Insurance companies have struck pay dirt with a new client — Bollywood films, whose premiums are steadily fattening their bank balance. What was earlier an afterthought, with film-makers running for cover only at the nth hour, is now becoming an extremely lucrative business for insurance companies, with film companies opting for not one or two but four different policies on each film. As reported in manor newspapers last year, ’politics’, ‘public sentiment’ and ‘last-minute legal wrangles’ have made it mandatory for Bollywood to seek cover. Subsequently, the amounts for which films are being insured have been rising exponentially. In fact, Karan Johar’s My Name Is Khan, currently being shot in Los Angeles, Nikhil Advani’s Chandni Chowk to China (releasing on January 16) and Aashtavinayak Cine Vision’s Blue (almost 70% complete) have been insured for amounts close to Rs 80 crore each!!!

Things are so vulnerable at this point that insurance companies can underwrite everything except the commercial success of the movie. Top 3 in-demand policies are the production policy (where risks during the production stage are underwritten); the error and omissions policy (that usually covers disputes arising out of copyright infringement, defamation, libel/slander and such other issues); and the distributors’ loss of profits policy (which covers losses that may occur when a film release is stalled on account of riots/terror attacks or even weather conditions). The distributors’ loss of profits policy is fast gaining popularity. An inside source from Aamir Khan’s team confirms that the distributors of Ghajini have bought a distributors’ loss of profits cover of Rs 60 crore, beating earlier highs like Karan Johar’s policy for Dostana that stood at Rs 25 crore and Percept Picture Company’s cover for its animated film Jumbo of Rs 8-10 crore. 

The fourth and much in-demand policy nowadays is the change in release date policy that covers risks arising out of postponements. Rohan Sippy’s The President Is Coming, for instance, was scheduled for a November 2008 release but has been pushed to January 2009 after the 26/11 terror strikes. While it seems to be a win-win situation for both insurance companies and Bollywood producers, who have to pay a premium that is a mere 0.5% to 1% of the insurance cover, what happens when the time for claims comes? No one is sure on this part, as, fortunately, no producer has reaped the benefits of his policies yet. However, Dharma Productions have put in their claim for losses that occurred when Dostana screenings were stopped after multiplexes were forced to keep their shutters down after 26/11. The claim is being processed, with the insurance company still drawing up what the estimated losses could be.

Trade estimates say that the highest business done by a Bollywood film (Singh Is Kinng) across India is Rs 34 crore (net). Yet, the same distributors, Indian Films, insured Ghajini for almost double the amount — a clear indication on how insurance on films has doubled.