New Delhi: It isn’t just cricket that the Indian Premier League (IPL) has revolutionized, but also the Indian insurance business.
Thus, Indian insurance firms that have thus far only insured cricket matches are discovering a hitherto unexplored line of business—insuring players of all nationalities.
With the insured sum likely to be at least Rs200 crore a team or Rs1,600 crore for all eight teams that are part of IPL, local insurance firms are looking to reinsure their liability with foreign insurance companies in an effort to mitigate their risk.
Executives at several insurance companies have told Mint that no deal has been signed yet, but expect a flurry of them to be signed before the league commences on Friday. IPL is a Twenty20 league promoted by India’s top cricket administrator, the Board of Control for Cricket in India, or BCCI.
IPL, which features some of the best cricketing talent in the world, is being packaged as a sports and entertainment event: One team has hired a US cheerleading squad, two teams are owned by Bollywood stars, and several teams have brand ambassadors from Bollywood. The league has already generated a lot of money for BCCI with the eight teams being sold for $723 million, or about Rs2,892 crore, to owners ranging from Reliance Industries Ltd to actor Shah Rukh Khan. Media rights went for another $1.02 billion for 10 years and title sponsor DLF Ltd paid another Rs200 crore for five years.
New game: Muttiah Muralitharan, Sri Lankan bowler. Team owners are insuring foreign players too. (AFP)
Still, more money, it emerges, just means more risk.
The executives claimed that this is the first time foreign players are being insured in India. Though there are foreign players in the Indian football league, the risks are not as high as they are in the case of IPL, they added.
Usually, when foreign teams travel to India, their cricket boards take out an overseas medical insurance policy to cover risk of injury to their players. In the case of IPL, the foreign players, 32 of them, are coming to India in their individual capacities and hence their respective boards will not underwrite the liability.
Initially, this served up a technical problem, because to be insured in India by an Indian firm, an individual has to be a citizen, or has to reside here for more than 180 days. The foreign players, it emerged, didn’t satisfy both counts.
To work around the problem, team owners are now taking out policies for their teams, including players, coaches, physiotherapists and trainers. Since at least some of the owners of all the teams are Indians, their insurance liabilities can be covered by Indian firms. Policies issued by the firms will cover the treatment of the players in case of injury; the 25% player fee that will have to be paid by the team owner regardless of whether its cricketers are able to play or not; and the 75% balance fee for the injured players.
“Considering that it’s a high- risk game, a player will be given cover against any injury or disease. If a player is benched following an injury or (for) any other reason, the insurance company will reimburse 75% of the match fees to that player,” said a reinsurance broker who is in the final stages of closing the deal with one of the IPL teams and who spoke on the condition of anonymity.
The insurance policies will also cover the cost of treatment overseas for Indian players should they be injured while playing in the league. BCCI finances treatment for players who are injured while playing for the country. In the case of IPL, the same policy will cover treatment both in India and overseas—a first for insurance policies issued by Indian companies.
While neither the insurance companies nor the teams were willing to disclose the premiums paid, people close to the situation who did not wish to be identified say that it could be 1.5-2% of the insured sum.
Apart from this, all IPL matches will, like several other cricket matches, have a special contingency cover.
The Oriental Insurance Co. Ltd, a New-Delhi based general insurer, has designed a special cover for various teams in IPL to insure against untoward weather, riots, public liabilities and other unforeseen tragedies. Under this, the game is considered to have been played after the first ball of the match is bowled. Claims can be made only when the game gets cancelled without a single ball being bowled.
“We have been providing insurance cover to BCCI for the past 25 years. But, unlike previous matches, given the recent rise in terrorism threats, we have offered terrorism cover too with a special contingency cover,” said Mumbai-based Rajesh Malhotra, senior divisional manager of Oriental Insurance.
The sum insured ranges from Rs50 lakh to Rs9 crore, with the Mumbai and Mohali teams seeking the highest cover. “The amount insured depends on multiple factors ranging from capacity of stadiums, sell-out of tickets to how good crowd pullers they are,” said Malhotra.