This policy provides protection for claims brought against directors, officers and employees for actual or alleged breach of duty, neglect, misstatements or errors in their managerial capacity.

For further details or queries on the above, please email us at liability.insurance@tata-aig.com

CorporateGuard - Directors and Officers Liability Insurance

The sources of possible actions against directors are wide and varied. As one of the leading Directors and Officers (D&O) liability insurers in the world, we know that directors are particularly exposed following merger and acquisition activity and company liquidations. Employee actions against directors are another frequent source of claims in areas such as racial discrimination, sexual harassment and unfair dismissal. Further actions can arise as a result of Regulators' actions under various statutes, such as the Companies Act 1956, Securities and Exchange Board of India Act 1992, Foreign Exchange Management Act 1999, etc.

Reports on Corporate Governance like the Kumaramangalam Birla Report 1999, the Narayana Murthy Report 2003 and Clause 49 of the listing agreement with stock exchanges, etc. set out the breadth and scope of board level responsibilities more clearly than ever before. These statutes set the standards for directorial behaviour and at the same time increase the potential for actions against directors who fall short of these standards. Defence costs and damages in such actions can vary from thousands to millions of rupees and the length of time taken to settle cases can extend from several months to several years.

The regulatory environment facing the directors of today's companies is more rigorous, and their responsibilities more onerous than at any time in living memory. The next few years will see even tighter legislation and increasing globalization of business, thus subjecting directors and officers to closer scrutiny from shareholders, customers, employees, suppliers and regulators not just in the global market place but also in their domestic environment.

Tata AIG has anticipated this changing environment. We know how important it is to give directors and officers the best possible protection. We have a history of successful innovation and market leadership in providing management liability insurance and offer a comprehensive Directors & Officers Liability Insurance solution - CorporateGuard.

The Management Challenge - and Tata AIG's Apt response 
 
Directors and Officers liability insurance covers risks faced by management in today's business environment. Corporate Governance, shareholder activism, employment practice litigation, transparency requirements and increasing regulatory supervision & investigation necessitate a comprehensive management liability solution which the CorporateGuard Directors and Officers liability insurance policy provides.

Why is a Directors and Officers liability insurance policy required?
 
Some of the specific exposures that make D&O insurance necessary for the Directors and Officers are:

• Vulnerability to shareholder/stakeholder claims
• Sexual harassment, discrimination allegations and other employment practice violations
• Regulatory investigations
• Accounting irregularities
• Exposures relating to mergers and acquisitions
• Corporate Governance requirements
• Compliance with various legal statutes

Who can bring an action against Directors and Officers? 
 
• Employees
• Suppliers
• Competitors
• Regulators
• Customers
• Shareholders
• Other stakeholders

Who does the cover apply to? 
 
The cover applies to former, present and future members of the board of directors, the management and any employee performing a managerial or supervisory role.

What does the Directors and Officers liability insurance policy cover? 
 
The D&O policy provides cover for the personal liability of Directors and Officers arising due to wrongful acts in their managerial capacity. Defence costs are also covered and are payable in advance of final judgment.

Why should Indian companies buy Directors and Officers liability insurance? 
 
Indian companies need to purchase D&O insurance to protect their Directors and Officers from exposures arising out of compliance with various statutes. Directors have highly demanding legal obligations to uphold. They also have a fiduciary duty to exercise skill, care and diligence. Further, even independent and nominee directors are held to be equally accountable to stakeholders.

Also, as Indian companies foray into the global marketplace to sell their products and services or to mobilize capital, they need to purchase D&O insurance to secure protection from overseas exposures.

AIG - Pioneers in D&O liability insurance 
 
Having pioneered the Directors and Officers liability insurance, AIG is the most preferred underwriter of D&O Insurance among the Fortune 500 companies in the United States. AIG's inherent strengths available to the Indian industry through the Tata AIG partnership include:

• Superior claims handling ability
• Presence in more than 130 jurisdictions
• Local expertise, understanding and support with global backing
Note: For complete details on policy coverage and interpretation, please refer to the policy wording.

For further details or queries on the above, please email us at liability.insurance@tata-aig.com

Provides protection for the company and its subsidiaries for claims brought in respect of negligent acts, errors or omissions in the performance of professional services. The policy is meant to pay for defence expenses and damages and includes amounts that the insured is legally required to pay because of judgments, arbitration awards or the like rendered against the insured, or for settlements negotiated in accordance with the coverage afforded by the policy.

Cover Includes 
 
Tata AIG provides customized insurance policies including sophisticated insurance solutions for:

• Information Technology Companies
• Call Centres / Business Process Outsourcing Companies
• Financial Institutions
• Media Companies
• Consultants
• Law Firms
• Other Professionals

Exclusions 
 
Main exclusions under the policy are:

• Known wrongful acts
• Bodily injury and property damage claims
• Insured versus Insured claims
• Contractual liability exposure
Note: For complete details on policy coverage and interpretation, please refer to the policy wording.

For further details or queries on the above, please email us at liability.insurance@tata-aig.com

The Indian capital markets are witnessing an unprecedented boom and corporate India is all set to leverage this opportunity to raise funds and achieve their corporate objectives. However, this increased market exposure leads to increased stakeholder litigation and with this increase in litigation comes a growing awareness of the responsibilities incumbent on the directors and officers of companies.

This is especially true when the company makes a public offering of its securities. Signatories of a public prospectus have a personal responsibility for its contents and could therefore be found personally liable for the losses of securities holders arising from misrepresentations within the prospectus. These potential liabilities arising out of the issue of a prospectus can be very large. Most securities actions are fuelled by unfulfilled investor expectations, so as well as being substantial, legal actions can also occur much after the transaction. IPO Insurance (also known as Public Offering of Securities Insurance - POSI) addresses these uncertainties by ring-fencing securities exposures in a single premium, transaction-specific policy.

Raising capital in a risky world 
 
Investors and analysts have always scrutinized the prospectuses of companies raising capital for Stock exchange listings, mergers, expansions, etc. The scrutiny does not stop once the transaction has been completed. Shareholders and investors want to know how well their money has been invested and that also in an unforgiving environment.

The need for specialist insurance protection for issuers of securities has never been greater, and yet an alarming number of public offerings go ahead without suitable protection for the issuing company and its directors, officers and employees.

Features 
 
Who can buy a POSI policy?

POSI is designed for any company that is raising capital through the publication of a prospectus. It can provide cover for introductory offerings (IPO), secondary offerings and can also cover private placements.

Note: For complete details on policy coverage and interpretation, please refer to the policy wording.

For further details or queries on the above, please email us at liability.insurance@tata-aig.com

Benefits 
 
What are the benefits of POSI?

• POSI gives companies the opportunity to ring-fence the significant and long-term exposure presented by securities offerings.
• POSI being a transaction specific product ensures suitable coverage to the insureds and protects the existing D&O contracts.
• Accounting rules may allow for the POSI premium to be capitalized against the offer proceeds, without being considered as a bottom line deduction from the company's profit and loss account.
• POSI is a transaction specific product and the policy period can be customized to provide protection for upto six years.

Cover Includes 
 
What does POSI cover?

• POSI protects the insureds against securities claims arising from an offering of a company's securities.
• POSI can also cover liabilities arising from negotiations, discussions and decisions in connection with the offering.
• Cover includes punitive and exemplary damages.

Whom does the cover apply to? 
 
The POSI policy covers to the company and its directors, officers and employees for securities claims brought against them in connection with the offering.

It is precisely because companies trust their staff, that many companies don't think they need protection from fraud. The unpleasant statistic is that about 90% of company fraud is carried out by a company's own employees, and it is usually by its managers and supervisors.

The truth is that it's the more trusted and senior staff that have knowledge to skirt round security measures and set up insidious fraud systems. And when they strike, it's usually not once, but again and again over a period of time (often years), sometimes on their own, sometimes in collusion with outsiders.

Clever concealment is why most frauds are uncovered by accident and why recovery rates are so low. Fortunately it's only the minority of trusted staff who turn nasty but there are many reasons why they do turn nasty - company separation, which can be emotionally devastating and financially crippling, company restructures which breed resentment with new bosses, frustration with career prospects, a looming retirement date and pension worries and even boredom.

All of these situations can and do give trusted staff the malign motivation to steal. Of course, we hope they don't, but the facts speak for themselves. We have developed our Crime insurance products for companies that don't want to rely on wishful thinking and require protection or safeguard from such frauds.

Note: For complete details on policy coverage and interpretation, please refer to the policy wording.

For further details or queries on the above, please email us at liability.insurance@tata-aig.com