#MeToo: Companies get insurance against harassment charges

For India Inc, the recent spate of allegations under the ‘Me Too’ movement has led to a realisation that it is not just large companies or those with global operations that need an Employment Practices Liability cover but also smaller domestic firms.

The Employment Practices Liability cover provides protection against claims from employees based on discrimination (for example, based on sex, race, age or disability) or wrongful termination or harassment. It also covers other related issues, such as failure to promote.

According to Bajaj Allianz General Insurance MD & CEO Tapan Singhel, many companies were not buying the Directors & Officers (D&O) cover as they felt that companies would not be sued in India. “Now that more and more such issues are coming up, the companies and the independent directors are realising the need for such an insurance cover,” said Singhel.


The D&O policy is a cover that protects the senior management of a company by compensating them for legal defence costs if a suit is brought about by shareholders, customers or employees. It also helps to defend against regulatory action.

“The Employment Practices Liability cover is built into the D&O insurance policy. However, the protection is not available if criminality is established. If the defence cost is paid and subsequently the official is found guilty, the claims are recovered,” said Future Generali MD and CEO K G Krishnamoorthy Rao.

According to ICICI Lombard chief of underwriting claims and reinsurance Sanjay Datta, there are covers available to protect the company against allegations that it did not do enough in the workplace. However, when it comes to an individual, the extent of protection is vague. “Normally, it is not covered as these are not decisions taken in the normal course of duty. A professional can take a stand-alone libel cover as these accusations are not against professional activity. It is an allegation that hits the reputation and does not deal with work issues,” said Datta.

But a lot of corporates are exposed when a brand ambassador is disgraced. “Large companies often pay celebrity endorsement fees in crores. This money is lost if the celebrity, for some action, falls from grace. In fact, the company may end up spending more to build up their reputation,” said Marsh Insurance Brokers MD & CEO Sanjay Kedia.

According to Kedia, companies that have an exposure to the US are taking an additional stand-alone Employment Practices Liability cover that provides much more insurance than the half-million to $1 million available under the D&O policy.

For corporates, their responsibilities have increased with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The law places stringent requirements on employers to provide a safe working environment and free from any harassment.