The 2021 edition of the Indian Premier League (IPL) has been suspended with immediate effect, the organisers announced on May 4.
This came amid news reports of players across multiple teams testing positive for COVID-19 in recent days.
"The BCCI does not want to compromise on the safety of the players, support staff and the other participants involved in organising the IPL. This decision was taken keeping the safety, health and well-being of all stakeholders in mind," the IPL Governing Council (GC) said in a statement.
While the event has been suspended, sources told Moneycontrol that insurance will not pay for delays.
This is because the IPL insurance taken by the organisers has excluded COVID-19. This means that cancellations or delays caused by COVID-19 outbreak will not be payable in the form of insurance claims.
The size of the insurance cover is close to Rs 3,500 crore and it covers event cancellation due to terrorism or Act of God (AOG) events like cyclone, landslides, earthquake and allied natural catastrophes. It also includes event broadcast and individual team covers.
New India Assurance is the largest player in this space, writing a majority of the policies.
Mega-risk events like IPL take covers for the individual teams (and players) and the overall event broadcast. Event cancellation is the biggest component of the insurance cover.
"COVID-19 has been named as a standard exclusion in the IPL 2021 insurance policy. This is because the world is amidst a pandemic. Insurance works on a concept of probabilities and not certainties," said a source close to the development.
Player exits won't be covered
It was also reported earlier in the day that the match between the Chennai Super Kings and the Rajasthan Royals (RR), scheduled for May 5, would likely be rescheduled after CSK's bowling coach Lakshmipathy Balaji and a member of the travel staff tested positive for COVID-19.
The IPL GC had not confirmed the rescheduling of the matches on May 4 and 5.
These developments came a day after the May 3 match between the Kolkata Knight Riders and the Royal Challengers Bangalore (RCB) was rescheduled as a precautionary measure after two KKR players -- Varun Chakaravarthy and Sandeep Warrier -- tested positive for COVID-19.
Since player exits and match postponement is also linked to COVID-19, the insurance cover will not pay for the claims.
"Right now, there could be a possibility that the rest of the games are shifted to some other region not affected by COVID-19. Only delays linked to weather-related vagaries or man-made disasters will be payable under insurance," said an insurance executive.
In 2020, the organisers of the tennis grand slam Wimbledon got around $142 million after the tournament was cancelled due to COVID-19. The cover taken by the All England Lawn Tennis Club, which organises Wimbledon, explicitly covered infectious outbreaks such as the COVID-19 pandemic.
Pandemic add-ons soon?
Industry insiders said that general insurers in India are studying 'pandemic covers' of the West offered in the past for events like Wimbledon.
"We need to see the necessity of pandemic covers at an all-India level. Pricing will be decided based on COVID-19 loss modelling," said Delhi-based insurance consultant Siddhant Oberoi.
He added that for this, insurers would need to consult global reinsurers to look at the risks and price it appropriately.
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