Picture this!
You run a small retail store and it is well-established in your area. You have a team of dedicated employees who work hard daily. One day, a fire broke out in your store due to an electrical malfunction, causing profound damage to your store and five employees were injured. Now, you need coverage for property losses and medical expenses for the affected employees.
Here ‘corporate insurance’ acts as a guardian angel!
In today’s fast-paced business world, companies/businesses deal with a wide range of risks that can mess up their financial stability and daily operations. Corporate insurance, also called business or commercial insurance, is specifically designed to protect companies/businesses from financial losses when unexpected events occur. It works by shifting the financial worries of these surprises from the business to the insurance company in exchange for regular premium payments.
In this post, we will primarily understand the benefits of corporate insurance along with its types. This helps you keep things running smoothly, and be ready for any surprises in the ever-changing business world!
Why Did IRDAI Mandated Health Insurance For Employees In India?
Before exploring the benefits of corporate insurance, let’s understand why IRDAI (Insurance Regulatory and Development Authority of India) mandates medical insurance for all employees.
The COVID-19 pandemic has been a global wake-up call that showed how much a health crisis can affect everyone. It has also made us realize how important it is to focus on staying healthy. Because of this, organizations like the IRDAI have taken important steps to improve health protection.
According to a circular from 2020 by the IRDAI, having medical insurance for employees has become mandatory for companies/businesses/workplaces. After the lockdown, businesses were directed to follow a ‘Standard Operating Procedure’ to resume operations, and part of this protocol specifically involved offering insurance to employees.
There are 3 primary reasons behind these mandatory protocols.
- It ensures that employees have enough financial coverage for healthcare, including hospitalization and treatments.
- To promote preventive care with check-ups, vaccinations, and wellness programs, and fostering proactive well-being.
- Making health insurance mandatory for employees is also a strategic move by IRDAI to increase insurance penetration in the country.
This decision is to help employees financially and encourage them to stay healthy. This decision shows that IRDAI is looking at the big picture and learning from what happened during the COVID-19 pandemic.
Types Of Corporate Insurance
Here are the major types of corporate insurance available in India:
- Property Insurance: It provides coverage for physical properties such as buildings, equipment, inventory, and other tangible items. It also safeguards your business from losses caused by fire, theft, vandalism, natural disasters, and specified perils. While most incidents are covered by corporate insurance, there may be a few exceptions.
- Professional Liability (Errors & Omissions) Insurance: It safeguards your business from negligence and claims that have caused substantial losses to your business. It is particularly crucial for industries like law, finance, healthcare, accounting, etc., where errors or omissions can prove disastrous.
- Group Health Insurance: It provides your employees with financial protection against healthcare expenses, such as hospitalization and related costs. This corporate insurance ensures that all company employees receive similar benefits and consistent coverage.
- Workers’ Compensation Insurance: In compliance with Indian regulations, workers’ compensation insurance is mandatory for all employers. This insurance covers medical expenses and lost wages for employees who sustain work-related injuries or illnesses. It not only provides necessary support to employees but also protects employers from potential legal liabilities.
- Product Liability Insurance: It shields your business from financial losses arising from product defects or issues. This type of business insurance is designed to protect manufacturers, distributors, and sellers from potential harm caused to consumers or damage to their property by their products.
- Business Interruption Insurance: It prepares your business for temporary shutdowns due to covered events such as fire, natural disasters, or other perils. This insurance covers income loss and additional expenses, enabling your business to maintain financial stability and recover swiftly after disruptions.
Major Benefits Of Corporate Insurance
Although there are several benefits of corporate insurance in India, major ones are discussed below:
Risk Reduction:
Corporate insurance acts as a financial safety net, shielding businesses from potential losses due to lawsuits, property damage, or employee health crises. By transferring certain risks to an insurance provider, companies gain confidence in continuing their operations, as they know that they are protected.
In the case of covered losses, insurance payouts help businesses recover without facing severe financial setbacks. Without such coverage, businesses may face legal fees, medical bills, and repair costs, putting their stability at high risk.
Improved Trust & Credibility:
Choosing suitable corporate insurance coverage signals that your business is prepared for unexpected challenges, earning trust from clients, partners, and stakeholders. It is also important to note that proof of insurance is often required in certain industries before entering contracts.
Corporate insurance also highlights your proactive measures to protect assets, employees, and operations, building confidence in clients. This reliability and stability make people trust the company more in the business world.
Employee Retention & Recruitment:
Corporate insurance plays a vital role in attracting and retaining employees by addressing their health and financial needs. Various insurance policies, such as workmen’s compensation offer financial support to employees as well as their family members in case of work-related injuries or illnesses. This, in turn, enhances overall job satisfaction and contributes to employee retention.
Also, offering health insurance as part of employee benefits attracts top talents. It also showcases the company’s commitment to employees in making them feel secure about their health and financial protection in case of emergencies, thus, fostering loyalty and retention.
Protection From ‘Acts Of God’:
Natural disasters can cause a lot of trouble for businesses, damaging properties and stopping regular operations. But if your business has corporate insurance, especially business interruption insurance, it can be a big help during these tough times.
This insurance covers the money you lose when your business has to close temporarily for repairs. It helps you pay for things like rent, bills, and employee salaries even when your business isn’t making money. With this support, you can focus on fixing things and be confident that your financial responsibilities are taken care of.
Frequently Asked Questions
Corporate insurance typically covers a range of risks, including property damage, liability claims, employee health benefits, professional liability, and cyber liability, to name a few. The coverage provided depends on the specific policies and needs of the business.
While some types of insurance, like ‘workers’ compensation’, may be legally required in India, other coverages may be optional. However, it is advisable to purchase suitable corporate insurance for your business (no matter what size it is) to prevent significant losses.
Yes. One of the major benefits of corporate insurance is that it can be customized to meet the specific needs of your business. It can be tailored to the industry category, size, and unique risks of your business.
In many cases, premiums paid for corporate insurance are tax-deductible as a business expense. However, tax laws and regulations are subject to change and can vary depending on the jurisdiction.
Choosing the right corporate insurance coverage involves a comprehensive assessment of the business’s risks and needs. You should consider factors, such as industry-specific risks, potential liabilities, property value, employee benefits, and legal requirements. Working with insurance professionals, such as brokers or agents, can also help navigate the complexities of insurance and identify the appropriate coverage options for your business.
It covers all employees, including permanent and temporary workers. It provides benefits to employees for medical expenses, lost wages, and rehabilitation costs resulting from work-related injuries or illnesses.
Generally, work-related injuries or illnesses are covered under ‘Workers’ Compensation Insurance’. However, there may be certain exceptions and limitations depending on the circumstances. For instance, intentional self-injury may not be covered by the insurance. Thus, it is important to read the fine print before buying any corporate policy.
