Padmavati: ‘Padmavati’ delay can trigger insurance claim
MUMBAI: ‘Padmavati’ distributors can make a claim for losses due to the delay in the movie’s release, thanks to a new insurance cover that has evolved in the last decade. New India Assurance, which is facing claims of Rs 3 crore following damage to the film’s sets by protesters, has also insured the movie for Rs 80-crore loss in box office collections if screening is affected or of the public cannot access the theatres.
Until a decade ago, film-making was treated as project insurance, where the cover ceased on completion. Once production was completed, the producer recovered money spent on it by selling various rights of the film. In 2009, after an outbreak of Swine Flu, the Maharashtra government had ordered a shutdown of public places including schools and theatres. The move had hit the collections of two releases — Vishal Bhardwaj’s ‘Kaminey’ and Ram Gopal Varma’s ‘Agyaat’. This unexpected risk prompted the development of the ‘distributor’s loss of profit’ cover.
Officials at New India confirmed that they are in receipt of claims for Rs 3 crore at the production stage, which was insured for Rs 140 crore. The state-owned insurer has also covered Sanjay Leela Bhansali’s historical fantasy for Rs 80 crore for distributor’s loss of profits. New India Assurance chairman G Srinivasan said, “The policy will cover a strike or riot situation and would also cover weather-related events, but it does not cover any loss if the film is banned by any government. Also, the cover comes into effect only after the film is released.”
JLT Independent Insurance Brokers director Amit Agarwal said, “The distributor’s loss of profit policy has evolved quite well over the last eight-nine years. The distributor forecasts the revenue according to territory. A claim occurs if, due to any of the listed perils, the general public is not able to reach the theatre.” According to Agarwal, a Mumbai weekend would account for nearly 25% of a movie’s revenues. “However, if in the subsequent weeks, revenue picks up so that the total two-month revenue is in line with projected earnings, no claim is paid.”
In addition to covering box office losses due to insured events, the policy will also reimburse the producer the cost of promotion. “If for any of the perils mentioned the release date is delayed, the producers are compensated the cost of promoting the film — advertisements, posters and promotional events. But even here the money is paid after two months of release,” said Agarwal.
Industry officials say that movie-making in India is quite different compared to the West. In the West, movies are researched for two years and the shooting is completed in 60 days. In India, the research takes a few months and the production takes a much longer time with changes made during the shooting. Also, contracts are very loose and stars do not return the money paid to them.