Liability Claims Bulletin - Eighth Edition

Our corporate site Contact us

The current landscape of liability insurance claims is being significantly influenced by regulatory changes, technological advancements, and evolving societal expectations.

We are witnessing a notable increase in claims related to diversity and inclusion failures, as employees hold organizations accountable, resulting in a rise in employment-related claims. Additionally, there has been a surge in commercial crime claims associated with third-party fraud, prompting organizations to strengthen their internal controls. The number of cyber claims stemming from data breaches and ransomware attacks are significant, leading to substantial ransom demands and recovery costs. Clients across various industries are experiencing professional indemnity claims arising from errors or negligence in the provision of professional services to customers.

Welcome to the eighth edition of our Liability Claims Bulletin, where we highlight the challenges, key learnings in liability insurance claims that we have observed this year. Join us as we delve into critical issues through five real-world scenarios encountered by Marsh clients in the first quarter of 2025.

Directors and Officers Liability (Employment Practices) Insurance Claims:
Allegations of discrimination by ex-employees
Directors and Officers Liability (Employment Practices) Insurance Claims:
Allegation of unlawful termination on basis of race
Crime Claim:
Bank guarantee fraud
Cyber Claim:
Ransomware attack
Professional Indemnity Claim:
Failure to render proper professional services

Challenges raised by the Insurers:

The local insurer was intimated after a delay, which led to concerns regarding an increased exposure of the excess global insurer (placed in India).
Insurer raised concerns regarding late settlement (loss could have been mitigated if the matter was settled earlier).
Insurer raised concerns on the liability quantum assessment which according to them lacked proper legal precedents.
The rates charged by the counsel were higher than what insurer considers reasonable.

Marsh’s Contribution:

We established to the global insurer that prior to discovery, insured was not willing to make such a large settlement merely under duress of the plaintiffs.
We strongly contended that the delayed notification to the local carrier caused no prejudice to the global insurer as the local insurer had agreed to pay despite the delay in notification.
We presented case assessment prepared by the counsel to the insurer to establish the rationale behind the proposed settlement range. We were able to explain the staffing requirement on the case since it was a two-plaintiff litigation. We also provided justification on the rates.

Key Learnings:

Timely intimation of claim is essential. If there is any local policy then the claim should be intimated to the local insurer as well.
Written consent of insurer must be sought prior to engaging any counsels, incurring any costs or entering into any settlement.
Discuss defence strategy with the insurer to mitigate the overall loss.

Background:

The claimant (an employee who was terminated citing performance reasons) sent a legal notice alleging that the termination was unlawful. The employee further alleged that he was subjected to discrimination, hostile work environment and retaliation by the top management of the company.

Challenges raised by the Insurers:

The insurer raised concern that the settlement discussions with the claimant had commenced prior to the matter being notified to the insurer.
The insurer stated that their approval was not sought before engaging defense counsel and that defense costs were being incurred even prior to the notification date.

Marsh’s Contribution:

Marsh was able to contend that the matter would have probably gone into litigation if settlement was not pursued and that cost of defending such litigation would be much higher than current settlement.
Marsh was also able to contend that appointment of defense counsel was immediate due to nature of claimant’s allegations.

Marsh’s Contribution:

Marsh guided the insured on policy terms and conditions.
Marsh contended that insured had all reasons to consider the bank guarantee as genuine as it came from the Bank Manager and was signed by the parties. Additionally, Marsh also highlighted to the insurer that the insured had taken all necessary steps like filing of First Information Report (FIR) with the concerned police authorities, sending legal notice to concerned parties and making attempts to recover the amount.
Marsh was able to assist the insured to establish that fraud had been clearly committed. Hence, the payment of the claim should not be delayed.

Key Learnings:

Timely notification and submission of documents to the insurer is essential.
Insured must possess proper records of all requisite documents to facilitate smooth claim evaluation and settlement by the insurer.
Insured must also carry out reasonable due diligence measures in order to verify the genuineness of documents received from its customers.

Background:

The insured suffered a ransomware attack which impacted some of the critical servers, mailboxes, networks, and endpoints.
Insured had to replace all the servers, software, licenses, and carry out requalification.
In addition to their systems, their business systems were also impacted causing a business interruption loss.

Challenges raised by the Insurers:

Insurer argued that certain costs incurred such as purchasing new hardware, proactive costs, application licenses, etc., were not covered under the policy.
Since insured’s systems were down during the attack, they could not document the sales and hence did not have complete records to substantiate the exact business interruption loss incurred by the insured.

Marsh’s Contribution:

Marsh contented that since hardware affected by the attack was irreparable, the insured had no choice but to incur costs to purchase new hardware and take certain application licenses.
Marsh’s Forensic Accounting team engaged with the insured to assess and quantify the exact amount of Business Interruption (BI) loss suffered.

Key Learnings:

Insured must be aware of the terms and conditions under their policy.
Insured must conduct regular assessments of their cyber systems to detect vulnerabilities and take mitigation steps.
Cyber policies do not typically cover costs incurred in purchasing licenses, system hardware, and towards enhancement costs.

Background:

The claimant (insured’s customer) informed the insured of certain security issues in the Modernised Platform that was being transitioned by the insured for the customer. The claimant appointed a third party to undertake an assessment.
It claimed transition costs ($ 50 Mn approx.) as insured had failed to timely identify and remediate security vulnerabilities in the new technical environment; failed to meet a critical SLA obligation with respect to the monitoring of security threats for the Modernized Environment; and failed to meet multiple key Transformation Milestones with respect to the stand-up of the Modernized Environment.

Challenges raised by the Insurers:

There was a prior knowledge/ non-disclosure by the insured.
Insurer raised concerns on the delayed notification.
Settlement discussions without consent of the insurer.
Engagement of various vendors without consent of the insurer.
Insurer also raised concerns about the reasonability of costs in the absence of proper scope of work and narratives in the invoices.

Marsh’s Contribution:

Marsh explained to insurer the timelines of the discussions between insured and claimant to establish that the claim was notified in time, without any delay.
There were no settlement discussions as the document that the insurer referred to was only a draft and the insured had not agreed to pay any liability, rather it was a remediation plan.
We worked with the insured to explain to the insurer the role of each vendor involved and establish that the costs are in line with the role performed.

Key Learnings:

Insured must be aware of the terms and conditions under their policy.
Timely notification and submission of documents to the insurer is essential. Insureds must possess proper records of all requisite documents to facilitate smooth claim evaluation and settlement by the insurer.
Prior written consent of the insurer must be sought before initiation of any settlement discussions.

Liability Claims Bulletin - Seventh Edition | November 2024

Marsh.com Sign in

Liability Claims Bulletin - Eighth Edition | July 2025

Directors and Officers Liability (Employment Practices) Insurance Claims:

Insured:

Background:

Claim Amount:

Policy Type:

Challenges raised by the Insurers:

Marsh’s Contribution:

Claim Outcome:

Key Learnings:

Directors and Officers Liability (Employment Practices) Insurance Claims:

Insured:

Background:

Claim Amount:

Policy Type:

Challenges raised by the Insurers:

Marsh’s Contribution:

Claim Outcome:

Key Learnings:

Crime Claim:

Insured:

Background:

Claim Amount:

Policy Type:

Challenges raised by the Insurers:

Marsh’s Contribution:

Claim Outcome:

Key Learnings:

Cyber Claim:

Insured:

Background:

Claim Amount:

Policy Type:

Challenges raised by the Insurers:

Marsh’s Contribution:

Claim Outcome:

Key Learnings:

Professional Indemnity Claim:

Insured:

Background:

Claim Amount:

Policy Type:

Challenges raised by the Insurers:

Marsh’s Contribution:

Claim Outcome:

Key Learnings:

Leadership

Anup Dhingra

Bhishma Maheshwari

Jay Shah

Nachiket Shah

Anshu Maheshwari

Indranil Roy

Claims team

Sidhartha Pattnaik

Akshara Sharma

Debashree Pusti

Nanki Arora

Aishwarya Shetty

Urja Doshi

Jyotika Aggarwal

Archive