Cricket insurance costs surge as rain stops play in India
Inclement weather during cricket matches in India has seen the cost of insuring against cancellation rise from INR1.5 crore ($1.6m) in 2017 to INR4 crore in 2018. The success of the Indian Premier League means policies are often taken out by multiple organisations, from broadcasters to franchise owners, with subsequent claims spelling huge losses to insurers. "When the insurance company stands to lose INR6 lakh ($9,400) per over, there is less room to be flexible about rates", said Amit Agarwal of JLT Insurance Brokers.
Mumbai: The cost of insuring cricket matches , which accounts for a bulk of the Rs 200-crore sports insurance market in India, has gone up substantially in the last three-four years. Stakes in the country’s most popular game have risen and insurance companies are discovering that a little bit of rain can result in having to pay out large claims.A corporate sponsor of the Indian team has seen its insurance premium bill jump from Rs 1.5 crore in FY17 to Rs 4 crore in FY18 following a large claim in the previous year. Sponsors are only one of the stakeholders in a cricket match — the others being the association broadcasters and franchisee owners “Hardening cricket insurance rates are predominantly driven by loss ratios as most of the policies are bleeding,” said Amit Agarwal of JLT Insurance Brokers at JLT Independent , an insurance broking firm. “For the same match, there are multiple stakeholders who buy insurance cover. Often claims from multiple insurance policies hit the same insurer or reinsurers simultaneously. Given the multiple stake, a bad spell of rain could cause large losses to the insurer,” said Agarwal.The growth of league matches for a television audience with sponsors has increased the money involved in other sports such as football ( Indian Super League ) and Pro Kabaddi League . Badminton is another sport which is picking up. However, cricket continues to account for 85-90% of the total sports premium in the country.The sports insurance market, less than two decades old, had got a big boost with the launch of the Indian Premier League 10 years ago. The business, which started as a largely reinsurance-driven one, is now led by the country’s largest domestic insurer New India Assurance followed by Oriental Insurance National Insurance and HDFC Ergo .In early days of cricket insurance, non-life companies were cautious, charging high rates and providing limited cover. Companies issued policies like the one-ball bowled cover, where the insurance policy would cease to operate if even a single ball was bowled. In subsequent years, as domestic companies learned the game, more companies participated in sports insurance, which brought prices down.The entry of IPL resulted in the game becoming big business and different stakeholders buying cover to protect their interests. “When the insurance company stands to lose Rs 6 lakh per over, there is less room to be flexible about rates.”Interestingly, headline-grabbing events in cricket have not resulted in claims. For instance, the scrapping of the Chennai Super Kings and Rajasthan Royals did not result in claims to the insured as the actions of the franchise owners were judged to be illegal. Rather, it is inclement weather that results in losses