Stakeholders may lose big money
The insurance companies have specifically excluded event cancellation due to Coronavirus in the `2000 crore insurance policy bought to cover the IPL matches.
Broadcaster Star India and sponsors of the Indian Premier League (IPL) 2020 and of other cricket matches are unlikely to get any reprieve from insurance companies if the matches are further postponed or even cancelled as Covid 19 spreads its tentacles in the country rapidly.
The insurance companies have specifically excluded event cancellation due to Coronavirus in the `2000 crore insurance policy bought to cover the IPL matches by broadcaster Star India.
The event insurance cover for 2020 IPL has been provided by ICICI Lombard General Insurance who is the lead insurer (underwritten major portion of the cover) followed by New India Assurance, SBI General Insurance and Future Generali India Insurance.
The tentative schedule is April 15 to May 30 insuring a total of 60 matches.
The maximum sum insured is around `45 crore for league and `60 crore for playoffs. The total sum insured is `2000 crore. In comparison, the total sum insured last year was `1800 crore and last year there was no exclusion of Corona in the policy.
An insurance official told DC, “The major exclusions from the event cancellation policy bought this year are Corona and terrorism. Any loss arising out of Corona is specifically not covered in the policy this year.”
“Postponing the event will not lead to losses as people will watch the matches at home but cancellation of the event would result in losses.
When the policy was bought, Corona was emerging as a global risk spreading fast, even while it was not declared as a pandemic. So insurers decided to specifically exclude it,” added the insurance official.
The policy covers losses due to cancellation of the match from natural disasters such as flood, storm, heavy rains, earthquake or player accident/injury. It would also cover loss of player fee due to injury/illness. However, even if one ball is bowled, it counts as a match taking place and the organisers would not receive any money.
Besides broadcaster, the other stakeholders in the cover are BCCI, franchises, central sponsors and team sponsors. In the past the IPL covers led to big losses for insurance companies as the claims ratio (claims outgo plus administrative expenses) rose to 150 per cent to 200 per cent. This led to insurance companies hiking the premium rates.
Last week after a series of meeting, the Board of Control for Cricket in India (BCCI) and the IPL top brass postponed the IPL season till April 15 in the wake of the Coronavirus outbreak as postponing the tournament in the prevailing atmosphere was the best available option as it had little-to-no financial implication.
According to news reports, many state governments are against scheduling the matches of the forthcoming edition of the league as that would pose a severe threat of spreading the deadly virus. Cancelling the IPL is likely to cost the tournament’s broadcaster and franchises around `3000 crore said reports.