees if they are injured in an assault resulting in looting of money been carried by them

Exclusions

  • Shortage due to errors or omission

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.


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