Insurance is a contract between two parties the Insurer and the Insured by which the Insurer agrees to make good financial loss suffered by the Insured on an account of loss or damage to the property or personal injury caused be any peril Insured against, provided the consideration (Premium) have been paid.
Film Insurance is a contract between two parties the Insurer and the Insured (Generally the Producer) by which the Insurer agrees to make good financial loss suffered by the Insured on account of loss or damage Pre Production and The post Production stage of a film caused be any Risks/peril Insured against, provided the consideration (Premium) has been paid. It is sometimes can also, be called as Cine Insurance.
History of Film Insurance in India/ Situation, which triggered the drive towards Film/Cine Insurance
Film insurance which was once considered, an additional burden for the film producers, is now being seen as a norm for Indian films. Initially, insurance was considered as one more extra expense to films budget and the producers were very hesitant in taking insurance policies. It was the arrest of Sanjay Dutt during “Khalnayak” which prompted Subhash Ghai to Insure his next movie “Taal” for which he paid Rs 1.5 million as premium for the film valued at Rs 110 million. Ever since Taal was insured more and more producers have rushed to Insure their movies.
Film Insurance as a concept came into existence in the early The 1990s with “Taal” (Mukta Arts Ltd is an Indian film production company – Promoter Subhash Ghai) being one of the first movies to be insured in India. This was followed by a slew of movies by big banners being insured with general insurers.
Another reason for the move towards Film insurance is that Film production was given `industry” status in 2000, and Reserve Bank of India allowed banks to lend to film production. Now the insurance of the film is a prerequisite for bank loans for Hindi films. Therefore, anyone who wants a loan from a bank for film making has to take insurance on his film.
Premium snapshot of few producers in the past
|Movie||Producer||Insurance (Rs. million)|
|Mohabatein||Yash Raj Arts||150|
|Lagaan||Aamir Khan Production||150|
|Kabhi Khusi Kabhi Gham||Karan Johar||220|
Growth and Future Prospects of Film Insurance
Now, with both public and private general insurers actively offering products catering to the needs of the film industry, industry experts said that film Insurance share in the industry could touch 8-10% in the next 3-5 years. Presently (2016), it accounts for about 2% of the industry”s total business.
There was a 45 to 50% growth in business this in 2016-2017 compared to 2015-2016 due to the increase in the number of films Insurance policies being taken. Apart from covering loss to life or property on sets, the Insurance not only covers legal issues related to a film but also post-release issues like theatre shut down due to riots or strike. It also Insures the film against unforeseen incidents like death, illness of an actor or occurrence of natural calamities or accidental damage leading to delays in the film schedule. It also includes coverage against accidents that damage equipment while shooting is in process. Additionally, it covers insurance against its legal liability to pay damages for third-party civil claims arising out of bodily injury or property damage caused in the course of the event by an accident in the premises where it is held and during the policy period.
While a decade ago, the film Insurance segment was dominated by public general insurers, now private general insurers have also entered the market and offer products. The New India Assurance Company Ltd, National Insurance Company Ltd, United India Insurance Company Ltd is some of the public general insurers which offer film insurance. Among the private players, Insurers like Future Generali India Insurance Company Ltd, ICICI Lombard General Insurance Company Ltd, HDFC Ergo General Insurance Company Ltd, Tata AIG General Insurance Company Ltd, IFFCO-Tokio General Insurance Company Ltd, Etc., offer such products.
As per current Insurance norms, insurance companies compensate for the production house for delays and losses due to adverse weather conditions, natural disasters, damage to property/sets and injury to the actor during film shoots. The sudden illness of the main cast of the film due to food poisoning and similar conditions is also offered relief under this policy.
Alternatively, "The stakes are so high in today”s scenario that everyone takes production insurance. As far as insurance for revenue is concerned, it is a bit complicated as one has to make an estimate of revenue and a territory break up. It Insures one against any major loss because riots or floods etc which may hurt one”s collections in those regions."
In these products, the type of cover depends on the budget of the film. The premium for such a policy is usually 5 to 10% of a film”s budget. For example: If the total budget of a film is Rs 100 crore, the premium would be Rs 5 to 10 crore. The premium technically depends on the risks associated with the movie and pricing of premiums is ascertained accordingly with proper pricing policies of the Insurer. While submitting a request for insurance, the production house is required to give details of the budget including money paid to the actors, apart from the shooting schedule and location.
"Continuity of any business is prudent and for the same, it is important to Insure it from any foreseen or unforeseen causes. The whole industry is so much dependent on individuals, like actors, directors, and technicians among others. “
With almost 250 Bollywood films and 1,000 plus regional films releasing every year, insurers expect the demand to continue. Film insurance as a segment was seeing growth.
Not just business, the claims have also would have increased that since the coverages have also become wider and overseas shooting has become common, claims due to natural calamities disrupting shoots had also increased. But, it is being a good response from producers making it a norm to take insurance.
A brief overview of coverages in Film/Cine Insurance. (Insurable/ What can be Insured)
- Props sets and wardrobes etc Insurance.,
- Accident Insurance and Health Insurance of Crew Members (Including all artist and non-artists of production company/house) for instance opting for Short Term Group Personal Accident & Group Mediclaim Insurance as an inbuilt policy with the film/cine insurance.
- Post and Pre Production stage Insurance
- Miscellaneous equipment Insurance (Owned & Rented)
- Third Party property damage/ Liability Insurance
- Film and Video Content storage
- General Liability Coverage Insurance
- Professional Indemnity Insurance
- Piracy Insurance – Cyber Insurance where we get to hear the content of films have been leaked and causes damages
- Kidnap and Ransom Insurance Coverage.
- Claims against natural calamities, terrorist”s attacks
- Overseas mediclaim Insurance ( during shooting location being in an overseas location)
- Analyzing the risks of film insurance with detailed information, various tailor-made coverages can be included with appropriate premium pricing.
The regional film industry is also exploring the idea of Insurance Industry. Especially Tamil and Telugu films have started getting insured. While the attraction, compared to Bollywood is low, South Indian films have also started having film insurance. Along with it should not only restricted to Film Insurance and Insurers should explore on television serials and various programmes, advertisement & television commercials, reality shows, live shows, news channels, documentary films, digital films, etc.,
Jaswanth Singh G
Insurance Domain Consultant (InsureTech) and Faculty for Insurance, Financial Services & Pension Studies
Article Published in December 2017 Edition of The Insurance Times