Film insurance is catching up with producers

Experts peg film insurance share in industry at 8-10% in next 3-5 years, up from 2% at present

Film insurance, which was once considered an additional burden for film producers, has now become a norm. Now that both public and private general insurers are actively offering products catering to the needs of the film industry, the share of film insurance in the overall insurance business could touch 8-10 per cent in the next 3-5 years, say experts. At present, it accounts for about two per cent of the industry’s total business.

As a concept, film insurance came into existence in the early 1990s. ‘Taal’ was one of the first movies to be insured.

Over the past year, there has been an uptick in the number of film insurance policies being taken. Sumant Salian, business head (media and entertainment) at Alliance Insurance Brokers, says the company has seen a growth of 45-50 per cent this financial year, compared to the last.

What does a film insurance policy cover? For one, it covers loss to life or property on film sets. It also covers legal issues related to a film as well as post-release issues such as theatre shutdown due to riots or strike, says Salian.

A decade ago, the film insurance segment was dominated by public general insurers. But now, private general insurers have also entered the scene. New India Assurance and National Insurance Company are some of the public general insurers that offer film insurance. Among private insurers, companies such as Future Generali India Insurance, Tata AIG General Insurance, and IFFCO-Tokio General Insurance offer such products.

According to the current insurance norms, insurance companies compensate the production house for delays and losses due to adverse weather conditions, natural disasters, damage to property/sets, and injury to actors during film shoots. Sudden illness of the main cast of the film due to food poisoning is also offered relief under this policy.

Hiren Gada, director of Shemaroo Entertainment, says, “The stakes are so high in today’s scenario that everyone takes production insurance. As far as insurance for revenue is concerned, it is a bit complicated as you have to make an estimate of revenue and a territory break up. It insures you against any major loss because of riots or floods, which may hurt your collections in those regions.”

In film insurance policies, the type of cover depends on the budget of the film. The premium for such a policy is usually 1-2 per cent of a film’s budget. If the total budget of a film is Rs 100 crore, for instance, the premium would be Rs 10-20 crore. While submitting a request for insurance, the production house should give details of the budget including money paid to the actors, apart from the shooting schedule and location.

Vikram Malhotra, chief operating officer, Viacom18 Motion Pictures, says, “Continuity of any business is prudent and for the same it is important to insure it from any foreseen or unforeseen causes. The whole industry is so much dependent on individuals like actors, directors and technicians, among others.”

With almost 250 Bollywood films and 1,000-plus regional films releasing every year, insurers expect the demand to continue. Segar Sampathkumar, general manager at New India Assurance, says as a segment, film insurance is seeing growth.

Not just business, the claims, too, have increased. K G Krishnamoorthy Rao, managing director and chief executive officer, Future Generali India Insurance, says since the coverages have also become wider and overseas shooting has become common, claims due to natural calamities disrupting shoots have also increased. “But, we are seeing more and more producers making it a norm to take insurance,” he says.

The regional film industry, especially in Tamil Nadu and Andhra Pradesh, is also warming up to the idea of film insurance. “While the traction compared to Bollywood is low, south Indian films have also started having film insurance,” adds Salian.

ENSURING A SMOOTH SHOW

• Taal was one of the first films to be insured
• Premium for a film insurance policy is usually one to two per cent of the film's budget
• An applicant has to share a film's budget, actor costs, schedule and shooting locations
• Insurers compensate producers for production loss due to theft, injury, riots or natural calamities
• Post-release crises, including theatre shutdown, is also covered
• Situations not covered include the sudden imprisonment of an actor and failure at the box office