Insurance companies are ending up the biggest losers in the economics of the washed out and rain-affected games in the ICC World Cup 2019. So much so that the insurance premium has increased by up to 300% and the companies are reluctant to take risk.
Star Sports, the biggest commercial stake holder, has taken a comprehensive insurance cover for all the World Cup 2019 games. As the rain threat looms large, some sponsors and other stake holders, who did not take insurance protection earlier, are keen to buy insurance cover now. The premium for some of the high risk games, with prediction of heavy rains, has gone up to 6% from 2% to 3% of the total policy value. But the companies are reluctant to take any risk.
Three games are fully washed out in the first two weeks of the World Cup in England and Wales. Threat looms large on several more, including the most precious India-Pakistan match on Sunday.
The three washed out games till date have already cost insurance companies approximately ₹ 180 crore in terms of compensation to various stake holders. The giant’s share, according to an industry source, goes to the broadcaster Star Sports. The broadcaster’s claims for advertisement revenues and allied opportunities loss would amount to ₹ 140 crore.
The other stake holders include on-air sponsors, broadcast sponsors, team sponsors, on-ground sponsors and gaming companies like Dream11, which get their best revenue opportunities during the live games. “The stakes for all commercial associates are high. Each one of them takes insurance cover to protect their interests,” says Karan Ruia, Lead Consultant, JLT Independent Brokers Private Limited, among India’s leading sports insurance consultants. “In an event like ICC World Cup, three washed out games would have cost insurance companies up to ₹ 180 crore. Broadcast sponsors and in-stadia sponsor brands too have per match aggregate insurance cover for risks of ₹ 6 crore to 7 crore.”
For the India-Pakistan match on Sunday, June 16, the stakes are much higher. “The rain threat has been taken into consideration for determining the premium of the ICC World Cup games. Rain in England is normal during the May-July World Cup period. Weathermen too have forecast rain and washout threat to some of the games,” adds Ruia. “The rain factor and high commercial value have been figured in determining the premium of the India-Pakistan match. Still, the insurance sector will get the biggest hit if this game is washed out.”
A no-game at the Old Trafford, Manchester, on Sunday alone may cost insurance sector up to ₹90 crore to ₹ 100 core with the broadcasters compensation being the two-thirds of the total value.
An insurance cover will protect the broadcaster primarily against the advertising revenue losses. The stakes are not limited to monetisation during the live broadcast of a sports event. Each game has its archival value and an India-Pakistan cricket match becomes the most priced sports content during the rights period to exploit in numerous ways with innovative packaging. The repeat telecast has its own value. The highlights sell.
Above all, any broadcast match will contribute to World Cup’s overall television ratings, which eventually determine the broadcast success and value of a television property.