There has been a big jump in financial liability insurance in
India. The industry is growing about 10-20% every year and is not
expected to slow down. Here are some of the reasons why.
What FLI offers?
There are
different types of FLI. Most are made to guard companies and individuals
against lawsuits and other claims. The three main types are general,
professional, and product. These cover things like credit issues,
problems facing company leaders, and factors about the public. It
reduces the fines that companies and individuals have to pay when they
are named in a suit. Law and third-party suits are rising by 30-40%
every year. This is due to changes to the legal and professional layout
of the financial services industry.
A changing business world
India is seeing a lot change in its business segment. The country is
facing more financial demand. Companies are more tied to foreign
branches. Investors and employees are more active in speaking out about
problems and what they need. These factors mean company officers,
directors, and shareholders are under more stress. They have more people
watching what they do. New laws and truths also mean more room for
making mistakes. Director’s and officer’s insurance is the fastest
growing kind. This covers them for error, workplace misconduct, and
legal fees in case of a lawsuit.
The Satyam Scandal
In 2009, the chairman for the Satyam Computer Services Company admitted
to fraud. He stepped down from his role and faced his crime. This
caused problems for the other top employees at the company. They faced
an uproar as many were sued and suffered big losses. The governing body
PriceWaterhouse Cooper was found to be too relaxed in following
standards. It had to pay big fines to the US Securities and Exchange.
The scandal drew a lot of media interest, which caused public outcry.
This issue had a big effect on the financial services industry. It
sparked legal change that affected the need for insurance.
The Companies Act
In 2012, the government changed the Companies Act. New laws make
business more see-through. They increase the duty to have company
supervision. It also explains the role of independent directors. This is
in the wake of the Satyam Scandal. The act allows mergers with foreign
companies. This puts more focus on international values. It also creates
financial demand in the country. The new act allows class action suits
to be filed against top company members. Other members or clients can
make a claim for errors and fraud. These changes make more charge within
companies, and therefore increase the demand for insurance.
Conclusion
The factors around India’s financial services industry in recent years
have made a need for insurance. It is vital to the ongoing growth of the
sector. Global mixing with big firms means tough regulators. It pushes
India’s top company heads to expand their skills and knowledge. Stricter
management is required. Media scrutiny is much more important. This can
greatly add weight to finger pointing. It creates more personal risk
for solo board members. Coverage is only likely to grow in years to
come. There is both the want and need for more armor.