Companies Rush to Buy Cover against Sexual Harassment Liabilities..

DRL, Piramal and Airtel among companies that have either bought or are talking to insurers to buy policies

Recent high profile sexual harassment scandals involving former Tehelka editor Mr. Tarun Tejpal and i-Gate chief executive Mr. Phaneesh Murthy have forced Indian companies to chase insurance covers against potential liabilities arising out of such staff behaviour.

Dr Reddys Laboratories, Piramal Enterprises and Bharti Airtel are among companies which have either bought or / are negotiating with insurers to buy policies that will cover the companies against lawsuits that may seek millions of dollars, citing sexual harassment at work place, said 4 people familiar with the negotiations.

People are asking about women safety policies and in what way can it be addressed, said Mr. T.R. Ramalingam, head of underwriting at Bajaj Allianz General Insurance.

Many IT companies,BPOs and KPOs have started talking about insurance cover where women work late. We need to wait for 2 months to see if it translates into business.

Companies, both domestic and those with international operations, are growing wary of the potential claims by people who accuse their colleagues of sexual harassment.

Murthy, for the second time in about a decade, was accused of sexual misconduct which led to millions of dollars in claims. Though the Tejpal case has not led to any financial claim so far due to misbehaviour, it has jolted managements to the realities of life.Indian companies, which till now used to cover just directors &  officers under the so called D & O policy, are extending it to cover other staff as well.

For domestic companies that is being done under the Employee Practice Liability Insurance scheme (EPLI), while technology companies operating in the US already had such cover.

The firms did not immediately respond to mails seeking comments.There are 2 kinds of EPLI that are being bought with the D & O cover Personal EPLI and Entity EPLI. The company can be made party to a claim under the Entity EPLI policy.

Companies can also opt for standalone EPLI but it is not commonly bought. The cost can go up by up to 50 % based on certain criterion, depending on the turnover of the company, employee strength & internal control and processes.

Companies opting for EPLI cover with D & O have gone up to 50 % from 20 % two years back, says Mr. Subramanyam B, Senior VP health & commercial lines, Bharti AXA General Insurance.If companies are looking to settle the case out of court, insurance companies are made party to the discussion.

Although the revenue growth for insurance companies could be meagre in early days,their business prospects are improving given the new Companies Act makes some officials accountable for lapses.

Under the new laws the aggrieved party can file cases against the individual and seek compensation for damages.

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