1

EXCUTIVE SUMMARY

Initially insurance was considered as one more burden to film`s budget and
the producers were very hesitant in taking insurance policies. It was 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, like Mohabatein, Lagaan, Kabhi
Khushi Kabhi Gham, Ashoka, Dil Chahta Hai, Ek Aur Ek Gayarah, Kuch Na
Kaho and Deewaar.

Apart from the above-mentioned movies some other movies were also insured
such as Saathiya, Joggers Park, Asambhav, Chalte Chalte, Main Hoon Na, Taj
Mahal, Khel, Ganga Jal, Kal Ho Na Ho, Lakshya etc. Till now United
Insurance India Ltd. (which is only insurance company to provide for film
insurance in India) has insured more than 40 films and hoping to double this
figure with in one year. Producer Yash Chopra claimed a compensation of Rs.
3.5 million
from United India Insurance when Aishwarya Rai had an accident, her
shooting schedules were disturbed and a set that was put up had to be brought
down.

Another reason for the move towards insurance is that Film production was
given `industry` status in 2000, and RBI allowed banks to lend to film
production. Now the insurance of the film is a pre-requisite for bank loans for
Hindi films. Therefore any one who wants loan from bank for filmmaking has
to take insurance on his film. In the future with more uncertainties in the film
market such as Bharat Shah`s arrest and fancy for cocaine by some of our
stars, more and more producers will move towards insuring their films.

Since opening its film insurance account with the movie Taal in 1998, United
India`s list of insured films has grown to 42 by the end of June 2003. The
merits of being insured and instances of disbursements against claims have
helped the industry`s interest in getting films insured. But amenable
candidates are still only a handful; many big banner productions such as Ram
Gopal Varma`s Company preferred to go uninsured. Further, United India`s
business is even today confined to Bollywood; attempts to get South Indian
films insured are yet to yield dividend.
 2

CHAPTER 1
INTRODUCTION OF INSURANCE
Insurance is a tool by which facilities of a small number are compensated out
of funds (premium payment) collected from plenteous. Insurance company pay
back for financial losses arising out of occurrence of insured events e.g. in
personal accident policy death due to accident, in fire policy the insured events
are fire and allied perils like riot and strike, explosion etc. hence, insurance is
safeguard against uncertainties. It provides financial recompense for losses
suffered due to incident of unanticipated events, insured within policy of
insurance. Moreover, through a number of acts of parliament, specific types of
insurance are legally enforced in our country.

Insurance essentially, is an arrangement where the losses experienced by a few

are extended over servers who are exposed to similar risks. Insurance is a
protection against financial loss arising on the happening on the unexpected
event. Insurance company collect premium to provide security for the
purpose. As loss is paid out of the premium collected from the insuring public
and the insurance companies act as trustees to the amount so collected.
Insurance companies have standard proposals forms, which are to be filed up
giving details of insurance required and presented to insurance company.
Depending upon the answer given in proposal form insurance companies
assess the risk and quote the premium. On the payment of premium and
acceptance thereof by
insurance company the insurance is of premium and affected. Nonetheless,
there is no insurance cover if premium is paid.

The term insurance has been defined as the device in which a sum of money as
a premium which is paid in consideration of the insurers incurring the risk of
paying a large sum upon a particular eventuality. The insurance accordingly is
a contract whereby: Certain sum, called premium, is charged in consideration,
 3

Against the said consideration, a large sum is guaranteed to be paid

by the insurer, who received the premium,

The payment will be made in a certain definite sum i.e. the loss or
the policy amount whichever may be, and

The payment is made only upon a contingency.

More explicitly, insurance may be defined as a contract in which one party

(the insurer) agrees to pay to the other party (the insured) or his beneficiary, a
certain sum upon a particular unforeseen event (the risk) against which
insurance is wanted.

CHAPTER 2
 4

TYPES OF INSURANCE

From business point of view, insurance can be classified into two

broad categories:

A. Life insurance

B. General insurance

A.Life insurance

Life insurance may be defined as a contract in which the insurer in

consideration of a certain premium, either in a lump sum or by other
periodical payments, agrees to pay to the assured, or to the person for whose
benefit the policy is taken, the assured sum of money, on the happening of a
specified event contingent on the human life or at the expiry of certain period.

B.General insurance

General insurance business refers to fire, marine and miscellaneous insurance

business whether carried on singly or in combination with one or more of
them.

CHAPTER 3
 5

INSURANCE REGULATORY DEVLOPMENT AUTHORITY

IRDAS MISSION

To protect the interests of the policyholders, to regulate, promote and ensure

orderly growth of the insurance industry and for matters connected therewith
or incidental thereto.

Composition of Authority under IRDA Act, 1999

As per the section 4 of IRDA Act' 1999, Insurance Regulatory and

Development Authority (IRDA, which was constituted by an act of
parliament) specify the composition of Authority.

The Authority is a ten member team consisting

of a. a Chairman;

b. five whole-time members;

c. four part-time members,

(all appointed by the Government of India)

Composition of Authority under IRDA Act, 1999

Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of
IRDA.

1. Subject to the provisions of this Act and any other law for the time being in
force, the Authority shall have the duty to regulate, promote and ensure
orderly growth of the insurance business and re-insurance business.

2. Without prejudice to the generality of the provisions contained in

 6

sub-section (1), the powers and functions of the Authority shall include:

a. issue to the applicant a certificate of registration, renew, modify,

withdraw, suspend or cancel such registration;

b. protection of the interests of the policy holders in matters concerning

assigning of policy, nomination by policy holders, insurable interest,
settlement of insurance claim, surrender value of policy and other terms and
conditions of contracts of insurance;

c. specifying requisite qualifications, code of conduct and practical

training for intermediary or insurance intermediaries and agents;

d. specifying the code of conduct for surveyors and loss assessors;

e. promoting efficiency in the conduct of insurance business;

 7

CHAPTER 4
FILM INSURANCE IN INDIA
This paper is aimed at understanding the film insurance in India. The paper is
an attempt to trace the development of film insurance in India and the
response of producers and insurance companies.

The paper start with a brief under standing of size and scale of the India Film
Industry. It explains the situations under which film insurance became
unavoidable in India. Further it elucidates the different heads, which are
generally covered under the film insurance. Attempt is also made to find out
that in spite of the fact that such a big risk and huge amount of money is
involved, why producers are not turning up for the insurance. At the end
suggestions are given to improve and regulate insurance in Indian Film
Industry. As India is one of the largest film making countries in the word,
the film insurance sector in this country is full of immense possibilities. The
only need is to make a balance between the interest of insurer and insured
and to provide adequate safe guards to both of them.

Size and scale of the Indian film industry

Since 1931, when talkies were first introduced in India, the film industry
has produced more than 67,000 films in more than 30 different languages
and dialects. In 2001 the industry produced 1,013 films making it the
world's largest feature film producer. The majority of films are made in the
South Indian languages of Telugu, Tamil and Malayalam (537 compared to
230 in Hindi), but Hindi-language films take the largest box office share.

The industry draws its revenues from: domestic theatrical sales (2001: 36
billion rupees); overseas rights (2001: 5.25 billion rupees); music rights (2001:
 8

1.5 billion rupees); television and video rights (2001: 2 billion rupees);
corporate sponsorship and merchandising (2001: 0.01 billion rupees). The
total revenues of the industry from these sources are estimated at 45 billion
rupees.

The intriguing romance between risk and reward in the Indian film industry

If we analyze the development of the Indian Film Industry from its golden age
we find that at that time film making was not as costly and risky as it is today.
Due to the immense growth in technology and the entrance of Hollywood, now
making a film involves a huge sum of money and depends on several
contingencies. Huge sets, highly risky stunt seen, very sensitive equipments, a
huge amount of salary paid to the actors and a lot other factors, has made
Indian Films a very risky business. Theses factors demand some kind of
mechanism through which a producer can be assured that, in case of these
contingencies he will be indemnified.

To deal with these situations film insurance was introduced in the foreign film
industry. Abroad, as insurers faced falling premiums in their traditional
markets they jumped onto the bandwagon of film insurance because they
received huge premiums but as time passed they were so badly hit that they
had to close shop. In India too as corporatisation sets in the film world there is
a lot of talk about films being insured. Insurance companies need to negotiate
the potholes effectively because if all goes as per planned it can prove to be a
fast growing industry.

A fast growing film insurance market in India

It was felt that paying a premium of 6 per cent of the production cost, as is
prevalent abroad would be too steep for Indian film producers. However,
as time has passed premiums have dropped to as low as 1%, as more and
more producers opt for cover.
 9

For example if a movie is being made at a budget of Rs. 30 million, the total
insurance premium payble would be Rs. 500,000 at the rate of
approximately
1.5%. With 700-800 films being made per year totally across India, the size of
the film market in India is estimated at around Rs. 48 million or
approximately
1 billion US dollars and even if 50% of these films (Rs. 24 million) are insured
at anywhere between 1.0%-5% the total premium will be anywhere between
Rs.
0.24 billion to Rs. 1.24 billion - a good start for a nascent industry if
it happens.
 10

CHAPER NO. 5

INSURANCE COVERAGE

Leading insurance companies have agreed to compensate for delays and

losses due to cyclones, bandhs (closures), strikes, adverse weather conditions
and traffic interruptions as well as harm to individuals involved in film-
making. Depending on the type of policy one takes, insurance in Hindi films
can be grouped under the following broad heads.

1.Named Artistes such as the Main Cast, Important Support Cast,

Directors, Technicians etc:
Coverage in such cases can be claimed due to non-appearance which may
arise due to - death, accident/illness involving hospitalization, death in
immediate family, natural calamity, complete breakdown of transport system,
riot/strike/civil commotion/curfew like situation prohibiting the cast from
reaching the site of shoot, acts of kidnap, murder etc Insurer`s liability is
restricted to reimbursement of lost remuneration in event of above events,
re-shooting expenses and losses due to expenses on account of
cancellation/postponement etc. However no cover can be claimed if the
cancellation has taken place if the person is an accused criminal under
arrest, detention, interrogation etc. or accidents arising out of participation
in hazardous stunts or conditions like pregnancy etc.

2.Properties, Sets, Production Equipments, Negatives etc:

Coverage in such cases is due to losses arising out of fire, flood, storm or
any other acts of God or natural calamities or accidents due to main cast, be
it accidental/external means or acts of riot/strike/ civil commotion etc. or
 11

terrorism/theft/burglary/dacoity or risks of transit Insurer`s liability is limited

to material damage, additional expenses on account of bringing back things to
normal, irrevocably lost insured expenses on account of
cancellation/postponement etc. Major Exclusions are due to objects of art
unless valued and declared or wear & tear/inherent defects electrical and
mechanical breakdown of equipments or inventory losses or deterioration
of negatives because of humidity and other atmospheric conditions.

3.Public Liability:
Coverage is due to injury/loss to members of public and their property
which can include indemnity for court or fees, advocate`s fees, legal costs
and expenses incurred with Insurer`s consent in the successful defense of
suits/writs/summons brought against to prevent the film being shot further
or being released. For example Kaun Banega Crorepati had taken this type
of
Insurance against PIL (Public Interest Litigation). Major exclusions exist in
this case are fines, penalties, punitive damages or liability assumed by virtue of
an agreement which are explicitly excluded.

4.Money Insurance:
Coverage in this case is cash in transit between shoot locations or cash kept at
the shoot site (under lock and key) or cash embezzled by the authorized person
of the insured but detected within 48 hours of the occurrence. Insurers
Liability is Rs.200, 000 per incident of loss with an overall limit of Rs
600,000 during the period of the policy. Major Exclusions include personal
cash of any nature or unattended cash or loss arising out of use of duplicate
key whilst the cash is kept in the premises outside business hours.

5.Workmen Insurance:
 12

Coverage includes bodily injury resulting in death/disability to the workman

arising out of and during the course of employment on-shoot locations.
Insurer`s liability is as per the provisions of the Workmen Compensation
Act.

6.Accident Insurance:
This coverage is for all members of the production team on-location and/or
off-location at a predetermined rate. Coverage can be claimed for bodily
injury resulting from accidents caused directly and solely by external, violent,
visible means during the policy period.

Type of policy

For a typical movie various covers as mentioned above typically exist.

Depending on the type of movie one is making, one will need to take one or all
of the above coverages as a part of the policy. For example in a movie like
Devdas where large sets have to be put in Film City, the policy will be heavy
on insurance for properties and sets whereas for a movie like Kaun which is
shot in just one room this kind of insurance can be completely avoided. Also
in a
movie like Khiladi 420 where a great number of stunts have to be performed
by the actor, extra insurance may be taken whereas in a movie like Aastitva
this may not be required.
 13

CHAPTER NO.6
ADVERTISEMENT FILMS COVERAGE
With the advent of new technologies and increasing consumerism new
concepts and ideas are coming in the area of advertisement films also. That
intern demands for more expanses and even stunt seen like films are now being
pasteurized in advertisement films. For example the seen of bunji jumping in
one of the ad films of cold drink. This kind of advancement makes ad films
more expansive and risky, which demands for insurance.

Therefore not only feature films but advertisement films are also showing
keen interest in insurance and first ever insurance of an advertisement film is
an evident example of this. An advertisement film, featuring actress Hema
Malini promoting Rahat Rooh Oil, has become the first domestic advertising
film to get insured. The premium was fixed at 1.10 per cent of the film's
budget. Film is being produced by Lehar Communications and insured by
United India Insurance Company Ltd. the film's budget is Rs 15 lakh. So the
ambit of insurance is expending to even the areas like advertisement films
also. Theses are the indication that now Indian Entertainment Industry is
ready to recognise the concept of film insurance and willing to insure against
any expected or unexpected event.
 14

CHAPTER NO. 7
BOX OFFICE COVERAGE
Due to a very huge list of flop films every year and the increasing rate of
unsuccess of many big banners film now a days a demand is also being made
to include the performance of the film at box office. This issue is not as simple
as
it prima facie seems. Now we will analyze positive and negative effects
of covering the performance of a film at box office.

The positive effect of this step will be that producer will make the films free
from all the worries about films fate at box office. Producers and directors
will take many courageous steps and come up with new experiments. Then,
even new comers will also dare to enter in to this profession. The repetition of
the
same formula again and again due to fear of unsuccess will also be reduced.
The quality of the films will improve and new ideas and stories will come
forward. Art films, which are in very poor state, will rejuvenate once again,
because then people will not hesitate in investing on those films.

Although this step might have above positive effects but there are lots of
practical problems and negative effects in its implementation. The first
problem is regarding the criterion in which the performance of a film would be
judged and indemnified accordingly. It is very difficult to find out a
straightjacket formula according to which the performance of a film would be
judged and that intern makes almost impossible to calculate the amount of
compensation based on that. Secondly due to advent of overseas rights and
musical rights etc., films including those films which are shown flop, recovers
there cost even before there release and in that case to recover from the
insurance company for the performance of there film will not be right. Lastly
there is a huge possibility
 15

that this kind of coverage will the producers and directors idle. They will make
substandard movies without caring for the quality to recover from the
insurance company. They will try to exploit this situation to their benefit and
there will be a huge amount of fake cases. This will lead to a floodgate
situation and it would become impossible for an insurance company to work.

Therefore in spite of some of the positive effects due to inclusion of the

performance of a film, negative effects and practical problems are such that it
is not advisable to cover the performance of a film at box office.
 16

CHAPTER NO 8
PRODUCTION INSURANCE FOR FILMMAKERS
Production insurance is probably one of the most important things a
filmmaker needs to take into consideration before shooting the project. Why
get insurance for your project? Essentially, there are three reasons: Legal,
Contractual and Asset Protection.
As for legal reasons, nearly every state requires that a production
company/filmmaker carry some form of insurance. A good example of this is
workers compensation insurance. Workers compensation is a no-fault
system that provides replacement income and covers the medical expenses of
the cast and crew who are injured on the job. It is implemented by state law.
Additionally, any work-related injury or illness (with the exclusion of
intentional self-injury or illegal substance use) is covered by this type of
insurance. Workers compensation is purchased through private carriers. The
premium depends on the job classification, meaning the level of potential risk
at hand.
The contractual reason is simple. If you are under contract with a television
production company or record label, most likely you will need to account
for insurance coverage as part of the contractual fulfillment.
And the final component, asset protection is not as complicated as it sounds: it
covers you against damage and loss to assets like production equipment,
or liability for people that work in the cast and crew.
In general, film production insurance is an annual, general liability policy that
will cover for you for your filmmaking activities for one year.
You may wonder what kind of policy to get. Once again, the type of policy
you want relies on the type of film you plan to make. Obviously, if you are
making
a short documentary film, the type of policy you want will differ from a
 17

filmmaker who aims to make a feature-length film. There are basically three
types: short-term, long-term and annual. Short-term policies are used for single
production, such as a commercial. A long-term policy is used for several
projects during a longer period of time. An annual policy is reserved for
ongoing projects, such as documentaries, industrial, commercials and
education (DICE). DICE policies typically last for one year.
Similarly, its important to give yourself enough time to purchase your
insurance in advance. Laird Criner of Film Emporium, Inc. in New York City,
says purchasing a short-term policy can be approved relatively fast,
sometimes within a day. For more complex projects, such as a long-term or
annual policy, it can take up to two weeks. Also, purchasing insurance, unlike
other
film-related matters, does not require the filmmaker to be a member of a
guild or union.
When purchasing your insurance policies, it is once again important to
remember that the amount of coverage you purchase is wholly dependent
upon the type of project youre working on. There are three major insurance
categories that every independent and documentary filmmaker should
recognize. Criner cited the following policies:
General Liability Insurance
General liability insurance is basically what it sounds like. It covers against
damage to the filming location/space, and injury or harm to those present
that are not working on the film. However, it does not protect against
liability caused by an employee automobile accident while on the job. Short-
term policies are available; rates may vary on the specific broker or
insurance company.
Video Equipment Insurance
One of the most common types of film insurance is video equipment
insurance. Equipment insurance covers any and all film equipment used in
your filmmaking process and production. This policy will cover loss, damage,
theft,
 18

etc. to your rented or owned equipment. Your insurance policy will only cover
the amount of the equipment value that you request on your original
application. Both the film and equipment insurance policies cover film and
video production only; this does not include something specialized like a
music video shoot. Often you can get insurance on rental equipment for 10%
above
the rental cost.
Errors and Omissions Insurance
This type of insurance protects against lawsuits alleging unauthorized usage
of titles, copyrighted materials, ideas, formats, characters, plots, plagiarism,
unfair competition, defamation and invasion of privacy. E&O insurance
sometimes requires the counsel of an entertainment lawyer who will review
your script, clearances and releases.
In the February issue of Studio Monthly, Criner said, Your best way to help a
broker help you is to provide all insurance requirements you encounter in
writing, so there is no miscommunication. When picking and choosing
insurance, Criners words should be taken into consideration.
Understandably,
it may seem like theres a sea of information to wade through. Fortunately,
there are quite a few resources on the Internet that can provide further insight
for curious filmmakers.
 19

CHAPTER NO.9

FILM FINANCING

The basic objective by the banks is to provide finance for production of

feature films as defined under the Cinematograph (Certification) Rules, 1983.
Advertisement films, short films, documentaries, etc. are not eligible for
financing. In order to be eligible to be financed by a bank, it is required that
the former should be a corporate entity, promoted by reputed producers,
backed by established directors & other technicians and possessing satisfactory
track record. In case the entity is recently corporatized, the track record of the
main promoter(s) is considered.

The bank is obligatory to assist the entity for financing not less than Rs. 2
crore and not exceeding 50% of the estimated cost of the film. After the
financial assistance, the entity is bound to repay the amount normally within a
period not exceeding two years. However, the schedule of repayment decided
on
case-to-case basis depending upon the timing and quantum of sale
proceeds from distribution agreements/music rights etc. and expected
streams of cash inflows.

Security
The following are conditions to be fulfilled by the producer in order to
be financed by the bank for the film.

Letter from film processing laboratory-conveying rights on the negatives

of the film in favour of IDBI.
Assignment of all agreements and Intellectual Property Rights (IPRs) in
favour of IDBI. IDBI to have right of negotiation of valuation of all IPRs.
 20

A Trust & Retention Account (TRA) will be maintained for all capital as
well as revenue inflows and outflows. The receivables on sale of all IPRs
shall be credited to TRA. The modalities of TRA will be worked out to the
satisfaction of IDBI. A No Objection Certificate (NOC) from all concerned
parties for the TRA arrangement will be required. IDBI shall have first charge
on the TRA.
First hypothecation charge on all the tangible movable assets under the
project.
Personal guarantee(s) of the producer(s).
Assignment of existing rights like music, video, internet, CD, DVD
rights, library of old hit films, etc.
The film to be comprehensively insured.
The borrower would be required to obtain completion bond guarantee
from such agencies. Till such time the guarantee is made available, the risk in
this regard would need to be mitigated suitably to the satisfaction of IDBI.

Procedure for Sanction of Assistance

The complete application will be submitted by the bank to an Advisory

Committee for screening the proposal for financing. Wherever necessary, the
bank may refer the proposal to a group of experts for guidance and expert
advice. The borrower will enter into an agreement with the bank, after it has
conveyed its acceptance of the terms and conditions of sanction
communicated by the bank.

Disbursement Expenses during the pre-shooting stage to be met from the

promoters` contribution. The assistance from the bank will be disbursed during
shooting and post-shooting stages. Amount of disbursement will depend on
the total budget of the film, progress and shooting/processing of the film,
 21

withdrawal schedule and timing of the equity contribution, compliance

of various terms and conditions of the letter of sanction.

Monitoring the bank to have the right of appointment of specialized

agencies for monitoring the timely shooting/processing of the film and
assessing the reasonableness of the expenditure incurred, etc.

Since 1931, when talkies were first introduced in India, the film industry has
produced more than 67,000 films in more than 30 different languages and
dialects. In 2001, the industry produced 1,013 films making it the world`s
largest feature film producer. The majority of films are made in the South
Indian languages of Telugu, Tamil and Malayalam, but Hindi-language films
take the largest box office share. The industry draws its revenues from:
domestic theatrical sales (2001: 36 billion rupees); overseas rights (2001:
5.25 billion rupees); music rights (2001: 1.5 billion rupees); television and
video rights (2001: 2 billion rupees); corporate sponsorship and
merchandising (2001: 0.01 billion rupees). The total revenues of the industry
from these sources are estimated at 45 billion rupees.

The development of the Indian Film Industry from its golden era was very
different and much simpler than it is today. Due to the immense growth in
technology and the entrance of Hollywood, now making a film involves a
huge sum of money and depends on several contingencies. Huge sets, highly
risky stunts, sensitive equipments, a huge amount of salary paid to the actors
and a
lot other factors, has made Indian Films a very risky business. These factors
demand some kind of mechanism through which a producer can be assured
that, in case of these contingencies he will be indemnified. These were the
same reasons as the concept of Film-Insurance was introduced in the foreign
film industry. Thus, this concept has been introduced even in India. Insurance
 22

companies need to negotiate the potholes effectively because if all goes as

per planned it can prove to be a fast growing industry.

It was felt that paying a premium of 6% of the production cost, as is prevalent

abroad would be too steep for Indian film producers. However, as time has
passed premiums have dropped to as low as 1%, as more and more producers
opt for cover. For example if movies were being made at a budget of Rs. 30
million, the total insurance premium payable would be Rs. 500,000 at the rate
of approximately 1.5%. With 700-800 films being made per year totally
across India, the size of the film market in India is estimated at around Rs. 48
million or approximately 1 billion US dollars and even if 50% of these films
(Rs. 24 million) are insured at anywhere between 1.0%-5% the total premium
will be anywhere between Rs. 0.24 billion to Rs. 1.24 billion - a good start for
a emerging industry if it happens.
 23

CHAPTER NO. 10

RISKY BUSINESS

Don't put your livelihood and creativity at risk. Film and video insurance is
a must for most video business people, to protect you, and your product.

The term "Risky Business" likely conjures up the iconic coming of age movie
that first put Tom Cruise permanently on the star map. Unfortunately, the term
Risky Business for many videographers and small production houses may
refer less to the classic 1983 movie and more to the way they run their video
production businesses day to day.

The use of insurance to hedge against risk is commonplace in our society,

yet many video production artists and technicians are risk-prone, never
having heard of, let alone used, industry-specific insurance like film
insurance or Media Liability Insurance. If these terms are new to you or
only vaguely familiar, chances are that you and your video production
business may be under-insured.

Categories of Risk
You may first ask yourself - why? Whether you're a hobbyist, sole proprietor
or own a full-blown video production company, why would you want to incur
additional expense by looking for industry-specific insurance in the first
place? The simple answer: To ensure your creative future in video production
from
two basic categories of risk.
 24

Risk of Loss/Damage: Odds are that you already have, or plan to invest,
many thousands of dollars into your video production equipment. Protecting
your investment against loss or damage is the most basic of all reasons to
evaluate your insurance needs.

Risk of Liability: Beyond the basic protection of your video production

equipment is protection from the not-so-basic risk of liability. Liability isn't
about protecting your equipment from loss or damage. It's about protecting
you and your long-term ability to do what you love - video production. Just as
the implications of liability are much broader than those of simple property
loss or damage, the cost to limit your liability is equally broad (i.e. more
expensive).

Risk in the real World

Property Loss: Examples abound of videographers losing equipment from
accidents or theft. Several upgrades into my own video production career, my
first HD camcorder along with some RDE sound equipment were stolen
from my vehicle in broad daylight. Thankfully, the equipment was insured.
To this day I still have and use the pro-level camera I upgraded to, thanks to a
down payment made possible by the insurance claim.

Another example is from well-known film and video DP, Philip Bloom, who
reportedly lost his new Panasonic Lumix "beloved GH2." on a shoot in
Sydney, Australia. A freak gust of wind lifted the camera, with 3D lens, timer
and tripod,
 25

four feet into the air and over a wall into the water of Sydney Harbour.
This brief moment likely cost several thousand dollars. Needless to say,
property insurance against loss or damage is always worth the rather
minimal cost of
coverage - more on that
later.

Liability: On the other side of the risk spectrum are examples of loss due to
liability. A report of a wedding videographer being sued by his clients for a
"bad wedding video" recently made national news. The couple was awarded
nearly $1,000 from the videographer who produced the unacceptable video.
(For the record, I've seen the video. Let's just say, it's not good.) All parties
suffered loss in this case. The couple lost what should have been a keepsake
video of their wedding. The videographer lost the money he would have
made, his time and most importantly, his reputation as a video professional.

High profile and high dollar insurance claims go hand-in-hand with cases of
liability. In another recent case, famed director Michael Moore was sued for
using 71 seconds of home video in his documentary film Sicko, allegedly
violating copyright and privacy rights. After a long and expensive legal
battle, the two sides settled, for undisclosed terms.

In a final example of liability, a southern California production company was

successfully sued for a video production gone awry. The film and exercise
were to be used as training for soldiers serving in Iraq and Afghanistan.
During the
 26

production, the plaintiff suffered injuries from a staged interrogation

using actors as interrogators and weapons loaded with blanks. The
production company and the actor were ordered to pay the plaintiff
$91,000.

These examples of loss and liability in video and film production have one
thing in common. Insurance was either used, or could have been used to
replace, make restitution or defend the legal rights of parties in each of
these varied situations.
 27

CHAPTER 11.
NEED OF PRODUCER AND DIRECTOR IN INSURANCE
FILM INDUSTRY
What could insurance have possibly to do with film producers and director?
The answer: everything. Why? Because no movie or television show could
ever be made without an insurance policy in place.
It all started in the 1920s when film production officially became a vice and a
burgeoning business in Hollywood. The first entertainment insurance policies
in Hollywood were written to protect film equipment, pretty much like how
car insurance are written to protect your pocket when a car accident happens.
Now, entertainment insurance policies are written to protect film and
television projects from practically all risks, like damage to film equipment
and property.
Film insurance coverage has been expanded too to protect film producers and
directors. Insurance for film producers and directors have less to do with loss
of life or limb, it has more to do with protecting them against liabilities arising
from lawsuits. Underwriters know this type of insurance by its more
ubiquitous initials E&O insurance or Errors & Omissions insurance.
Producers and directors need E&O insurance for different types of risks. They
may not know it, but the title of a movie production project might be
violating
a trademark by a third party and hence could be subject to lawsuits arising from
copyright infringement. On the other hand, failure to obtain consent or a
license could invite a lawsuit or multiple lawsuits. As you may know, within
the litigious United States of America, the cost of defending oneself against
lawsuits could be staggering.
On an expanded note, an E&O insurance policy protects producers
and directors from liabilities arising from lawsuits that allege:
* Defamation, libel and slander
* Intellectual copyright infringement
* Unauthorized use or misappropriation of format, characters or ideas
* Breach of confidence
* Infringement of privacy rights

E&O insurance is not just limited to the bigwigs, they are also for any producer
 28

and director from a small independent production house.

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 29

CHAPTER NO.12

INSURED FILMS

Initially insurance was considered as one more burden to films budget and
the producers were very hesitant in taking insurance policies. It was 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 as the table below shows.

Movie Producer Insurance (Rs.

million)
Taal Mukta Arts 120
Mohabatein YashRaj Films 150
Lagaan Aamir Khan 150
Productions
Kabhi Khushi Kabhi Karan Johar 220
Gham
Ashoka Shahrukh Khan 70
Dil Chahta Hai Ritesh Sidhwani 180
Ek Aur Ek Gayarah David Dhawan 100
Kuch Na Kaho Ramesh Shippy 140
Deewaar Gaurang Doshi 300
 30

Apart from the above mentioned movies some other movies were also insured
such as Saathiya, Joggers Park, Asambhav, Chalte Chalte, Main Hoon Na, Taj
Mahal, Khel, Ganga Jal, Kal Ho Na Ho, Lakshya etc. Till now United
Insurance India Ltd. (which is only insurance company to provide for film
insurance in India) has insured more than 40 films and hoping to double this
figure with in one year. Producer Yash Chopra claimed a compensation of Rs.
3.5 million
from United India Insurance when Aishwarya Rai had an accident, her
shooting schedules were disturbed and a set that was put up had to be brought
down.

Another reason for the move towards insurance is that Film production was
given `industry' status in 2000, and RBI allowed banks to lend to film
production. Now the insurance of the film is a pre requisite for bank loans for
Hindi films. Therefore any one who wants loan from bank for film making
has to take insurance on his film.

In the future with more uncertainties in the film market such as Bharat Shah's
arrest and fancy for cocaine by some of our stars, more and more producers
will move towards insuring their films.
 31

CHAPTER NO. 13
BAJAJ ALLIANZ FIRST PRIVATE FIRM TO ENTER
FILM INSURANCE

MUMBAI: Bajaj Allianz General Insurance has extended cover to Vishesh

Production's new movie, Raghavendra, making it the first private
insurance company to do business with Bollywood.
Sam Ghosh, managing director, Bajaj Allianz, confirmed the deal, but
refused to disclose the size of the cover.
Allianz is a leader in film insurance worldwide and is actively looking at
bringing in products typically used in Hollywood, said Mr Ghosh. "With
the involvement of banks/FIs in financing, we feel that there is a need to
expand the range of film insurance products presently available in India," he
said.
The company's maiden venture is a small budget production well within the
reinsurance treaties, and there is no need for the company to obtain a
facultative
 32

cover.
The policy covers damage to sets and equipment, accident insurance to case,
reimbursement of expenses due to cancellation of shooting in case of injury
to cast or damage to sets.
"We are looking at film, TV serials and events insurance as a promising area
as the entertainment sector is showing exceptional growth in India," said Mr
Ghosh.
Film insurance in India is of recent origin. The first cover to be provided for a
movie was the Cine Mukta Policy, a package developed by United India
Assurance for Subhash Ghai's Taal. The package policy was named after
Mukta Arts, the production company promoted by Mr Ghai. Since then close
to a dozen movies were provided with insurance, including hits such as
Mohabattein and Dil Chahta Hai.
In addition to the package cover that other companies have been providing so
far, Bajaj Allianz is willing to provide cover to the increase in interest
expenses due to delay in any insured events.
Institutional funding of films in India is expected to increase following
the government's move to give industry status to film business. What is
also making financing easier is the corporatisation of movie producers.
According to sources, corporate players like Metalight Productions, Adlabs
and Tata Infomedia are likely to invest Rs 150 crore in film production, while
foreign funds are set to pool in another Rs 50 crore.
This is in addition to the Rs 100 crore expected from banks and financial
institutions. In fact, people related to the industry expect as many as 50 films
to be produced by corporates this year.
 33

CHAPTER NO. 14
CONCLUSION
Increasing professionalism and demand for more realism has driven film
business towards huge expenses and more risk. Now the changed
circumstances has made it necessary to cover the film under insurance. In my
opinion irrespective of the fact that bank finances or not, as a film producer it
is always better to cover risks by obtaining insurance cover, which works out
to hardly
1-3% of the budget, as it is chicken feed for even small-budget films since it is
added to the cost of the film. Thus, producers can do themselves a great
service by insuring their films.

However, insurance companies need to beware of the Film Producers who can
be a cunning lot if experience abroad is anything to go by, where many
insurers have shut shop due to huge losses incurred. In normal insurance, the
interests of
 34

policyholder and insurer are usually somewhat aligned. If a traveler has

taken medical insurance he does not want to get sick. A film producer
doesn't mind because it is not he who is getting sick but it is some one else
who is directly affected and due to which he is being indemnified.

Regarding the demand to include the performance of film at box office, as

already discussed the practical problems and negative effects are such that it
must not be implemented. With specific reference to Indian Film Industry, it
has still to warm up for insurance. Although many production houses has came
up but the number is relatively very small. A large section still believes that
insurance does nothing but to increases the budget of the film. This tendency
should be changed. Advent of insurance in advertisement film is a right step in
the direction. Recently some interest has also being shown by the southern film
industry, which was most inactive and unwilling initially. This indicates that
concept of film insurance is slowly and gradually recognized and accepted in
India. It is a good sign for the film industry and it might just bail out the Indian
Film Industry from its current recession.
 35

CHAPTER NO 15
RECOMMENDATION
Since opening its film insurance account with the movie Taal in 1998, United
India's list of insured films has grown to 42 by the end of June 2003. The
merits of being insured and instances of disbursements against claims have
helped the industry's interest in getting films insured. But amenable
candidates are still only a handful; many big banner productions such as Ram
Gopal
Varma's Company preferred to go uninsured. Further, United India's business
is even today confined to Bollywood; attempts to get South Indian films
insured are yet to yield dividend.

According to insurance company officials, there is continued perception in the

film industry that premium outflow merely adds to the budget of a movie and
is hence an avoidable expense. This, despite a well-known major production of
 36

the recent past, having scored three instances for claims - ranging from
personal injury to major fire - and refusing to insure through all that.

The cost of disinterest in insurance becomes clearer from the fact that United
India's premium is pegged at approximately 1-1.5 per cent of a film's
budget, considerably lower than the 4-6 per cent range of film completion
bond guarantees abroad.

The domestic insurer covers the entire gamut of film making up to

post-production, commencing with cast insurance; props, set and wardrobe;
film negative insurance, extra expenses covering postponement, fire,
burglary; money insurance, personal accident and legal liability.

So far, the variety of claims that have come up before United India includes
delay on account of injury to a film star, unexposed negative due to a
malfunctioning camera and damage to film equipment in a road accident. To
earn the benefit of insurance cover, a film producer is required to submit
details of his track record, budget, script and production schedule. Drafting an
insurance product for the film industry is apparently a time-consuming task
and therefore premium is decided on project-to-project basis, varying with the
kind of risk the insurance company is taking upon itself.
 37

CHAPTER NO. 16
BIBILOGHRAPY

BOOKS
Film Insurance
By Anand Bhautik
WEBSITES
www.google.com
www.wikipidia.com
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