Money & Banking

With no pandemic cover, IPL and other events unlikely to get insurance payouts

Shobha Roy Kolkata | Updated on March 28, 2020

Epidemics or pandemics are usually not underwritten by a majority of insurers in India.

None of the major events, including the Indian Premier League (IPL), that were suspended in the wake of the outbreak of the Coronavirus (Covid-19), are likely to get any claims settled even if they have insurance cover. This is because an epidemic or pandemic is usually not underwritten by a majority of insurers in India.

According to Sanjay Datta, Chief – Underwriting, Claims and Reinsurance, ICICI Lombard General Insurance, while most events may have cancellation covers, they may not typically have covers for epidemics or pandemics. Such products primarily look at covers for catastrophic events such as floods or local events.

“It is pretty low in India since most customers do not take coverage for pandemic. So, normally event cancellations are on specific triggers and a pandemic is a once in a lifetime thing and people would not have thought about it,” Datta told BusinessLine.

It is usually the peak season for various indoor and outdoor live or promotional events such as music concerts, entertainment shows, conferences, exhibitions etc. As many as 800-1,000 big and small events have been called off or pushed indefinitely, following the recent outbreak, said Arjun Sharma, Vice President, Sports and Entertainment Leader, Marsh India Insurance Brokers Pvt Ltd.

Market not well developed

The event insurance market in India is estimated to be close to ₹400-500 crore. It is to be noted that the concept of such insurance has not picked up too much and is mainly restricted to sports and musical events, large corporate events, exhibitions, some local events and weddings among others.

Moreover, insurance procurement in India is generally closer to the scheduled events (just 3-4 days prior to the actual event). “In this case insurers pre-empted such a scenario and started excluding claims arising out of Covid 19 situations,” Sharma said.

According to P Nandgopal, Founder and Chief Mentor, Insurance Inbox, catastrophic policies usually do not have standard rules or terms and conditions and insurers write such a policy based on past trends and history. However, if the general terms and conditions are written in a way that cancellations happen due to a government order then the claims could be honoured.

“In this case, the cancellations were not due to the spread of the virus in itself but due to government order and lockdown etc. If such an interpretation is possible within the given terms and conditions, then those could be payable. Courts and the Ombudsman will take a view while interpreting this. Denying claims will be unfair unless these are very narrowly defined policies,” he said.

Will pandemics be covered in future?

However, going forward, insurance companies could come up with cover for pandemics or epidemics.

“Post the corona crisis, customers will come to realise that events can get cancelled not only for local reasons but also due to national or global reasons. People will look for such covers designed to look at cancellations due to such epidemics,” Datta said.

Though insurance companies are keen to look at the possibility of including an epidemic or pandemic as a part of the overall offering, pricing would be the key to launching the product.

According to Deepak Dhar, Head-Speciality Lines and Marine Underwriting, Bajaj Allianz General Insurance, this is the first time that the general insurance industry has been faced with such a situation in the last 35-37 years.

“We do not have any data as to how it will impact... we will look at it; we want to look at it but how to price it is something that needs to be seen. The viability needs to be checked. It will all depend on the commercials. It cannot be a main cover; it can be an add-on cover,” he said.

Another aspect is that even if insurers were to develop such a cover, customers may not be interested.

Published on March 28, 2020

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