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Liability Claims Bulletin - Eighth Edition | July 2025

This eighth edition of the Liability claims bulletin continues our commitment to keeping clients abreast of developments in liability insurance.

08/07/2025

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. 

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

Directors and Officers Liability (Employment Practices) Insurance Claims:

Allegations of discrimination by ex-employees

Insured:

A global media service provider

Background:

Ex-employees filed complaints alleging gender-based pay equity and discrimination claims; wrongful termination, retaliation and failure to investigate claims besides others.

Claim Amount:

Indemnity: $ 3.2 Mn approx. + Defense costs: $ 1.5 Mn approx. / INR 40 Cr. approx.

Policy Type:

D&O (EPL)

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.

Claim Outcome:

$ 2.1 Mn/ INR 18 Cr. approx. (there was some allocation on account of deductible, adjustment on account of counsel rates and other policy breaches) 

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. 

Directors and Officers Liability (Employment Practices) Insurance Claims:

Allegation of unlawful termination on basis of race

Insured:

An Indian multinational pharmaceutical company

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.

Claim Amount:

$ 210,000 approx. towards settlement + $ 17,000 approx. towards defense costs/ total of INR 1.8 Cr. approx.

Policy Type:

D&O (EPL)

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.

Claim Outcome:

Settlement amount of $ 180,000 approx. + Defense costs of $ 13,000 approx. / total of INR 1.1 Crore. approx. (net of deductible)  

Key Learnings:

Insurer’s written consent to be sought prior to incurring any costs, entering into any settlement agreements or admitting any liability is a condition precedent under the policy, which must be complied.

Crime Claim:

Bank guarantee fraud

Insured:

An agricultural products manufacturing company

Background:

Insured’s customers issued fake Bank Guarantee to them thereby causing first party financial loss to the insured.

Claim Amount:

$ 1 Mn approx. / INR 9 Cr. approx.

Policy Type:

Commercial Crime Policy

Challenges raised by the Insurers:

  • The insurer raised concerns whether the insured tried to verify the veracity and genuineness of the bank guarantee issued to them.
  • The insurer also highlighted that no chargesheet had been filed to establish the fraud.

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.

Claim Outcome:

The insurer paid $ 900,000 approx.  / INR 8 Cr. approx. 

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.

Cyber Claim:

Ransomware attack

Insured:

An Indian multinational pharmaceutical company

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.

Claim Amount:

BI Loss- $ 9 Mn approx. / INR 81 Crore approx.

First Party Costs- $ 1.1 Mn approx.  / INR 9.5 crores approx.

Policy Type:

Cyber Policy

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.

Claim Outcome:

The Insurer paid the full policy limit of $ 3.6 Mn approx./ INR 30 Cr. approx.

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.

Professional Indemnity Claim:

Failure to render proper professional services

Insured:

A global tech company

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.

Claim Amount:

$ 20 Mn approx. + Vendor Costs / INR 171 Cr. approx.

Policy Type:

PI Policy

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.

Claim Outcome:

Insurer paid $ 15 Mn approx. / INR 128 Cr. approx.

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.

Leadership

Anup Dhingra

Managing Director, FINPRO IMEA 

Bhishma Maheshwari

Chief Client Officer, Senior Vice President, Communications, Media and Technology Leader, Marsh India 

  

Jay Shah

Chief Growth Leader, Senior Vice President, Financial Institution Leader, FINPRO, Marsh India 

Nachiket Shah

Senior Vice President, Management Liability Leader, FINPRO, Marsh India 

Anshu Maheshwari

Senior Vice President, FINPRO, Marsh India 

Indranil Roy

Senior Vice President, Corporate Segment Liability and Construction Leader, Marsh India 

Claims team

Sidhartha Pattnaik

Claims Advocacy Leader, Marsh India   

Akshara Sharma

Executive Vice President, FINPRO, Marsh India 

Debashree Pusti

Assistant Vice President, FINPRO/Cyber, Marsh India   

Nanki Arora

Assistant Vice President, FINPRO, Marsh India

Aishwarya Shetty

Relationship Manager, FINPRO, Marsh India 

Urja Doshi

Relationship Manager, FINPRO, Marsh India 

Jyotika Aggarwal

Assistant Manager, FINPRO, Marsh India

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