Companies take cover
Insurance firms are offering policies that cover sexual harassment claims.
Sexual harassment can hurt a company badly - and its shareholders, too. Hewlett Packard's market value has plunged by $15 billion (Rs 69,000 crore) - from a high of $105 billion - since its CEO Mark Hurd was accused of sexual harassment by a female marketing contractor. Hurd reached a legal settlement with the woman although an investigation by HP did not reveal any violation of the company's policy. The woman also did not make any legal claims on HP.
However, the damage was strewn all over the place. Hurd had to resign, as the company accused him of falsifying expense reports to conceal a "close personal relationship." HP also lost a CEO to Oracle no less, and Hurd had to settle a lawsuit with HP, which wanted to stop him from working with Oracle.
There's little a company can do to protect itself from a slide in the value of its stock in such circumstances. But it can insure itself against claims for damages arising from allegations of sexual harassment against its top executives. Although there are no specific policies tailored to cover sexual harassment claims, there are separate covers globally in the guise of an Employment Practices Liability (EPL), which includes sexual harassment claims.
Other than EPLs, a Directors & Officers, or D&O, policy can cover sexual harassment at the workplace. Broadly, a D&O policy covers damages and defence costs as a result of a lawsuit for alleged wrongful acts by directors and officers. Organisations, too, can be covered by this policy. "The policy is quite comprehensive and it includes same gender issues, too," says Krishnamoor thy Rao, Managing Director and CEO, Future Generali India General Insurance Company. "There are companies in India that have taken maximum cover ranging from $1 million to $100 million," adds Rao. A $100 million (Rs 460 crore) D&O policy comes with an annual premium of Rs 1 crore. If the company is also insured, the premium goes up to Rs 1.5 crore.
Whilst a D&O policy can protect senior executives, Indian insurance companies also offer an EPL, which protects a business against claims arising out of actual or alleged wrongful termination of employment, unlawful discrimination, sexual, racial, disability or workplace harassment, wrongful failure to employ or promote and the like. Thus, companies are quite aware of claims that can arise out of allegations of sexual harassment and discrimination.
Early in the decade, Infosys settled a high-profile sexual harassment suit by partly paying out of its own pocket and through an insurance company. Infosys disclosed in a filing to the stock exchange in early 2003 that "an unfavourable resolution could adversely impact Infosys results of operations and financial conditions". A year later, the Philadelphia Housing Authority settled a sexual harassment claim against an executive director by contributing $99,000 to the payout. The insurance carrier contributed $101,000.
Since then, there have been many companies reaching outof-court settlements in sexual harassment cases, but in most such cases businesses have had to dig into their own coffers. Yet, buying insurance against potential harassers is never a bad idea. Such companies would at least be acknowledging that they recognise the threat of harassment and discrimination.
-Anand Adhikari
However, the damage was strewn all over the place. Hurd had to resign, as the company accused him of falsifying expense reports to conceal a "close personal relationship." HP also lost a CEO to Oracle no less, and Hurd had to settle a lawsuit with HP, which wanted to stop him from working with Oracle.
There's little a company can do to protect itself from a slide in the value of its stock in such circumstances. But it can insure itself against claims for damages arising from allegations of sexual harassment against its top executives. Although there are no specific policies tailored to cover sexual harassment claims, there are separate covers globally in the guise of an Employment Practices Liability (EPL), which includes sexual harassment claims.
Other than EPLs, a Directors & Officers, or D&O, policy can cover sexual harassment at the workplace. Broadly, a D&O policy covers damages and defence costs as a result of a lawsuit for alleged wrongful acts by directors and officers. Organisations, too, can be covered by this policy. "The policy is quite comprehensive and it includes same gender issues, too," says Krishnamoor thy Rao, Managing Director and CEO, Future Generali India General Insurance Company. "There are companies in India that have taken maximum cover ranging from $1 million to $100 million," adds Rao. A $100 million (Rs 460 crore) D&O policy comes with an annual premium of Rs 1 crore. If the company is also insured, the premium goes up to Rs 1.5 crore.
Whilst a D&O policy can protect senior executives, Indian insurance companies also offer an EPL, which protects a business against claims arising out of actual or alleged wrongful termination of employment, unlawful discrimination, sexual, racial, disability or workplace harassment, wrongful failure to employ or promote and the like. Thus, companies are quite aware of claims that can arise out of allegations of sexual harassment and discrimination.
Early in the decade, Infosys settled a high-profile sexual harassment suit by partly paying out of its own pocket and through an insurance company. Infosys disclosed in a filing to the stock exchange in early 2003 that "an unfavourable resolution could adversely impact Infosys results of operations and financial conditions". A year later, the Philadelphia Housing Authority settled a sexual harassment claim against an executive director by contributing $99,000 to the payout. The insurance carrier contributed $101,000.
Since then, there have been many companies reaching outof-court settlements in sexual harassment cases, but in most such cases businesses have had to dig into their own coffers. Yet, buying insurance against potential harassers is never a bad idea. Such companies would at least be acknowledging that they recognise the threat of harassment and discrimination.
-Anand Adhikari
