Now, an In­surance Cover for In­sol­vency Pro­fes­sion­als

The Economic Times - - Finance & Commodities - Times­


Mumbai: ICICI Lom­bard, HDFC Ergo, New In­dia As­sur­ance and Na­tional In­surance are among the in­sur­ers who will of­fer a tai­lored in­surance cover soon for in­sol­vency pro­fes­sion­als as the new breed of ex­ec­u­tives stare at mul­ti­ple risks from charges of sab­o­tage to neg­li­gence. While there are broad in­dem­nity cov­ers, these are avail­able only for a com­pany’s top ex­ec­u­tives and board of di­rec­tors. How­ever, it wouldn’t cover an in­sol­vency pro­fes­sional who would take charge of run­ning a com­pany dur­ing bank­ruptcy pro­ceed­ings. The board of di­rec­tors re­main sus­pended, though top man­age­ment staff will be drawn up to help run the com­pany. “As of now, the nor­mal pro­fes­sional in­dem­nity cover can pro­tect them,” Said San­jay Datta, chief un­der­writ­ing and claims, a t ICICI Lom­bard dif­fers. “Later on as mar­ket need in­creases we can de­velop a spe­cialised cover for them.”

Res­o­lu­tion of de­fault cases un­der the new In­sol­vency and Bank­ruptcy Code is g ather­ing mo­men­tum. Al­though it may be the most ef­fi­cient way of re­solv­ing bad loans, it ex­poses IPs to many lit­i­ga­tion as pro­mot­ers who hold their com­pany close to their hearts would look at var­i­ous ways to put ob­sta­cles in the func­tion­ing of IPs. Sec­tion 233 of IBC gives pro­tec­tion to in­sol­vency pro­fes­sion­als for any ac­tion taken in good faith. “How­ever, the onus to prove innocence will be on the in­sol­vency pro­fes­sional. Which at times may be dif­fi­cult, time con­sum­ing and ex­pen­sive. As such the pro­fes­sional in­dem­nity in­surance be­comes vi­tal and no pro­fes­sional should start with­out be­ing in- sured,” said Su­bodh Ku­mar Agar­wal, an in­sol­vency pro­fes­sional. Staterun in­sur­ers are also turn­ing ac­tive. “We will surely be in­ter­ested in pro­vid­ing cover. First, we need to un­der­stand the nu­ances of the prod­uct be­cause to design the prod­uct

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.