Director and Officers liability Insurance

Master of Business Economics [M.B.E.]

Semester-2
In the subject of
BANKING AND INSURANCE

Submitted by
Hetal Kakdiya 13
Trushna Madhak 14
Vandna Radadiya 25
Lopa Shah 28
Bhumika Vanpariya 32

Submitted to

SEJAL SHAH
Director and Officers liability Insurance

Introduction:

In recent years, directors and officers liability insurance has become a core component of
corporate insurance. As many as 95% of Fortune 500 companies maintain directors and officers
("D&O") liability insurance today. Furthermore, it has become a commonplace of the financial
world that disappointed investors will charge corporations and their officers and directors with
securities fraud whenever a company's stock drops significantly in price. Studies indicate that
the average settlement of securities fraud litigation in 1999 was greater than $8 million, with
average defense costs exceeding $1 million. In light of these numbers, it should not be
surprising that such litigation has become almost routine, and D&O liability insurance plays a
large role in handling it. At the same time, the D&O insurance industry has become highly
specialized and new products are constantly emerging to meet the needs of specific markets.
This article will discuss the historic and current trends in the industry. In addition, this article
will address some of the primary legal and coverage concerns that must be considered by
underwriters, claims handlers, corporations and their executives, and the attorneys who
represent them.

Definition

serving in their capacity as corporate officers. Directors and officers (D&O) insurance is risk-
reduction coverage for the executive staff of companies that may be subject to lawsuits. Lawsuits
occasionally are filed when investors lose money, and upper management--especially directors,
officers and board members--can be included. Even if the lawsuits are dropped or settled outside
of court, attorneys fees can be high. D&O insurance limits the liability, so that the personal
assets of each director or officer are not compromised.

History of D&O Insurance:

In the 1930s, in the wake of the depression, Lloyd's of London introduced coverage for
corporate directors and officers. At the time, corporations were not permitted to indemnify
their directors and officers. Joseph P. Monteleone & Nicholas J. Conca, Directors and Officers
Indemnification and Liability Insurance: An Overview of Legal and Practical Issues, 51 Bus. Law
573, 574 (1996). However, directors and officers did not perceive a great risk, and the insurance
did not sell. Well into the 1960s, the market for D&O coverage was negligible. In the 1940s and
1950s, courts, corporations and directors and officers began to see benefits to corporate
indemnification and prompted state legislatures to enact laws permitting it. Then, during the

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1960s changes in the interpretation of the securities laws created the realistic possibility that
directors and officers themselves, and not only corporations, could face significant liability. See
Roberta Romano, What Went Wrong with Directors' and Officers' Liability Insurance, 14 Del. J.
Corp. L. 1, 21 & nn. 74-77 (1989). Insurers responded to these changes by reviving specialty
coverage for the "personal financial protection" of directors and officers.
The historic focus on "personal financial protection" distinguished D&O insurance from other
kinds of commercial insurance that cover identified areas of corporate risk. Insurers had
defined corporate risks they would insure. General liability insurance provided corporate
insurance for bodily injury or property damage claims; fidelity bonds afforded specified first-
party coverage for losses corporations incur due to certain acts of their officers, directors, or
employees. D&O coverage, on the other hand, was not intended to be corporate insurance;
much less an attempt at general corporate insurance for liability caused the corporation by
virtue of the acts of its directors and officers. In recent years, however, D&O coverage has
undergone a number of changes.

Likely Targets

The Watson Wyatt Worldwide Survey regarding lawsuits involving corporations reports that
corporations with large assets are most likely to be named in a lawsuit. According to the survey,
the most likely organizations to have claims filed against their directors and officers and have
more claims per entity are large national banks. Large technology companies also have become
targets of lawsuits, mainly because of the fluctuations in the value of stock and significant losses
by investors.

Coverage Areas

Over time, the coverage areas included in D&O protection have expanded. A-side endorsement
coverage provides coverage for officers and directors that include legal-defense costs when a
company does not indemnify its directors and board members. Some states do not allow
companies to indemnify their officers and directors in such lawsuits as securities violations.
B-side endorsement provides coverage to officers and directors who are indemnified by their
company. This section does not cover or reimburse costs or losses for the corporation itself.
C-side endorsement coverage allows for entity securities coverage, which provides coverage
when securities claims are made against the corporation and its officers and directors.

Customized Coverage’s

D&O insurance has evolved as insurance providers strive to meet the needs of their clients.
Customization of benefits designed to fit specific industries is available because the types of
suits and claims differ from organization to another. For example, health care organizations face
different types of suits than large banking organizations, whose coverage needs will differ from
those of technological companies.

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 Exclusions

Exclusions to D&O insurance coverage include fraud and dishonesty. The policy will not cover
costs caused by the breaking of laws. It also does not provide coverage when one corporate
member is suing another member of the same corporation. And there is no coverage for
professional liability, meaning that if a board member also serves as an attorney for the
corporation, the policy doesn't extend to the member if he is acting as attorney for the
corporation. It covers only members

 
When do I need Directors & Officers Insurance?

You need Directors and Officers Liability insurance when you assemble a board of directors. They will
frequently make the requirement.

  Investors, especially Venture Capitalists, will also usually require that you show evidence of Directors &
Officers Liability insurance as part of the conditions of funding your company.

Also having employees opens management up to employment practices lawsuits - which usually can be
covered under D & O insurance.
  

 
Why do I need Directors and Officers Liability Insurance?

First, you need Directors & Officers Insurance because claims from stockholders, employees, and
clients will be made against the company, AND against the directors of the company. Since a director
can be held personally responsible for acts of the company, most directors and officers will demand
to be protected rather than put their personal assets at stake.
  Secondly, you need Directors and Officers Insurance because: Investors and members of your board
of directors will not be willing to risk their personal assets to serve as a corporate director or officer,
no matter how heartfelt their belief in your company.

Lastly, employment practices suits constitute the single largest area of claim activity under D&O
policies. Over 50% of D&O claims are employment practices related.

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:

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  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

Evolution of 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 - Corporate Guard.

Who can bring an action against Directors and Officers?

 Employees

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  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.

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.

D&O Insurance for Small & Medium-Sized Companies

Today's businesses operate in a fast-moving and dynamic environment. Management is closely involved
in the day-to-day business operations and important business decisions have to be made on the spot.
Such entrepreneurial environment can have a dangerous downside as well. Because the management is
so closely involved in daily operations and is often making key decisions, small company owners and
managers are extremely vulnerable to lawsuits from regulators, shareholders, customers, competitors,
employees and government bodies amongst others. A costly lawsuit of this kind can have a particularly
severe impact on individuals since the owner's personal net worth is often tied to the financial health of
the company. Keeping this in view, Tata AIG has designed a pre-underwritten Directors and Officers
liability insurance policy called Highlight which is designed specifically for the needs of unlisted small and
medium sized enterprises.

 Tata AIG's Highlight D&O policy offers an easy way for small and medium-sized companies to
secure protection for their Directors and Officers from such lawsuits and claims.
 Tata AIG experts can help assess the amount of coverage your company needs based on your
risk exposure and offer you comprehensive protection at affordable premiums.
 Tata AIG's extensive resources and state-of-the-art customer service makes managing risk
simple and cost-effective.

Highlight covers claims made on Directors and Officers of a company by stakeholders including:
Shareholders, Regulatory Agencies, Joint Venture Partners, Lenders, Suppliers, Customers, Consultants,

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 Employees,Trade-Unions.
The Defence costs involved in the claim are also covered under the policy and are payable in advance of
final judgement.

Directors and Officers Liability Insurance

(Often called D&O) is insurance payable to the directors and officers of a company, or to the
corporation itself, to cover damages or defense costs in the event they are sued for wrongful
acts while they were with that company.
Typical sources of claims include shareholders, shareholder-derivative actions, customers,
regulators, and competitors (for anti-trust or unfair trade practice allegations).
Directors and Officers Liability insurance is commonly purchased with a companion product
"Corporate Reimbursement Insurance" (or "Company Reimbursement Insurance"). When
purchased together, a single insurance policy is normally issued which is entitled "Directors and
Officers Liability and Company Reimbursement Insurance". Modern Directors & Officers policies
now frequently include cover for the Company Entity itself as well as Employment Practice
Liability.
D&O insurance is usually purchased by the company itself, even when it is for the sole benefit
of directors and officers. Reasons for doing so are many, but commonly would assist a company
in attracting and retaining directors. Where a country's legislation prevents the company from
purchasing the insurance, a premium split between the directors and the company is often
done, so as to demonstrate that the directors have paid a portion of the premium.
A common misperception of D&O insurance is that it makes directors or officers able to engage
in acts they know to be wrong; this is not the case. Intentional acts are not covered in D&O
insurance. Only negligence by directors or officers would be covered.
In a recent spate of litigation, a number of adverse court verdicts regarding the liability of
directors and officers of companies to a third party were passed where the directors and
officers were held personally liable for payment of compensation to the third party. Ordinarily,
the directors and officers are bound by duty towards the company itself, shareholders,
employees, creditors, customers, competitors, members of the public, government and other
regulatory bodies. Any breach or non-performance in the duties can result in claims against the
companies and/or its directors of the company by reason of any wrongful act in their respective
capacity. The Directors' and Officers' Liability Insurance policy has been designed specifically to
meet any financial liabilities imposed upon them.
This policy is necessary for directors and officers of every company if they wish to avoid
potential litigation owing to-
 Failure of supervision.
 Inaccuracy in statements of financial accounts.

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 Lack of judgement and good faith.
 Mismanagement of funds.
 Mis-statements in prospectuses.
 Allotment of shares.
 Unauthorised loans or investments.
 Failure to obtain competitive bids.
 Imprudent expansion resulting in a loss.
 Using inside information.
 Unwarranted dividend payment, salaries or compensation.
 Misleading statements filed with the stock exchange.
 Misrepresentation in acquisition agreement for the purchase of another company.
 Wrongful dismissal of an employee.

Risks covered:

This policy covers all claims made in event of-

 Mergers, takeovers and divestment.
 Liquidation.
 Changes in control of shareholding.
 Share issues.
 Shareholder claims.
 Misdeeds of co-directors.
 Trustee accountability and responsibility.
 Customs and excise allegations.
 Administrative liabilities.
 Termination of employment.
 Disposal of old firm/ entry of new owners.
 Miscellaneous litigation.

Directors & Officers Liability Claims:

Directors & Officers of both Public and Private Companies face legal liabilities in their service
to the corporation. The claims experience between the two varies. Public Companies
experience more frequency and severity of claims related to shareholder issues, while both
Public and Private Companies face similar experience for Employment Related Claims. Below is
a partial list of typical claimants:
 Shareholders
 Employees
 Creditors
 Customers/Clients
 Competitors

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 Government Regulatory Agencies

Bhopal disaster Case, AIR 1990 SC 273:

The Bhopal disaster was an industrial disaster that occurred in the city of Bhopal, Madhya
Pradesh, India, resulting in the immediate deaths of more than 3,000 people, according to the
Indian Supreme Court. A more probable figure is that 8,000 died within two weeks, and it is
estimated that an additional 8,000 have since died from gas related diseases.
The incident took place in the early hours of the morning of December 3, 1984, in the heart of
the city of Bhopal in the Indian state of Madhya Pradesh. A Union Carbide subsidiary pesticide
plant released 42 tones of methyl isocyanate (MIC) gas, exposing at least 520,000 people to
toxic gases. The Bhopal disaster is frequently cited as the world's worst industrial disaster The
International Medical Commission on Bhopal was established in 1993 to respond to the
disasters.

Insurance Law
D&O Liability Insurance – Defined

Has your insurance claim been denied or underpaid? You may have a lawsuit. Get a free case evaluation
from an experienced attorney.

Directors and Officers (D&O) liability insurance protects directors and officers from liability
arising from actions connected to their corporate positions. D&O coverage was very rare just a
few years ago. The Enron and WorldCom debacles were a wakeup call for many companies who
began to think that D&O insurance might just be worth the price.

In 2002, the Congress passed the Sarbanes Oxley Act, which has had a major impact on directors
and officers liability. Even though the act focuses on improving corporate governance by
protecting shareholders, the result has been increased litigation and more fines and penalties.

DIRECTORS AND OFFICERS LIABILITY POLICY

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 1) Salient Feature. 1

2) Scope of Cover 1

3) Premium Rating. 1

4) Principal Exclusions. 1

Salient Feature
The basic Companies Act 1956 itself and its various amendments through years have made the Directors
and Officers widely exposed to liability towards shareholders, customers, suppliers, creditors, employees
and other third parties. Our Directors and Officers Liability policy has been specially designed to provide
protection to the Directors and Officers against liability to pay compensation on account of their
wrongful act. With the latest amendments in the Companies Act, this policy is a must for Directors and
Officers to remove their stress over liabilities and concentrate freely on the development of the business
of the company.

Scope of Cover
National Insurance shall pay on behalf of the insured

          All losses the insured are legally obligated to pay or

          Which the company is legally required or permitted to pay to the insured
under applicable Company Laws or Agreements

For a claim against an insured for a wrongful act of the insured. Defence costs are also
reimbursable under the policy.

Wrongful Act: Defined as any actual or alleged act, error, omission by the insured(s)
while acting in their capacity as Directors and Officers of the company. Wrongful act also
means any matter claimed against Directors and Officers solely by means of their status
as Directors and Officers of the company.

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 Policy is on claims made basis.

Policy can be extended to cover:

a)        Non-Executive Directors.

b)        Spouses of Directors and Officers.

c)        The Estates, heirs, legal representatives of the deceased insured.

d)        Outside Directorship.

Legal liability to a Third Party may arise in case of claims by :

a)         Employees/former employees

b)         Shareholders

c)         Competitors

d)         Company bodies

e)         Suppliers

f)           Creditors

g)         Other third parties etc.

Premium Rating
The rating would vary from client to client depending upon a number of factors like the profile of the
client, the Sum Insured selected, present and past functioning of the company, information in the
balance sheet and annual report, degree of exposure etc., and can be decided only after analyzing the
full information.

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 Principal Exclusions
a)        Dishonest, fraudulent, criminal or malicious act.

b)        Personal guarantee.

c)         Libel and slander

d)        Personal injury and damage to property.

e)        Pollution damage

Many of the exclusions can be waived on payment of extra premises.

Example OF Director and Officers liability Insurance

1) Reliance Directors and Officers Liability Policy 

 Features

Directors and officers holding top positions in companies are responsible in terms of their actions
towards the company, the shareholders, the employees, and the public at large. The increase in
litigation against directors reflects a change in the attitude of the general public towards greater
management accountability and hence the position of a Director/Officer is becoming more
onerous. The possible consequences of various allegations such as above may lead to either civil
or criminal action being brought against directors and officers. The directors/officers may face
substantial costs in legal costs, which are covered by Reliance Directors' and Officers Liability
Insurance Polic

 Key Benefits

 Exhaustive coverage against different legal risks that directors and officers might be
exposed to
 Liabilities arising out of directorship in subsidiary companies covered
 Outside directorship can also be covered
 Extension available to cover crisis communication
 Court Attendance costs and pollution defense costs are also available as extensions
 Fines and Penalties can also be covered

 Policy Coverage

The policy coverage is provided on claims made basis, meaning that coverage applies only to
claims made against the Director or Officer during the period of insurance irrespective of when

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the wrongful act occurred.

 The Policy offers three covers:

 For the Directors and Officers: Pays on the behalf of the directors and officers all loss
arising out of a claim for wrongful act for which coverage applies under this Policy and
for which the Directors and Officers are not entitled to indemnification from the
Company.
 For the Company: Pays on the behalf of the Company all loss arising out of a claim for
wrongful act for which coverage applies under this Policy and for which the Company is
permitted or required by law to grant indemnification to the directors and officers.
 For Advancement of Legal Costs: Covers the legal costs reasonably incurred by the
directors/officers in defending any claim against them before civil and criminal courts in
respect of a Wrongful Act for which coverage applies under this Policy.

For Regulatory Proceedings: Pays the legal costs reasonably incurred by

directors/officers in respect of their attendance at regulatory proceedings.

 Extensions Available

The following extensions are available to cover:

 Extended Discovery Period

 Auto acquisition of subsidiaries
 Outside Directorships
 Crisis Communication Cover
 Court Attendance Costs
 Pollution Defense Costs
 Director Versus Director
 Allocation of Legal Costs
 Fines and Penalties

 Policy Exclusions

This Policy does not apply to :

 Claims arising from or attributable to any Claims or circumstances notified under any
Policy prior to inception of this Policy.
 Claims arising from or attributable to the committing in fact of any dishonest or
fraudulent act or omission or any personal profit or advantage gained by directors and
officers to which they are not legally entitled.
 Claims for the return by the directors and officers of any remuneration paid without the
previous approval of the appropriate governing body of the Company where such

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 approval is required or where any such approval is required by law.
 Claims arising from or attributable to bodily injury, sickness, disease, death, damage or
destruction (including the loss of use arising therefrom) resulting from the hazardous
properties of radioactive or nuclear material or of any radioactive or nuclear facility)
 Claims for bodily injury, sickness, disease or death of any person or damage to or
destruction of any tangible property, including loss of use thereof.
 Claims arising from or attributable to :
o the actual, alleged or threatened discharge, dispersal, release or escape of
pollutants into or upon lands, the atmosphere or any water course or body of
water, whether such discharge, dispersal, release or escape is intentional or
accidental, or
o any direction or request to test for, monitor, clean up, remove, contain, treat,
detoxify or neutralize pollutants
o or any Claims arising therefrom except to the extent any Claim is brought
derivatively by a security holder of the Company who, when such Claim is first
made, is acting independently of the directors and officers and the Company
 Claims arising from or attributable to the directors and officers or the Company carrying
out, or failing to carry out, professional services to a third party or any act, error or
omission relating thereto.

Claims brought by one director or officer against another director or officer unless such Claim is
brought by or against a former Director or Officer or is in respect of an Employment Disput

2) What is unique about Tata AIG Directors & Officers liability insurance
Having pioneered the Directors and Officers liability insurance, Tata AIG is the most preferred liability
insurance underwriter among corporates in India. Tata AIG's inherent strengths available to the Indian
industry include:

 Superior claims handling ability

 Presence in more than 160 jurisdictions

Local expertise, understanding and support with global backing

3) What About Satyam's D&O Insurance?

Posted on January 9, 2009 by Kevin LaCroix

As the details about the Satyam Computer Services scandal have emerged and the U.S. securities
lawsuits have begun to flood in, questions have also arisen about Satyam’s D&O insurance. At least
some of the questions are answered in a January 8, 2009 article in The Economic Times (India’s largest
financial daily) entitled "Satyam Scam Triggers Biggest D&O Claim"

 According to the article, Satyam carries a $75 million D&O insurance program led by Tata AIG,

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which is a joint venture of Tata Group and American International Group. The article also states
that the Satyam claim "could trigger one of the largest Directors and Officers insurance claims in
India."

Of course, knowing the limits of liability under Satyam’s insurance program does not necessarily
tell you how much insurance ultimately will be available to defend and indemnify Satyam and its
directors and officers. In a case where the company’s Chairman has publicly admitted fraud, the
applicable terms and conditions will be absolutely critical. I discuss below a couple of issues that
seem likely to arise.

 The Fraud Exclusion

Without knowing more about the specific terms applicable under Satyam’s D&O insurance
program, it is difficult to say anything with certainty. However, at least in the U.S., D&O
insurance policies do not cover fraudulent, criminal or intentional misconduct.

But, again in the U.S., these exclusions typically do not kick in until there has been an
"adjudication." Even though Satyam’s Chairman has admitted cooking the books, he has not
(yet) been convicted of anything, so to the extent the policy’s exclusions have an "adjudication"
requirement, the exclusions would not apply, at least in the interim.

Moreover, a well-constructed U.S. policy would also contain a "severability of exclusions"

provision so that even if an exclusion would apply to preclude coverage based on the Chairman’s
misconduct, it would not apply to others who were uninvolved in the conduct. Of course, many
questions are now being asked about who else at Satyam might have been involved in the
fraudulent accounting. The Chairman’s letter sought to establish that other board members were
unaware of the fraud.

A prior post discussing the "adjudicated fraud" exclusion can be found .A separate post
discussing an interim decision in the Refco matter and relating to the interaction of the exclusion
and the funding of defense costs can be found.

 Application Misrepresentations?

Another insurance issue that likely will be raised is the question of policy rescission. Given the
magnitude of the fraud and the apparent length of time during which it was going on, the
question may be asked whether the policy was procured through misrepresentations in the
application process.

Under the typical current D&O policy in the U.S., application misrepresentations can serve as a
basis on which the carrier can rescind the policy only as to persons with knowledge of the
misrepresentations and as to persons to whom that knowledge is imputed. A well-constructed
U.S. policy will limit "imputation" so that innocent persons do not risk rescission of their
coverage because of another’s misrepresentation. The imputation language used in Satyam’s

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policy could well be critical.

 A prior post discussing D&O insurance policy rescission issues can be found here (refer
especially to my "final thoughts" toward the end of the post).

 I welcome any insight readers can provide about the provision of the typical D&O insurance
policy in the Indian market, as well as any additional information anyone can supply about the
Satyam program, particularly any additional carriers involved.

 Very special thanks to loyal reader Aruno Rajaratnam for providing a copy of The Economic
Times article as well as other information about Satyam.

 Global Accounting Outlook = Bleak: Fitch's Ratings has issued a January 8, 2009 report
entitled "Accounting and Financial Reporting: 2009 Global Outlook" (available here, registration
required) with some very interesting observations about the year ahead for public company
accountants. As the report states in its opening line, "these are indeed interesting times for
accounting."

Among other things, the report notes the following with respect to the "going concern" questions
that many companies and their accountants will face as the companies prepare their year-end
2008 financial statements:

The sharp decline in global debt and equity securities values and a very difficult credit
environment have presented a unique set of chllenges to the interpretation and implementation of
some pervasive accounting issues. An immediate question facing some companies preparing
their full-year 2008 financial statements, is how best to justify a "going concern" basis, given the
doubts some have about their abiltiy to refinance. Management statements on this issue should
be required reading for investors and analysts. The determination of impairment charges on debt
securities and the lack of clear-cut rules on the subject have pitted some issuers against their
auditors. This is a particularly sensitive issue because profitability and regulatory capital
adequacy are at state for many financial institutions.

 Obviously, insurance companies are among the companies for whom the determination of
impairment charges will be particularly sensitive. And among others who will want to read
companies' managers' statements on the "going concern" issue, in addition to investors and
analysts, are D&O underwriters.

 A news article describing the Fitch report can be found here. Special thanks to a loyal reader for
sending along the news article and a link to the report.

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Conclusion
The director and officer polices liabilities are more costly. There is different product designed by
different insurance companies in India and abroad. The Indian multinational companies
operating across the global have to inevitable purchase director and officer insurance and other
professional indemnity polices to save the interest of the stakeholders. While purchasing the
polices company should the right insurance polices to cover the required liabilities. While
selecting the polices of every company and its directors should understand the nature of their
business, excepted possible litigation and liabilities. Probable claimant extent of the cost and
expenditure either to file or defend the suit , the applicable existing local and national law, the
hierarchy of the court, the mood and attitude of the court to such issue, to possible fraud and
moral hazard in the area. After understanding the requirement   director and officer polices can
be purchased to that affect. Once the police purchased the company and CEOs should read the
policy cautiously and understand the term and condition of the policy.

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