IPL match cover ends once first ball is bowled
21 Apr, 2014 01:01 PM
The Board of Control for Cricket in India (BCCI) gone for a 'one ball bowled' cover for the ongoing Indian Premier League, leaving the broadcasters and franchisees to protect themselves against the glorious uncertainties of a cricket event.

BCCI has purchased an insurance cover of around Rs 900 crore which will make good loss of revenue from sale of broadcast and other rights if any of the IPL matches fail to take off. The cover includes various reasons, including weather, civil strife and death of a political leader. It has also bought a terror cover for the entire event. However, there is a catch: the moment the first ball is bowled the cover for that match ceases.

"The objective of covering the match up to the first ball is to prove that BCCI has done everything to ensure that the match takes place. The umpire will not allow the match to begin unless everything is in order. The fact that a ball has been bowled proves that the board has done its bit," said an insurance official.

The overall cover has been provided by New India Assurance for a premium of around Rs 8.5 crore and has been largely reinsured internationally. The deal was brokered by Aon Insurance Brokers.

On the other hand, the company with the highest stake in the event - Sony Entertainment Television - has however reduced the amount of insurance cover that it purchases for the Indian Premier League, choosing to cover only its expenses rather than loss of revenue. As a result, the television company has bought a cover for a little over Rs 700 crore from Kolkata-based National Insurance Company and arranged by Allianz Insurance brokers.

As compared to BCCI, Sony's cover is largely for the fee money it would lose if the event were to be cancelled on account of events like rain or bad weather. The country's biggest sport event in terms of revenues will be held partly in the United Arab Emirates in April during the ongoing Lok Sabha elections. The matches will return to India in May once polling is over.

Insurers say that the subcontinent is seen as a bigger risk for events, both from weather and terror standpoint. Although rates for terror cover have softened in the international market, insurers say that the March 2009 terror attack on the Sri Lankan cricket team was still fresh in the minds of insurers. Weather risks are also seen to be high this year as the El Nino effect increases the chances of unseasonal rain.

Some risk managers feel that savings of a few crore of rupees in premium was not worth Sony's decision to avoid insuring revenues. "A lot of advertising revenue is tied to the IPL. We do not know why the media company chose to insure only expenses," said a broker not connected with the deal. He said that Sony's decision made sense only if the company was confident that it could replace the content if the event was cancelled and avoid loss of advertising.
Source : The Times Of India

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