EVENT CANCELLATION INSURANCE POLICY

Event Cancellation Insurance Policies are slowly gaining market. The policy is very useful for event managers/producers who face uncertainities in organising of events

1.INTRODUCTION:
1.1. Insurance companies in India are covering major events like international cricket against the uncertainties of terror attacks and the vagaries of weather. Event cancellation insurance policy helps protect interest of organisers, broadcasters and sponsors of various event/ functions. Huge money pours into cricket from our sub-continent than from anywhere else in the world. This has build an unfortunate perception that all countries in the regions are hot spots for international events.

A belief that has proved to be a great loss for fans and for the sport itself. A bomb blast in Karachi, a few years ago, resulted in New Zealand cancelling its Pakistan tour. But in London, the Ashes series between England and Australia went undisturbed despite the train blasts. Uncertainty affects financing for the organisers – from broadcaster, sponsors or from public buying tickets. Fortunately for them this is where insurance covers are required for. Wherever is an exaggerated perception of risk insurnce companies step in to level the playing field. Take the case of last year’s taingular (India- West Indies-Srilanka) series scheduled in Sri Lanka.

With routine attacks by the LTTE giving the island nation a reputation as a destination with major terror risk, the Cricket Sri Lanka, the cricket Board of the country, had told the broadcaster, Ten Sports in that case, that it would bear the risk of terrorism or political risk. Therefore the broadcaster had to arrange for cover for only those losses arising out of adverse weather and Acts of God (AOG) perils – however the Sri Lankan Board had agreed to take insurance cover to indemnify the broadcasting company against all other risks including terrorism or political risk. Subsequently West Indies left without playing and the matches between India & Sri Lanka were abandoned because of rain.

1.2. Besides cricket matches, other high value insurance events are movies and television serials. With the stakes getting increasingly bigger insurance of television serials is picking up. While feature films are also insured the industry is still in its infancy. A start was made when United India Insurance issued the first package policy fot the feature film Taal in 2000.

It was a comprehensive policy, extending cover to the film, performers, as well as producer Shri Subhas Ghai. Since then the entry of corporatisation of production houses has given a boost to film insurance to these high value insurance events like movies & television serials. Bajaj Allianz has provided insurance cover for Vijay Mallya’s film Rakht, the Oscar nominated short film — Little Terrorist and a Tamil film by Suman Productions in Chennai.

1.3. After movies and cricket, it’s the turn of television software producers to line up for insurance covers. One of the biggest policies issued is that by Bajaj Allianz General Insurance for 200 episodes of Star One’s serial Nach Baliye. The important event insurance cover opted is this star One’s Nach Baliye – a dance competition among mini-celebrities.

The interesting part of the cover is that it provides to meet the cost of bringing in a new contest couple if any of the celebrity contestants are unable to make it, for reasons specified in the policy. This particular policy also included a Rs. 2.5 Crore Personal Accident cover for the strars in case any accident occures during shooting of the serial. Besides, there is a Rs. 3.5 Crore Personal Accident cover for all the key crew members and workers.

1.4. In the show business the industry, largely uncovered, could be exposed to big risks. The stakes may be further high with products booking locations based on dates alloted by the superstar. Take for instance Kaun Banega Crorepati –II, hosted by Amitabh Bachchan or Shah Rukh Khan, who were the cornerstone of Star TV’s most popular serial in the first & second phase of serial. Kaun Banega Crorepati was one of the early ones to buy a cover.Star TV had earlier obtained a Rs. 10 crore cover from Oriental Insurance Co. Ltd. for the first phase of the serial.

The channel had insured the sets and injury to audience and participants. The policy, however, did not cover non-appearance of the celebrity, Mr. Amitabh Bachchan, who hosts the show. However, the insurance cover for KBC II, the producers are understood to have shifted to Iffco Tokio. A similar policy is understood to have been acquired from Iffco-Tokio General Insurance for KBC-II. However, industry sources say that this policy too does not cover non-appearance. Alalong the insurance cover for KBC is understood to remain limited to the cost of sets and liabilities towards the audience for any injury that may take place on the sets.

1.5.Most game shows obtain a policy that covers the audience too. Sources said the nunber of proposals from television producers is on the rise , particularly when it comes to events. Unlike event insurance , few ask for cancellation covers for serials as these are only for limited period events. These are covers bought to protect costs suffered due to event cancellation. Given the limitations in drafting, insurance companies do not extend cover where the cause of claim can be subjective. Insurance companies prefer to keep the wordings simple and define the compensation in advance. But this makes insurance terms restrictive.

1.6. Details of Policy Coverage:
1.6.1. As an experienced event organiser, you know the only thing you can safely expect is the unexpected. But unfortunately, you cannot always count on business insurance alone to cover you if the unexpected happens and ruins your event. Event Insurance Portfolio is specially designed to protect you when organising small conferences, meetings, Annual General Meetings, and other corporate events.

1.6.2. The Events Insurance Policy Particulars
The Events Insurance Portfolio includes cover for cancellation and abandonment, property damage and legal liability and offers you the flexibility to choose an insurance package to match the exact cover you require.

Cancellation – if your event is cancelled for reasons beyond your control, the insurer will reimburse your irrecoverable expenses, up to the limit you choose. This includes cancellation following terrorism for your event.

Property damage – the insurer will cover loss of or damage to your property (or property you are responsible for) either at or traveling to and from your event up to the limit selected by you. The cover also includes loss of or damage to the venue’s buildings, fixtures, fittings and machinery up to the stipulated limit selected by you. This property insurance section covers the property used in the event. The premium is usually dependent upon the value of the property to be covered. The levels of cover can vary depending on your event needs and you should discuss these with the event insurance broker.

Legal liabilities – the insurers provide cover if you have to pay compensation to a third party following accidental bodily injury or damage to their property if the incident happens during your event. The cover also includes legal defence and injuries from food poisoning caused by food or drink served as hospitality by you. It is basically a kind of liability cover as standard. You can also purchase additional cover for Employers’ liability for a suitable limit of your choice– your legal liability to your own and casual staff.

In addition to the standard covers above, you may also purchase additional cover for:
• Adverse weather for outdoor events (in the open or in a temporary structure);
• Interruption cover for teleconferencing – available for picture, audio or data image communication links;
• Non-appearance of key persons – if your event is dependent in whole or part on key speakers, celebrities or entertainers;
• Travel insurance;
• Money insurance;
• Enforced reduced attendance;
• Loss of net profit, etc.

Event insurance usually includes the above cover components. The information given is for informational purposes only and is not intended as or should not be construed as advice. Covers can vary depending on your needs and you should discuss these with the event insurance broker. You should always discuss the event insurance cover levels and limits of cover and policy details with the event insurance broker, much ahead of your need.

Public Liability: This section covers your liability against claims from the public while attending your event. The premium is often dependent upon the number of people attending your event. The levels of cover can vary depending on your needs and you should discuss these with the event insurance companies or the brokers. This cover is usually a compulsory element of an event insurance policy. Basically it covers your liability against claims from the public while attending specifically to your event. The premium is often dependent upon the number of people attending your event. The levels of cover can vary depending on your needs and you should discuss these with the event insurance broker. This cover is usually a compulsory element of an event insurance policy.

Property Insurance: It covers the property used in the event. The premium is usually dependent upon the value of the property to be covered. The levels of cover can vary depending on your event needs and you should discuss these with the event insurance broker.

Employers’ liability: It covers you as the organiser against any claims from any staff that you might employ for the event. The premium tends to be in relation to the number of staff which you employ for the event. The levels of employers liability cover can vary depending on your needs and you should discuss these with the event insurance companies or the brokers.

Cancellation and Abandonment cover: It covers your event against cancellation or abandonment, postponement, failure to vacate, adverse weather, and rainfall affected and any other eventuality beyond the control of the organiser of the event. The extent of cover can vary depending on your needs and you should discuss these with the event insurance companies or the broker.

1.6.3. Exhibitors Risk:
You invest a lot of time and effort in an exhibition stand, and whilst at the event you’re also exposed to potential legal liabilities. The insurers Exhibitor’s product is designed to protect your company and investment.

The insurers Exhibitor’s Cover includes:
 Cancellation – if the event at which you have arranged for space as an exhibitor is cancelled, you are covered for losses (up to your sum insured )
 Property damage – any loss of or damage to business property within the space allocated to you at the event, which you own or for which you are legally responsible (for example, hired equipment). This includes property supplied to you by the organiser of the event and R.5,00,000/- cover for damage to the venue without proof of negligence.
 Legal liabilities – cover if you have to pay compensation to a third party following accidental bodily injury or damage to their property if the incident happens during your event. Cover also includes injuries from food poisoning caused by food or drink served as hospitality by you. The standard cover is Rs. 10,00,000/- but higher limits can be considered ( under Public Liability).

1.6.4. Private Event Insurance Portfolio:
Organising a social event such as a wedding or anniversary party can be hugely satisfying, but can also take a lot of time, effort and financial outlay. The Insurers’ Private and Social Event Portfolio ensures you can enjoy peace of mind on your big day – whatever may be the occasion.

This Private Event Insurance Portfolio offers the insured the flexibility to choose the relevant level of cover from the available package options – including cancellation, abandonment, property damage and public liability – so you only pay for the level of cover you need.

Cancellation – if your wedding or social event is cancelled for reasons beyond your control, the insurer will reimburse your irrecoverable expenses, up to the limit you choose. This includes cancellation due to non-appearance of the bride, groom, and member of the wedding party, official photographer or guest of honour due to accident, death or serious illness. Cancellation cover also includes cancellation following terrorism up to Rs. 2, 50, 000/- for your event – something some insurers may exclude. Some of the Indian insurer will also pay you up to 100% of your irrecoverable costs should the event have to be rearranged for another day – some insurers limit this to a lower percentage of your costs.

Property damage – Under this cover – the insurer will cover loss of or damage to your property (or property you are responsible for) either at or traveling to and from your event up to Rs. 1, 00, 000/- or more. You are also covered for loss of or damage to the venue’s buildings, fixtures, fittings and machinery up to Rs. 1,50,000/-. There are no single article limits for any one item.
Legal liabilities – the insurer will cover you if you have to pay compensation to a third party following accidental bodily injury or damage to their property if the incident happens during your event. Cover also includes legal defence and injuries from food poisoning caused by food or drink served as hospitality by you. The insurers offer Rs. 5 million liability cover as standard. You can also purchase additional cover for Rs.10 million Employers’ liability – your legal liability to your own and casual staff.

In addition to the standard covers above, you can purchase additional cover for:
• Adverse weather cover for outdoor events in the open;
• Non-appearance of the bride’s or the groom’s grandparents over the age of 70;
• Non-appearance of the Disc Jockey or live entertainers;
• Increased limits for property and Public Liability;
• Cancellation following an unexpected recall to active duty in the Armed Forces or Police.

Event insurance usually includes the following cover components. The information given is for informational purposes only and is not intended as or should not be construed as advice. You should always discuss the event insurance cover levels and limits of cover and policy details with the event insurance companies or the brokers.

1.6.5. Event Insurance Covers for Cricket Matches:
Now-a-days insurers are covering major events like international cricket against the uncertainties of terror attacks and the vagaries of weather. Insurance cover helps protect interest of organisers, broadcasters, and sponsors. More money pours into cricket from the sub-continent than from anywhere else in the world. This has built an unfortunate perception that all countries in the regions are hot spot for terror attacks at the back drop of international cricket events. A belief in the international sphere of similar nature has proved to be a great loss for fans and for the sport itself. “A bomb blast in Karachi, around four years back, resulted in New Zealand cancelling its Pakistan tour. But in London, the Ashes series between England & Australia went undisturbed despite the train blast.

This kind of uncertainty affects financing for the organisers – from broadcaster, sponsors or from public buying tickets. Fortunately for them this is where insurance comes in. Wherever there is an exaggeration perception of risk insurance companies step in to level the playing field. Consider the case of the triangular series involving India-West Indies-Sri Lanka scheduled in Sri Lanka last year. With routine attacks by the LTTE giving the island nation a reputation as a destination with major terror risk, the cricket Sri Lanka, the cricket board of theat country, had told the broadcaster, Ten Sports in this particular case, that it would bear the risk of terrorism and political risk.

The broadcaster had to arrange for cover for only those losses arising out of adverse weather and ‘Acts of God’. The board had agreed to indemnify the company against all other risks including terrorism or political risk. However, getting insurance cover turned out to be a major challenge for the board. Local companies did not have the capacity. International giants such as Swiss Re declined the cover, while the London reinsurance markets quoted very high rates.

Finally a package was finalised where the insurance cover was provided by two local companies – Ceylinco and the local arm of Allianz. But because these companies did not have a large risk appetite the corporate broking with Aon Global Insurance Services arranged for ceylinco’s cover to be reinsured with Oriental and Allianz Lanka’s cover to be reinsured with Bajaj Allianz. The result was that the Sri Lankan board managed to get a cover for the third of what the international underwriters were quoting.

The broker went through 30 years of weather data and obtained crowd statistics for the past 10 years. They went through information on how many matches were cancelled and why. Only after providing these kinds of information by the broker, that insurance companies were willing to quote. Actually, Insurance Industry sources said that though insurance companies have the capacity to underwrite events, they mainly lack of the expertise. Where the Indian Insurers issue policies based on a two page proposal form – the insurers abroad asked for 20 pages information booklet because of their apprehensions.

10. Conclusion:
According to Mr. Kamesh goyal, MD, Bajaj Allianz General Insurance – what ails event insurance is that insurers are typically reluctant to insure events which are not backed by known names/ organisers, while all big organisers do not insure, thus it can lead to a situation where one claim can wipe out entire year’s premium. But entertainment industry in India is growing rapidly and as it becomes more organized and professional, event insurance has already started gaining ground. Bajaj Allianz had good experience as they have insured in the past the India-New Zealand cricket match which was part of the Australia Tournament.

Closer home, National Insurance & Oriental Insurance frequently going to issue a “one ball bowled” cover to various Indian Cricket Associations like BCCI, Tamilnadu/ Orissa Cricket Association, etc. mainly for the Test Matches – where the cover is valid if not a single ball is for even one of the five days. Even when the rain has washed away tone or few days the modified compensation now-a-days are even based on the number of overs bowled in the whole match.

This cover has now proved to be crucial component of all the multi-crore deals between various Television broadcasters and Cricket Associations. Practically this event insurance on cricket helps bring in more money into sports in India. Therefore, the event insurance helps protect the interests of organisers, sponsors, and broadcasters. If the event is insured the sponsor is safe and is more confident in putting up money. Even through prize insurance, a corporate can announce a prize upon a sportsperson winning a tournament. The insurer agrees to come up with the prize money for a premium, which is a fraction of the amount covered under other heads.

Besides cricket matches, other high value insurance events are obviously movies & television serials. In the show business industry largely uncovered even in recent days – could be exposed to big risk. With the stakes getting increasingly bigger insurance of television serials is picking up considerably. The stakes may be further high with producers booking locations based on the dates allotted by the superstars. Take for instance Kaun Banega Crorepati hosted subsequently by two megastars like Amitabh Bachchan & Shah Rukh Khan – remained the cornerstone of Star TV’s most popular serial being covered under the event insurance. One of the bigger insurance policies of television serial issued is that by Bajaj Allianz for 200 episodes of Star One’s serial “Nach Baliye”. While feature films are also insured the insurance industry is still in its infancy in event insurance.

A start was made when United India Insurance issued the first package policy for the feature film ‘Taal’ in 2000. It was a comprehensive policy, extending cover to the film, performers, as well as producer Mr. Subhas Ghai. Since then the entry of corporatisation of production houses has given a boost yto film insurance. Bajaj Allianz had provided insurance cover for Vijay Mally’s film “Rakht”, the Oscar nominated short film –“Little Terrorist”. Since the uncertainty affecting financing of all such events continues the requirement of these various types of event insurance policies will be more demanding in the days to come.

ANABIL BHATTACHARYA
NATIONAL INSURANCE CO. LTD.,