Top executives in the company, however, said that having bagged the business for a premium of Rs 18 lakh, it cannot renegotiate the rates with the organisers.
It is awaiting confirmation of the reinsurance cover from the international reinsurance market. OIC had won the bid to provide insurance cover to IPL matches for Rs 18 lakh.
The insurer was yet to receive the premium amount from the Board of Control for Cricket in India (BCCI). It would have to cover the entire risk arising from cancellation of the event, if the premiums were paid. Generally, the premium is paid before the event begins.
"The firm does not have any reinsurance support, neither is there any terror-pool to support the insurer. In case the event gets cancelled, it will cost Rs 400 crore (Rs 4 billion) to the insurer," sources said.
Now, the insurer is renegotiating on the reinsurance support. "We are looking for confirmation of the reinsurance cover. Risks are placed with international reinsurers along with the national reinsurer GIC," said OIC Chairman and Managing Director M Ramadoss. He added that only 5 per cent of the risk is retained with them, while the rest 95 per cent is reinsured in such cases.
Unlike the terror attack in Mumbai, which had the support of the terror-pool managed by the non-life insurers, events such as cricket matches do not have such support.
At present, the terror-pool primarily covers property whereas motor, personal accident and events are kept out of the pool. General Insurance Corporation, the manager of the terror-pool had covered the liabilities arising from the Mumbai terror attack.
After the 26/11 terror attack, the demand for the terror cover went up. Similarly, it is likely that the size of the cover taken by the cricketers for both life and personal accident will increase. Since premium depends on various factors, including exposures involved and the cost of reinsurance, the insurance premium for cricketers is likely to harden in the market.
Recently, GIC increased the terror insurance premium from 22 paise to 30 paise per Rs 1,000.
"The fact is that the world is increasingly becoming a dangerous place and India all the more, owing to the instability in Pakistan and other neighbouring countries like Sri Lanka and Bangladesh will further heighten the awareness of potential terror attacks and risks associated with them, some of which might convert into demand for standalone terror cover," said Royal Sundaram CEO and MD Ajay Bimbhet.
