ICICI Lombard to IFFCO TOKIO, insurers strike early on World Cup pitch

General insurers look to make a mark on the global stage, leveraging their understanding of the game through the Indian Premier League

The unpredictability of a game of cricket has for long been romanticised by commentators and sports writers. But its true import is probably being understood best by a band of general insurers that have had their ears close to the pitch for years now, tracking the Indian Premier League.

SBI General Insurance, ICICI Lombard, New India Assurance, Insurance, IFFCO TOKIO General Insurance, New India Assurance and United India Insurance are among the insurers who have expanded their portfolio for ‘event cancellation’ for sports, adding greater flexibility and scenarios under cover for the IPL. They are now eager to put their skills to the test with the upcoming World Cup.

“IPL has given a real fillip to the whole concept of event insurance in India,” said Subramanyan Brahmajosyula, head-Underwriting and Reinsurance at SBI General Insurance. And 2019 being a bonanza year for cricket he, like his compatriots, sees it as the perfect time to push for a larger slice of the global pie with the ICC World Cup.

The product was around for several years, say insurers, but they were cautious writing this kind of business. “While it was not unusual for event organisers to take basic event cancellation insurance, it is only after IPL that more such covers protecting franchise owners and broadcasters have become popular,” according to Brahmajosyula. A rough estimate of the total events business today would be around Rs 50 crore. And this now includes special packages for the BCCI (Board of Control for Cricket in India), franchise owners, local cricket association/ stadium owners and broadcasters. Prior to IPL, this might have been about a tenth of this amount or even lower.

New India Assurance said that it covers all stakeholders involved and as the stakes are getting higher, all are taking up customised covers to insulate themselves from any kind of losses. Premium for such specialised cover varies from 0.1 per cent to 3 per cent of the exposure. It essentially depends on the scale. Insurers look at their requirements per match, look at the overall season and then arrive at a combined average rate. Things like location, exposure per match, total exposure, stadium capacity, ticket price are all taken into consideration.

With IPL, insurers say they learnt to spot multiple opportunities within a single event. Event cancellation impacts different people differently and insurers plan accordingly. For instance the Mumbai Cricket Association may insure a match for Rs 5 crore on the basis of tickets sold. If the match is rained out, no ball bowled, the association gets the full amount. If a few overs have been played and the audience does not need a refund, it gets nothing. For the same match, the broadcaster Star Sports, may estimate that its ad revenue would be Rs 20 crores. If the match is abandoned after 20 overs and the broadcaster has about Rs 10 crore worth of ads that could not be aired, the insurer has to compensate. The numbers and possibilities change if a team owner insures against the possibility of a star player falling ill.

The product is further tweaked as per the length of the cover. The BCCI generally takes it for the entire season. However, the franchises look at particular days, players and so on. “While all the covers provided to different stakeholders come under the broad umbrella of event cancellation, depending upon the requirements we customize the products,” said Brahmajosyula.

The insurers are  looking at gaining similar expertise with other leagues. They are  looking at tournaments which command a large global following, even if local presence is minimal. “Taking the cue from IPL, we have also seen organisers of other sporting events such as hockey, kabaddi, badminton and football opting for event insurance covers,” Subra­manyan added.