With terrorism reinsurance rates escalating by seven to eight times, the Board of Control for Cricket in India (BCCI) may have to shell out a higher premium to cover risks. State-owned Oriental Insurance, the insurer of the Indian Premier League (IPL) event, has already written to BCCI about the rise in reinsurance rates and is awaiting a response.
After the terrorist attack on Sri Lankan players in Lahore, the venue for the IPL matches was shifted to South Africa and, as a result, Oriental had to increase the rates.
“The terrorism rate in the London reinsurance market has gone up manifold. We have written about the revised rates and expect a response when IPL Chairman and Commissioner Lalit Modi returns to India on Monday,” said a senior executive from Oriental Insurance.
However, the executive added that the entire premium will not be more than Rs 3-4 crore against the sum assured of Rs 375-400 crore.
The IPL insurance cover will provide protection against cancellation of matches due to such named perils as fire, terrorism, flood, rains and national mourning. In addition to covering loss of revenue for BCCI, the policy will also cover the losses incurred by the franchisees and the sponsors because of a match being cancelled on account of such factors. The insurer has approached IMG Brokers to bag the deal at attractive rates from reinsurers in London.
“Due to the increased threat of terrorist attacks on the players and chances of matches being cancelled, it has been very difficult to get reinsurance support. Rates have gone up to 2-2.5 per cent of the sum assured,” said a source close to the development.
This is way below the meagre 0.65 per cent that National India Assurance is charging for a cover of Rs 500 crore from Sony Television. The broadcaster is insured against interruption due to weather risks, according to market sources, who added that the insurer is yet to get reinsurance support. When contacted, National India Assurance’s Chairman and Managing Director V Ramasaamy declined to comment.
