After banks, insurance companies are looking to provide legal and financial support to their employees being probed by investigating agencies for business decisions – seemingly taken in good faith – gone wrong. The General Insurance Public Sector Association (GIPSA), a body of staterun general insurers, has approved such a policy and asked members to get board approval to implement it.
A senior executive with an insurance company confirmed the development and said the policy is similar to the one approved by the Indian Banks Association (IBA). “We have mostly followed that module in spirit, except for some minor changes which are meant for the insurance industry,” the official said.
The IBA proposed that lenders bear all legal expenses in such cases, including providing an advocate when required. The IBA’s action was triggered after Bank of Maharashtra CEO R Marathe and executive director RK Gupta were arrested by the state police. The charges against them were later withdrawn.
“The insurance sector is somewhat more complicated, and we have seen officials being under undue scrutiny for business decisions gone wrong,” said a GIPSA executive, making a case for quick approvals by the boards of member-insurers.
“Take the case of TS Vijayan, who bounced back from a demotion at LIC and multiple investigations into allegations of irregularities to become the insurance regulator,” the executive added. Another industry executive, however, said that unlike in banking, there aren’t such grey areas in the insurance sector.