Rajinikanth's Robot 2 set to become highest insured Indian film

Rajinikanth and Akshay Kumar-starrer Robot 2 is set to become the highest insured Indian film in history.

Lyca Productions has taken a cover of Rs 350 crore for production costs alone, with plans to subscribe for additional cover for distribution closer to the Diwali release date of the Tamil film.

The sci-fi feature is already touted as the most expensive film with a budget of Rs 400 crore. Its futuristic feel has resulted in high production costs and so the makers are going the extra mile to take precautions, with a consortium of public and private general insurers providing the cover.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.Salman Khan-starrer Kick, which released in 2014, was insured for almost Rs 300 crore, including distribution costs. The distributor took a policy to cover the loss of revenue for 60 days from the date of release. Almost all producers take such policies to ensure business interests are not severely affected by a poor showing at the box office.Baahubali, known for its opulence, took a cover of more than Rs 200 crore. The sequel, which is slated to release later this year, is understood to have taken a cover of Rs 250 crore.

Sumant Salian, Business Head-Media and Entertainment at Alliance Insurance Brokers, said that when a film has high-profile actors in the lead, it is crucial to cover the risks associated with them.

Rajinikanth films are the most popular and have the maximum footfall in the first day of release. Hence, producers leave no stone unturned to see that the movie’s release or pre-release is not impacted by untoward incidents.

The actor’s film, Lingaa, secured a mega-insurance cover which included production and loss of revenue in India and overseas. The Rs 200 crore-plus cover includes upwards of Rs 100 crore for production cover apart from cover against force majeure incidents that could disrupt the screening of the film.To secure an appropriate insurance product, the producer has to share a film's budget, actor costs, schedule and shooting locations.What do the policies cover?

The policies for films cover different areas such as production, publicity and distribution. Insurers also provide compensation for any mishaps during the production and post-production stages.

If it is a sci-fi or historical movie, big production houses take higher cover because of the expensive sets. The policy covers loss of life or property on the sets. If an A-list actor is involved, then 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 litigation overseas 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 the movie was similar to a script that he had written.

Events where the losses cannot be calculated including the failure of film at the box office, actors getting imprisoned or deciding to quit a film midway, cannot be covered.

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. New India Assurance and National Insurance Company are some of the public general insurers that offer film insurance. Among private insurers, companies such as Future Generali India Insurance, and IFFCO-Tokio General Insurance offer such products.

The premium is usually 0.5 percent of the size of the cover. Insurers said that apart from the Bollywood production houses, regional films are also increasing taking insurance policies. Errors and omission covers that provide protection against any allegation of plagiarism and threats from extremist outfits are also becoming popular.Higher claims

Over the past year, there has been an uptick in the number of film insurance policies being taken. Salian, whose company is a big player in the film insurance market in India, said the company has seen a growth of 30-40 percent on a year-on-year basis. With almost 200 Bollywood films and 1,000-plus regional films releasing every year, insurers expect the demand to continue.

Insurers say that claims from production houses are also increasing. The most common ones include injury on sets, damages owing to fire and plagiarism complaints. Separate covers for delay in release of films because of objection to its content are also being taken.

Salian said that new policies such as covering a production house for long term contracts with actors is also in the works. Such a policy would cover the production house for losses against the actor’s death or injury.

With many films leaked online before being released in theatres, film producers are also seeking cover against piracy. However, industry players said that it will take time for such products to come into the Indian market since it is difficult to estimate costs from losses owing to piracy.