New Delhi: The attack on the Sri Lankan cricket team and the abrupt slowdown in the economy have not only pressured the organizers of the Indian Premier League, or IPL, to rearrange its second season schedule, but also pay out more for protection against terrorist attacks and, for the first time ever, insure itself against default in payments by advertisers.
Two senior officials of the Oriental Insurance Co. Ltd have separately confirmed that premium rates for terror cover have gone up by at least 50% this year because of increased risks associated with the tournament. According to the officials, both of whom did not want to be named as they are not authorized to speak to the media, the size of the terror cover is around Rs375 crore.
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This is the first time IPL is taking out separate cover against terror attacks. Last year, it was part of a comprehensive risk package.
“Premium rates are substantially higher this year after an attack on the Sri Lankan team. Rs33 lakh has been paid as premium for the whole event,” said one of the officials.
Individual teams are also considering insurance cover.
“We are careful about security of our players and making all provisions to ensure that we have incident-free matches in Delhi. Insurance cover by the IPL is a welcome move,” said Vidur Naik, marketing manager, Delhi Daredevils.
Meanwhile, given recent instances of defaults in payments by some advertisers and the rapidly worsening economic outlook, IPL is not taking any chances.
“For the first time they (IPL) have also taken cover of around Rs135 crore against the default by sponsors,” said the official. The second edition of IPL gets under way on 10 April.
Neither official commented on the premium paid on this cover because this is proprietary information.
IPL has already generated a lot of money for the Board of Control for Cricket in India, or BCCI, with media rights being sold for $1.02 billion for 10 years and DLF Ltd paying Rs200 crore as the title sponsor for five years. In addition, Multi Screen Media Pvt. Ltd (MSMPL), the broadcaster that beams the Sony bouquet of television channels, is in discussions to absorb the Rs137 crore loss IPL suffered after Reliance Big TV withdrew from a deal for advertising rights at the various grounds that the IPL matches will be held. As Mint had reported on 3 February, Reliance Big TV had done so after MSMPL signed its rival Airtel Digital TV, the direct-to-home arm of Bharti Airtel Ltd, as its on-air sponsor.
On-ground advertising allows the sponsor to display its logo on the cricket grounds as well as put up its billboards across the stadiums, whereas on-air sponsors get to air their advertisements during the commercial breaks.
Last year too, Oriental Insurance had designed special cover for various teams to insure against untoward weather, riots, public liabilities and other unforeseen tragedies, including terrorism. The sum insured ranged from Rs50 lakh to Rs9 crore for different teams, depending on multiple factors including the capacity of stadiums and the number of tickets sold. Under such contracts, 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.
This year, IPL has taken out a separate cover on terrorism.
“So far, only the deal for terrorism cover has been completed. But for other items such as event cancellation, national mourning, fire or any other acts of god the deal is in its final stage and has not been closed yet,” said the second official from Oriental Insurance.
Graphics by Paras Jain / Mint