Mumbai: Key-Person insurance is catching up in a big way in the country, with banks, IT and pharma firms spending millions on insuring their indispensable employees. In fact, according to industry sources, executives like ICICI Bank MD & CEO KV Kamath and HDFC chairman Deepak Parekh could well be insured for a few thousand crore rupees. And it’s not just top officials of multinational corporations who are being insured by their employees; insurance brokers claim that key-person insurance requests from start-up IT firms are on the rise as well.
According to Naveen K Midha, senior vice-president and head of the employee benefits vertical at Willis India Insurance Brokers, a general thumb rule for key-person insurance followed over the world recommends that a key person in an organisation be insured for at least five times the net profit of the company over the past three years. So with both ICICI Bank and HDFC consistently turning in annual profits in excess of Rs 1,000 crore for the past few years, the premium figures are not hard to fathom.
“People like KV Kamath and Deepak Parekh are synonymous with their respective organisations, and big bucks being spent on them is understandable,” explains Mr Midha. But while big firms have the luxury of a strong brand name, smaller start-ups rely on their core team for acquiring business. “The need for key-person insurance is more acute in smaller firms,” he added. Interestingly, key-people for an organisation might not just be their MDs and CEOs but also technical support staff with special knowledge of the firm’s systems and even brand ambassadors.
Key-person insurance protects the company against the untimely death, disability or retirement of the insured. The insured-sums obviously vary from company to company and region to region. Also, key factors like the employees remuneration and propensity to jump jobs are taken into consideration while the policies are framed. Such schemes are also being used by some companies as an effective retention tool. Unlike life or medical insurance schemes undertaken by employers, premiums paid by companies in this case are treated as business expenses and do not attract fringe-benefit taxes either.
Willis is one of the world’s largest insurance brokerages, which has been represented in India for the past three years. According to, Willis Asia MD James Quirk; Indian companies have increasingly started adopting a host of relatively new insurance products, like cover for trade and political risks, and insurance for mergers and acquisitions. Such products have gained prominence in India of late, given the rising number of outbound acquisitions and the volatility in the international economic conditions.
According to Naveen K Midha, senior vice-president and head of the employee benefits vertical at Willis India Insurance Brokers, a general thumb rule for key-person insurance followed over the world recommends that a key person in an organisation be insured for at least five times the net profit of the company over the past three years. So with both ICICI Bank and HDFC consistently turning in annual profits in excess of Rs 1,000 crore for the past few years, the premium figures are not hard to fathom.
“People like KV Kamath and Deepak Parekh are synonymous with their respective organisations, and big bucks being spent on them is understandable,” explains Mr Midha. But while big firms have the luxury of a strong brand name, smaller start-ups rely on their core team for acquiring business. “The need for key-person insurance is more acute in smaller firms,” he added. Interestingly, key-people for an organisation might not just be their MDs and CEOs but also technical support staff with special knowledge of the firm’s systems and even brand ambassadors.
Key-person insurance protects the company against the untimely death, disability or retirement of the insured. The insured-sums obviously vary from company to company and region to region. Also, key factors like the employees remuneration and propensity to jump jobs are taken into consideration while the policies are framed. Such schemes are also being used by some companies as an effective retention tool. Unlike life or medical insurance schemes undertaken by employers, premiums paid by companies in this case are treated as business expenses and do not attract fringe-benefit taxes either.
Willis is one of the world’s largest insurance brokerages, which has been represented in India for the past three years. According to, Willis Asia MD James Quirk; Indian companies have increasingly started adopting a host of relatively new insurance products, like cover for trade and political risks, and insurance for mergers and acquisitions. Such products have gained prominence in India of late, given the rising number of outbound acquisitions and the volatility in the international economic conditions.
Source: The Economic Times
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