INDIA Law and Practice Contributed by: Neeraj Tuli, Rajat Taimni, Amrit Singh and Anuj Bahukhandi, Tuli & Co
terms of the policy merely because one party seeks a favourable interpretation. In relation to exclusions, Courts generally require the insurer to establish that the exclusion clearly applies and tend to construe exclusionary clauses strictly. Endorsements are read together with the policy, and will be given effect where their wording clearly modifies or limits the underlying coverage. The overall approach is therefore to give effect to the policy as a whole and the parties’ contractual bargain, while protecting the insured against genuinely unclear or overly broad exclusionary language. 4.3 Cyber and Technology-Related Coverage Issues Increasing engagement of third-party service provid- ers for development, maintenance and operations of IT systems means there has been an increase in the potential impact of cyber-incidents and technol- ogy failures as these can affect multiple organisations simultaneously. A cyber-attack, outage or other dis- ruption at a vendor can have a direct and significant impact on its customers’ operations, data and busi- ness continuity. In the author’s experience, such interdependent risks are being addressed by both vendors and their cus- tomers. Technology providers are purchasing third- party liability covers, which extend to liabilities arising from being used as a conduit by threat actors (often referred to as conduit liability). At the same time, their customers are seeking broad policy covers that extend cyber and technology coverage to incidents arising from vendor-managed or outsourced systems. This reflects a growing recognition that cyber-risk often resides across a wider ecosystem rather than within a single organisation. 4.4 Aggregation and Limits of Liability Disputes concerning aggregation, limits of liability and occurrence wording remain relatively limited in India, but these issues are becoming more relevant within the context of large or systemic losses. Where multiple claims arise from the same underlying event or series of events, questions may arise as to whether they con- stitute a single occurrence or multiple occurrences for the purposes of applicable limits and deductibles.
These issues are particularly relevant in property, lia- bility, cyber- and catastrophe-related claims, where the characterisation of the underlying event can mate- rially affect the extent of the insurer’s exposure. In the absence of a developed body of Indian case law on aggregation, such disputes are likely to turn primarily on the precise policy wording and the factual connec- tion between the losses. 4.5 Sanctions and Illegality Issues In the author’s experience, insurers do not generally agree to pay claims where the underlying losses are the result of illegal acts by the insured. Similarly, insur- ers generally deny cover for claims involving sanc- tioned entities and most policies and reinsurance terms include express exclusions to this effect. 4.6 Late Payment and Claims Handling Practices In the past year, the Courts have addressed a signifi- cant number of insurance-related issues, particularly in relation to interpretation of insurance policies, dis- closure of material facts, and repudiation of claims by insurers on grounds of non-production of documents. There has been a trend towards stricter interpretation of terms and conditions of policies. There has also been increased scrutiny of claims han- dling and delays in claim settlement. Recent regula- tory and judicial developments emphasise that claims should not be repudiated mechanically on procedural grounds such as delayed intimation or submission of documents, particularly where the delay is satisfac- torily explained. Insurers are increasingly expected to record valid reasons for repudiation and comply with prescribed claims-handling timelines. 4.7 ESG and Climate-Related Coverage The Indian insurance industry is a relatively new mar- ket compared to various global markets. As a result, the industry is still considered to be in a relatively nascent stage of development, particularly for various lines of insurance products which have recently been introduced in India. In relation to these products, the insurer’s underwriting is derived, to some extent, from global claims experience, in the absence of specific Indian claims experience.
156 I NSURANCE L I T IGATI O N 2026
CHAMBERS.COM
Powered by FlippingBook