Impact of IPL on insurance industry

Hello!!!

Friends,

In this article I had shared  views on how insurance industry is effected by IPL in both aspect i.e, in positive term & negative term.

IPL has provided opportunities on a larger scale to cover conventional risks. For instance, Sony and World Sports Group have paid over $1 billion for broadcast rights for the IPL matches. This includes $ 918 million for the telecast rights and $108 million for promotion of the tournament. Most of this money would initially go to the IPL franchises.

The Indian Premier League (IPL), apart from redefining cricket, has posed a few teasers. One of them is how to evaluate the financial risks involved with the game. In fact, hectic talks are on to structure innovative covers to protect the huge sums at stake.

Insurers in a spot over covering IPL injuries
One of the biggest risks is that despite paying fantastic fees to acquire players, franchisees do not have any way of getting their money back if a player is benched following an injury. According to the terms of the contract between the franchisee and the cricketers, the franchisee has to buy an insurance cover of up to seven times the fee amount paid.

Considering that the fee of MS Dhoni works out to around Rs 6 crore, the total insurance that needs to be bought by India Cements — which owns the Chennai team — would be around Rs 42 crore.
What makes this a challenge for insurance companies is the fact that players are seen to be involved in a high-risk environment where injuries are part of the game. Brokers involved in the deal say that given the unfamiliarity of the Indian market with such risks, there is a need to look at the UK market for support from specialist re insurers.

IPL saves Rs5 cr in insurance costs

Indian Premier League (IPL) organizers have been hit by a steep increase in premium payments to insure against terror attacks. A fivefold increase in the cost of insurance against terror strikes may have caused the organisers to alter plans for a Rs400 crore insurance cover, saving IPL Rs5 crore in premiums, people familiar with the development said on condition of anonymity.

The organizers have taken an alternative route. Oriental Insurance Co. Ltd will cover every match for Rs7 crore; this will include broadcasting interests, sponsorship losses and budgeted expenses of the match. Terror cover would be a part of the comprehensive cover, which will cost the organizers less than Rs1 crore in premium.So the overall cost of the comprehensive insurance coverage has not increased much.” Reinsurers protect insurance firms against the risk of losses.

Oriental Insurance will also be insuring the eight IPL franchisees for the players they bought in auction.This includes death and accident cover. The front provided by Oriental Insurance will also include cover against loss of baggage and medical expenses.

Franchisees are looking for insurance cover against abandonment of matches because of multiple perils such as weather, riots and terror attacks, people familiar with the situation said on condition of anonymity. Talks are under way, but the franchisees are yet to finalize the details of such coverage.