The Indian Premier League (IPL) is turning out to be the biggest sporting extravaganza for the national cricket board — even bigger than the ICC Cricket World Cup — at least in terms of the insurance cover.
The Board of Control for Cricket in India (BCCI) is seeking a Rs 900-crore event cancellation policy for the fifth season of the T20 tournament, more than double of what was sought for World Cup matches played in India last year, and Rs 150 crore higher than the last IPL edition.
BCCI had purchased a Rs 400-crore event cancellation policy for the ICC Cricket World Cup last year. For IPL-4, which followed the World Cup, the policy was of Rs 750 crore. This cover is also higher than other marquee sporting events in the country in recent times, like the 2010 Commonwealth Games and last year’s Formula 1 race. While the Commonwealth Games were insured for Rs 200 crore, the Formula 1 race was covered for Rs 500 crore.
According to insurance industry sources, the cover will include domestic and overseas media rights, protection of sponsorship fees and other contingencies. “The policy will protect BCCI against loss of revenue on account of the cancellation of any match due to reasons beyond the organisers’ control, like terrorism, bad weather, a catastrophe, a strike, etc,” said a source.
The board is expected to finalise the policy, which will include 76 matches including the semi-finals and finals, in a couple of weeks. All matches will have insurance covers of almost equivalent amounts.
The total premium is expected to rise to Rs 10 crore from Rs 6 crore paid last year. State-run general insurers, National Insurance Company and Oriental Insurance Company, are believed to be leading the race to underwrite the policy.
Insurance officials indicated the BCCI move to involve many brokers to source cheaper deals had not gone down well with insurers, which delayed the underwriting of the final policy.
“It is a very specialised cover, which involves lots of capabilities when it comes to servicing such claims,” sources added. Last year, the total claim from IPL was more than Rs 2 crore whereas the premium paid was around Rs 6 crore, he said.
“BCCI is always looking for the maximum coverage with the lowest possible premium. This year, the premiums are higher by 25 per cent compared to last year as the coverage is higher and the reinsurers are quoting higher rates,” added an insurance official.
For IPL-3, the cover was in the range of Rs 480 crore and the board paid a premium of approximately Rs 4 crore for the policy for 59 matches.
Typically, public sector general insurance players National Insurance Company, Oriental Insurance Company, New India Assurance and United India Insurance are the major players for IPL as they have higher capacity compared to private players. Also, in such policies, very little portion of the risk is retained in the books of the insurance company and a majority of it is reinsured with reinsurance players. General Insurance Corporation of India (GIC), the designated national reinsurer, would reinsure 80-90 per cent of the cover, sources said.
IPL-5 will start at the MA Chidambaram Stadium in Chennai on April 4. It will include nine teams that will play 76 matches over 54 days, across 12 venues around the country.