Kolkata: State-owned National Insurance Co. Ltd has agreed to provide a record Rs 900 crore cover against any loss of advertisement revenue to Multi Screen Media Pvt. Ltd, which is to telecast the Indian Premier League (IPL) cricket tournament on its Set Max and Sony Entertainment television channels. IPL’s fourth edition gets under way on Friday.
This is the biggest cover obtained for the telecast of a cricket tournament anywhere.
For the IPL last year, Multi Screen Media had obtained an insurance cover of Rs 650 crore from the same company.
New India Assurance Co. Ltd had provided a cover of Rs 600 crore for the telecast of the just-concluded World Cup, according to an official of the state-owned insurer who did not want to be identified.
For each league match of the upcoming IPL, Multi Screen Media has obtained a cover of Rs 12-15 crore. If a match gets cancelled due to rain, the broadcaster could claim up to Rs 15 crore from the insurer.
But under the agreement between National Insurance and Multi Screen Media, the broadcaster is keeping aside some commercial time during each match to accommodate advertisements from cancelled matches, said a top official of the insurance company.
“The television channels should be able to accommodate commercials from up to three-four cancelled matches, especially in the initial stages, without lodging a claim,” he said.
For the two semi-finals, Multi Screen Media has obtained a cover of Rs 15 crore each, and for the final, Rs 18 crore, he said.
National Insurance has also agreed to compensate the broadcaster to the tune of Rs 450 crore if it suffers any loss of revenue due to a terrorist attack.
With Rs 10 crore being charged as premium, the IPL is being seen by a section of insurers as a high-risk event, to the extent that National Insurance was unable to secure reinsurance cover. Private insurers didn’t take any interest in the event at all.
“We would have had to charge at least Rs 20 crore in premium to (be) able to afford reinsurance cover,” the National Insurance officer said. “Competition prevented us from raising the premium.”
Instead, the company tried to get the other state-owned insurers to join forces with it but they too refused in the end.
National Insurance chairman and managing director N.S.R. Chandraprasad said the risk wasn’t high. “With no claim at all in the last two seasons, IPL’s been a profitable business for us so far,” he said. “There is very little possibility that a large number of matches would get washed out.”
The matches are scheduled from 8 April to 28 May, before the onset of the south-west monsoon.
Multi Screen Media obtained a higher cover for this year’s IPL because the number of matches has gone up from 60 to 74. Apart from that, it has raised advertisement tariffs by at least 20%, said Rohit Gupta, president, Multi Screen Media.
With India winning the cricket World Cup on 2 April, the IPL is expected to attract a larger television audience than in previous years.
Last year, some 120 million people watched it on television; this year, the figure is expected to rise to at least 140 million.
The advantage with the IPL is that the audience is maintained across matches, whereas in the World Cup, the viewership peaks for matches involving the Indian team, said Gupta.