Insurers cut rates as film makers rush for cover

As producers rush to insure their films from delays in launch due to unforeseen circumstances such as a strike or a natural calamity, insurers are offering covers at lower rates.

The premium for film insurance has fallen from 0.8 per cent of the sum assured to 0.4 per cent in the last two months.

United India Insurance has been into the film insurance business for long. Of late, the other three public sector players, Oriental India, National India and New India Assurance, have jumped into the fray to have a share of this business. A few large private sector insurers such as Bajaj Allianz are also present in this segment.

“After the two-month-long strike by multiplexes and delay in releases due to swine flu, the awareness about covering losses has gone up. With more players coming into the market, the rates have fallen. We are moving away from most of the recent movies as the rates are unviable,” said a senior executive at United India Insurance.

Movies such as Life Partner and Kaminey, which had a delayed launch as multiplexes and theatres closed due to the swine flu scare, didn't incur losses as they were insured. Though the insurer is yet to estimate the loss, the film makers will not suffer much, say industry sources.

While the policy covering production is the most popular, the cover against loss of profit in distribution is increasingly becoming popular.

The distribution loss for What’s your Rasheee?, which is releasing on October 2, has been insured by Oriental Insurance for Rs 20 crore.

The source added that there was a huge demand for annual cover by big production houses such as UTV, Sony and Yash Raj. This would insure any number of films made in a particular year.

The production policy insures lead actors, crew and film sets, while a distribution insurance covers losses suffered by the producer when the release of the film is stalled due to any reason.

The third most popular is the errors-and-omission insurance. Under this policy, legal matters are taken care of and the insurance company pays the court fee of the producer.