Coronavirus pandemic | Insurers say no to COVID-19 cover; film producers, event managers count losses

A Telugu-industry producer has been running from pillar to post for the past one week to reimburse losses he incurred after the film he was producing got stalled due to the Coronavirus pandemic.

His team did not read the terms and conditions of the policy that had clearly stated that no epidemic or pandemic-related shoot stalling would be covered. The insurer, a private sector player, stated that - as per the terms of the policies - these incidents were not covered.

“When pandemic is a standard exclusion, how can we pay the claim? Even though curfew is covered, this lockdown is not due to political violence but due to a health emergency which is not part of the product features,” said the claims official of the insurer.

Many film producers, event managers and organisers of big league matches are waking up to this unpleasant reality amidst the coronavirus pandemic.

The novel coronavirus pandemic has spread across 180 countries. April 2 is the ninth day of India's 21-day lockdown. The total number of confirmed COVID-19 cases in India stands at 1,965. The Union Health Ministry has said that 50 people have died due to the virus.

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While all new policies related to event cancellation and film insurance included COVID-19 as an exclusion, older products are subject to interpretation.

Sumant Salian, Business Head-Media and Entertainment at Alliance Insurance Brokers, told Moneycontrol that a typical film insurance policy would cover all perils including riots, strike, curfew and bandh call.

However, since the word ‘epidemic’ is not explicitly mentioned in the list of events covered, insurers have stated to their policyholders that cancellations or loss due to COVID-19 related delays would not be admissible.

“Insurance works on the concept of probability and only covers unknown risks. The Coronavirus threat was looming since January 2020 and event/film organisers should have taken precautions earlier,” said the head of claims at a mid-size private insurer.

Also Read: Live updates about coronavirus outbreak in India

Similarly, when it comes to marquee events like the Indian Premier League, sources said that the insurance cover wouldn’t be able to pay for the losses due to the COVID-19 delay. A 21-day lockdown was announced by Prime Minister Narendra Modi on March 24 to contain the spread of this virus.

Due to this, all events scheduled between March 25 and April 15 had to either be postponed or cancelled. IPL 2020 has now been deferred. Insurers have said that delays due to coronavirus were not an insurable scenario.

Film shoots stalled

A rough estimate showed that more than 200 shoots of films and 350 plus serials have been postponed till further notice. For tele-serials, the actors are bound by contract and hence cannot quit midway. However, that is not the case with films.

“The film budget is decided only after we rope in the lead actors. Now, with shoots being suspended, we have had two cases where the main lead has threatened to walk out since the dates of this shoot will now clash with another film he has signed,” said the assistant director at a Mumbai-based production firm.

In 1999, Aishwarya Rai Bachchan-starrer Taal was one of the first films to be insured. Since then, securing insurance cover for films has become a norm in the industry and the size of the cover has been ever-increasing.

The policy covers loss of life or property on the sets. If an A-list actor is involved, the production costs are even higher since the film’s fate depends on the lead actor. The policy also covers legal issues related to a film, as well as post-release issues, such as theatres shutting down owing to riots or strikes. Even overseas litigation is covered.

For example, an Indian producer faced a case in the UK almost three years after the film was released. The insurance company paid the claim for it after the other party threatened to sue them claiming that the movie was similar to a script that he had written.

Till around a decade ago, the film insurance segment was dominated by public general insurers. But, now, private general insurers have also entered the fray. The premium is usually 0.5 percent of the size of the cover.

Event cancellations

For events like music festivals, concerts or marathons, the organisers have been forced to cancel them across the board due to the prevailing weather conditions in the country.

“Even if the lockdown is lifted by April 15, we cannot hold a running event till end June because the weather is not conducive. We have had to cancel three events in the country and refunds processing is also slow because team members have collected cash for registrations as well. We have also lost a lot of money paid to advertisers and event partners who now don’t want to refund the amount,” said the director of a pan-India sporting group.

Insurance companies told Moneycontrol that, on a cumulative basis, losses related to event cancellations in March and April would touch almost Rs 50 crore. The worst cases, according to them, are events with foreign participants.

“To get an international artiste, organisers usually pay money in advance and also arrange flights/stay in five-star hotels. Since all of these are non-refundable, the organisers are now knocking on our doors to get at least a partial claim,” said the claims settlement official at a public sector insurance company.

Since the devil is in the details, insurance companies have either named ‘COVID-19’ or used terms like pandemic, infectious disease outbreak to not cover the cancellations. For older policies where the threat of Coronavirus is unknown, some event managers are still hoping to get some partial settlement of claims.

Insurance companies are still non-committal about whether any portion of the claim is payable. Till then, it is slow but painful to wait for the financiers of such mega events and film shoots.

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