Liability Insurance is growing in emerging markets in India

Liability Insurance is growing in emerging markets. It has taken diversified forms of development viz., commercial general liability, product liability, professional indemnity, directors and officers D & O liability, product recall, personal liability, motor liability, social security systems.

The liability insurance has taken the form of third party risks, export financial protection. Liability insurance covers the financial consequences arising out of the insured’s obligation to pay compensation for harm caused to third parties. There may be commercial as well as personal risks.

Liability insurance is called, “Long-tail” business where the claim picture will be fully developed long after the policy has expired Globalisation and burgeoning international trade stimulate demand for liability insurance.

Ethical, moral, cultural, religious and social norms and standards play an important role for development of liability insurance.

Liability insurance penetration varies significantly even among industrialised economies. Technological and industrial development also contributes liability insurance.

In many emerging markets, traditional principle of fault applies to liability insurance but recent changes have shifted the burden of proof onto defendant, “the introduction of punitive damages and liability extension have distorted the economic functioning of liability insurance.