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Remya Nair

Adith Charlie

Mumbai, Nov. 12 The Satyam fiasco appears to have no impact on premium rates for ‘Director and Officers Liability’ insurance cover in India.

Even though reinsurance rates for this segment have moved up internationally, Indian IT companies have managed to renew their covers at lower rates.

According to industry officials, IT companies such as Tech Mahindra, Wipro, Infosys and Cognizant got very good deals while renewing their D&O cover.

“We have seen situations where some of the directors and officers liability insurance premiums have drastically come down despite apprehensions that the entire Indian market would get punished due to the Satyam incident. However, as India has not had many claims, the premiums have not risen. The D&O premiums for a few major technology clients have come down significantly,” said Mr Sanjay Kedia, Country Head and CEO, Marsh India.

The fall in premiums has varied based on client-specific experience. The premium rates have come down by 5-25 per cent, he added.

The international reinsurers have not raised rates for Indian companies, which is why premium rates have not gone up, said Mr Rahul Aggarwal, CEO, Optima Insurance Brokers.

“D&O premium rates have not been affected much in the Indian market because there have not been too many claims. The international reinsurers have acknowledged that their claims experience for the Indian market has been good. That is why they have desisted from raising rates for the Indian market,” he said.

With economic slowdown, premium rates on D&O cover have gone up. However, certain insurers still continue to quote lower rates based on the track record of the companies they are insuring, said Mr Gaurav Garg, Managing Director and CEO, Tata AIG General Insurance.

Mr Ramachandran Venkatesan, Company Secretary, Wipro, said: “Insurance cover taken by Wipro under the directors and officers (Liability) insurance is in line with the demands of the external environment and industry standards. We will not be able to divulge further details about the same.”

Similarly, spokespersons for Cognizant Technologies Ltd and Infosys Technologies refused to provide more details on a questionnaire sent by Business Line while officials at Tech Mahindra were not available for comments.

“The Indian experience is a direct contrast to the situation prevailing in the international markets where the premiums have gone up. It has become difficult to get a cover for fresh liability insurance; it is possible only with huge deductibles,” Mr Kedia said.

However, premium rates could go up next year when April renewals occur.

Though the covers for existing policies have been renewed at the same prices, there has been a 10 per cent increase in premium rates for new business. Next year, there could be an upward pressure on renewal premiums as it will track this year’s premiums in the new business segment, Mr Aggarwal added.

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