GIC to underwrite film completion guarantees

To reinsure the risks underwritten by Infinity Film Completion Services.

India's only reinsurer, General Insurance Corporation (GIC), today announced it has sponsored a film completion insurance services entity, to break the monopoly of the West.

Internationally, the film completion guarantee business is dominated by two companies "� Film Finances Inc and International Film Completion Guarantors "� which share almost whole of the world market for film completion guarantees. Guarantees from both these firms are underwritten by Lloyds and the London insurance market.

"GIC is a sponsor of Infinity Film Completion Services (IFCS) and also the reinsurer of the risks underwritten by the company. This way we can break the monopoly of the west," said R K Joshi, chairman of GIC.

GIC officials said the reinsurer would invest 10 per cent of the initial guarantor fund of Rs 50 crore set up by IFCS. Most of the contributions for the fund have come from high net worth individuals overseas.

Mehool Parekh, managing director, IFCS, said the initial fund would enable IFCS to provide completion guarantees to film projects worth Rs 250-300 crore.

In 2004, the Indian film industry produced 934 films and earned revenues worth Rs 5,650 crore. In 2005, revenues are expected to be Rs 6,667 crore.

IFCS will charge a fee of about 5 per cent of the total cost of a film project, and this will include insurance premium of 1.5 per cent. 'Completion guarantees' is underwriting of the risk of a film not being made within budget and as per the prescribed schedule.

Completion guarantees will help independent producers to avail of banking finance at much lower rates than at present, and IFCS will also help the producers presell the rights of the film, said Anand Mahendroo, managing partner, IFCS.