Industry estimates suggest the size of the cover could be well above Rs 200 crore. This includes upwards of Rs 100 crore for production cover apart from cover against force majeure incidents that could disrupt the screening of the film.
Sumant Salian, head of media and entertainment, Alliance Insurance Brokers, said: “Rajini sir’s Lingaa has a higher production insurance cover than other films of south India. The film was also wrapped up in record time. They have covered loss of revenue overseas, since his films are very popular abroad.”
Insurance companies compensate film production houses for delays and losses due to adverse weather conditions, natural disasters, damage to property and injury to actors during shooting. Sudden illness among the main cast of the film due to food poisoning is also covered by such policies.
A decade ago the film insurance segment was dominated by public-sector general insurers but now private insurers have entered the scene. Film insurance, was once considered an additional burden for film producers, has become the norm.
The share of film insurance in the overall insurance business could touch 8-10 per cent in the next three-five years, say experts. At present, it accounts for about two per cent of the industry’s total business.
Apart from Bollywood movies, several south Indian movies are heavily insured. Claim payments have also been on the rise with recent cases of fire on sets and actors falling ill during shooting.
As a concept, film insurance came into existence in the early 1990s. Taal was one of the first movies to be insured. Sanjay Dutt’s arrest during the making of Khalnayak prompted Subhash Ghai to insure his next movie Taal, for which he paid Rs 15 lakh as premium for a film valued at about Rs 11 crore.
Since then more and more producers have been insuring their movies. These policies cover loss to life or property on film sets. They also cover legal issues related to a film as well as post-release risks like theatre shutdown due to riots or strikes.
Acts of terrorism, perilous activities, disappearance, unexplained inventory shortage, war or invasion are excluded from the cover. Some policies also cover the advance paid to film stars.
A senior executive looking into miscellaneous lines of business in a public-sector general insurance company said the stakes were high in a Rajinikanth film because a megastar was involved. "With his films doing good business in South East Asia, the US and UK, it was imperative to take an overseas insurance cover as well,” he added.
In film insurance policies, the type of cover depends on the budget of the film. The premium for such a policy is usually 0.3-0.8 per cent of a film’s budget. If the budget of a film is Rs 100 crore, for instance, the premium would be Rs 30-80 lakh. While submitting a request for insurance, the production house should provide details of the budget, including money paid to the actors, the shooting schedule and location.