With uncertainty over the fate of the Commonwealth Games rising as the opening ceremony draws closer, the organising committee is paying a record premium to insure the event against cancellation.
The committee will pay state-owned Oriental Insurance Rs 50 crore for Rs 730-crore cover, making it the most expensive event cancellation policy in the country ever.
In comparison, the Board of Control for Cricket in India (BCCI) recently paid Rs 1.5 crore as premium for an event cancellation cover of Rs 250 crore for the Champions League T20 tournament.For the Indian Premier League-3 earlier this year, the board paid Rs 4 crore for a sum assured of Rs 480 crore.
The policy for the Commonwealth Games will cover it against cancellation due to natural perils like earthquake, riot, death of a political leader and terrorist attack.
Oriental Insurance won the mandate in a close contest. Bids by the other three public sector players who participated were between Rs 51 crore and Rs 52 crore.The tender was floated in the first week of September and was supposed to close on September 13.
The organising committee will decide on the sub-limits for risks like terrorism within the overall policy in a couple of days.
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“There are a few options like going up to Rs 500 crore or Rs 300 crore for terrorism cover within the total cover of Rs 730 crore which is being worked out,” said a chairman of a public sector insurance company.
Since a lot of uncertainties suround the Games, the organising committee had to shell out a premium of Rs 50 crore to insure it against cancellation.
“Because the risk got into negative, premium rates shot up. To get reinsurance quotes insurance companies priced it adequately,” said G Srinivasan, Chairman and Managing Director, United India Insurance.
The policy, however, will not trigger in case of cancellation caused by incomplete preparations. “The policy will not trigger if the preparations are incomplete,” said R K Kaul chairman and managing director Oriental Insurance.
“There is a lot of uncertainty around the whole event. This is seen as inefficiency of the government,” said Rahul Agarwal of Optima Insurance Brokers.
“Also, Met department has forecast rains during the Games. This is a sovereign event unlike any other and any cancellation will have large ramifications. Pakistan is also increasing activities in Punjab and J&K. Though Delhi has good security and there are no alerts so far, insurers percieve it with a lot of uncertainty. It is complex game, played at different places,” he added
Last month, the organising committee bought an insurance policy of around Rs 5,500 crore covering the athletes, CWG officials, spectators and directors against death or injury.
Oriental Insurance is also the underwriter for this policy. The committee had paid Rs 11 crore premium for a policy of around Rs 5,115 crore.
All athletes are insured for Rs 25 lakh each under the group personal accident cover, while all CWG staff and officials are insured for Rs 2 lakh to Rs 10 lakh each. Athletes and officials accompanying them are separately insured under personal accident cover for another Rs 25 lakh each.
The cover has insured 7,700 athletes participating in the game and 800 officials accompanying them. In addition, the cover includes around 1,400 Commonwealth Games staff, each of whom is insured for Rs 2 lakh.
Spectators are insured for Rs 600 crore. Around 60,000 spectators are covered under the third-party liability. Under the policy, each spectator will be compensated for Rs 1 lakh if they get injured during the game.
In addition to covering athletes, the organisers have bought directors’ and officers’ D&O liability insurance cover of Rs 125 crore to avoid risk arising against any legal liability. The cover will take care of the expenses of defending legal obligation, excluding fraud and other criminal activities.
So far, three games officials have been suspended following an investigation into financial irregularities. Games treasurer Anil Khanna had resigned following graft allegations.