IPL 7 insurance cover may shrink as it moves to UAE, Bangladesh

The seventh edition of Indian Premier Leauge is likely to witness a shrink in its insurance cover as the first phase will take place outside India in UAE. Bangladesh too has been kept as stand by option for the second phase depending on the directive from the home ministry. In insuring such a mega event, the risk is usually higher in a foreign country, and controversies around the cricketing extravaganza and viewers' fatigue are only adding to the woes for IPL.

A member of the IPL governing council told Business Standard that the governing council is anticipating a cut in the cover amount for the mega cricket event as a major part of the tournament will be outside India.

"This is inevitable and we have, in a way, factored it while taking decisions with regard to IPL 7," the IPL governing council member said, requesting anonymity. At least a significant part of the tournament has to be played overseas, as the government has made it clear that it won't be able to provide adequate security for matches while the general elections are underway.

The insurance cover for IPL protects BCCI (Board of Control for Cricket in India) against any loss of revenue on account of the cancellation of any match due to reasons beyond their control such as terrorism, bad weather, natural calamities, strikes, etc. Usually, by this time, BCCI finalises the cover deal and makes a pitch to the general insurers in the country. PSU general insurers normally lead the way in providing the cover for one of the richest sporting body for the event.

According to a senior official of general insurance company, which provided cover for IPL in 2012, BCCI was being cautious and thus taking time to make a final pitch for the insurance cover of IPL 7 this year.

"We are also checking the security arrangement, weather outlook and some other external factors during the IPL window. The premium can be hiked by a percent or so as risk becomes higher in a foreign country," he said. According to the standard industry practice, premium is 2-3% of the total sum assured.

Despite being one of the most lucrative sporting events in the country, IPL has been witnessing a reduction in cover amount. In 2011, after India won the World Cup, the 20-over cricketing event got a thumping response and it had got a cover of around Rs 900 crore for that year. But in 2012, it had to settle with a cover of around Rs 650-700 crore owing to poor ad revenue collection and dismal performance by the Indian cricket team in all the one-day matches that it played.

However, despite the shrink in cover, IPL insurance would still be higher than India's other marquee sporting events in the recent times. While the Commonwealth Games was insured for Rs 200 crore, the Formula 1 race was covered for Rs 500 crore.

The 2014 Pepsi IPL season will start on Wednesday 16th April 2014, and conclude on Sunday, 1st June 2014 .The initial phase of the tournament would be played out at three venues in the UAE-- Abu Dhabi, Dubai and Sharjah from April 16 to 30.