Importance of D&O Insurance for Directors and Officers of Indian Organisations
The D&O insurance policy is essential for every company or organisation. A company must assure its top-level management about the policy coverage. In the absence of such a policy, they might not take crucial steps, which benefit the organisation. Therefore, the importance of D&O insurance for directors and officers of Indian organisations is essential to understand.
Let us comprehend the importance of D&O insurance for directors and officers of Indian organisations.
Protection against Personal Liability
In the era of LPG (Liberalisation, Privatisation and Globalisation), companies and firms face tough competition in the market. Therefore, the top management of a company needs to take some unpopular and bold decisions for the growth and development of the company.
However, such decisions may offend the stakeholders of the company. As a result, the directors and officers of an organisation may expose to different kinds of lawsuits. In addition, the government may also institute lawsuits against the company. Such lawsuits may cause severe loss and damage to the company.
In order to mitigate such losses, the policyholder may claim protection under the directors and officers liability policy. The insurance policy protects the personal wealth of the directors.
Attract Best Talents
The best talents emphasize the importance of D&O insurance for directors and officers of Indian organisations. The director's and officer's insurance policy reduces the risk involved in the operation of a company.
Nowadays, filing cases or instituting lawsuits have become common. The top-level management desire surety against the kinds of risk involves in the position. Therefore, the talent shall only join a company if it provides or indemnifies its directors against lawsuits or third-party claims.
The director's and officer's insurance is also essential for a new venture. Survival and growth in the competitive market are only possible if the operation of the company is guided by the best talent. Therefore, the new company or start-up must purchase a D&O policy to attract the best talents in the industry.
Enhance Company Reputation
The director's and officer's insurance policies enhance the reputation of the company in the market. The stakeholder shall continue investing in the existing company if it holds director's and officer's insurance policies. It ensures that the company protects their interest.
In addition, the company owning directors and officer insurance policy is likely to be transparent about its practice with the shareholders and investors. This helps in increasing the trust and faith of the investors in the company.
The D&O policy is important for small businesses. Nowadays, small businesses are not safe or immune in the market. Many a time, they may become the target of their competitor. Hence, in order to survive in the industry, small businesses must subscribe to directors and officers liability insurance policy.
Non-Profit Organisations (NGOs) are also prone to several kinds of risks. They work for the welfare of communities. However, it may offend other communities. Hence, they must subscribe to directors and officers liability insurance.