The cost to insure cricket matches, which contribute to 90% of the Rs. 200 crore sports insurance business in the country, has witnessed almost three-fold rise in one financial year. Thanks primarily to insurers loss ratio on account to the claims related to the rain-affected games.
Insurance companies have realized that even a short rain-induced interruption in a game can result in payment of large claims. This has driven the insurance companies to escalate the insurance premiums, according to a report published by Times of India. A Rs 1.5 crore insurance bill in financial year 2017 is costing up to rupees four crore in financial year 2018. This is because the companies have incurred major losses on accounts of claims related to the rain-affected games.
There are multiple corporate stakeholders in the game – from broadcasters and host associations to sponsors. Thus the insurance company ends up paying multiple claims to multiple insurers for the same damage. The sports insurance market in India is less than two decades old. IPL gave it a major boost in the past ten years. The business now is led by largest public sector insurer New India Assurance.
Oriental Insurance, ICICI Lombard, National Insurance and HDFC Ergo are the other main players in the market, who normally insure the same game for multiple stakeholders. This in turn results in multiple claims for the same damage and adversely affects the premium, claim and profit ratio.
“Hardening cricket insurance rates are predominantly driven by loss ratios as most of the policies are bleeding,“ TOI has quoted Amit Agarwal of JLT Insurance Brokers at JLT Independent as saying. “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.”
An increase in the fan base, better game collection and TV audience on account of emergence of leagues have resulted in growth of sports like football, kabaddi and badminton. But cricket continues to garner the top spot. The willow sport contributes 90% of the Rs 200 crore sports insurance business. High compensation for the rain affected matches has added substantially to the premium rates, which have seen a considerable rise over the past three-four years.