For the last 3 months we have complete COVID 19 lockdown in India. Many events are postponed/cancelled. Olympics and Wimbledon were cancelled. I am just talking of few big names as an example.
Wimbledon organizers are very intelligent. They have an ongoing insurance programme. Imbedded in the insurance terms and conditions – there is a condition that deals with the pandemic clause. Usually, negligible extra money / premium is required for the pandemic clause to be applied as you may be aware there is no pandemic that ever occurred either in India or in the world. Never was Wimbledon cancelled. Very remote chance for the Wimbledon being cancelled/postponed due to pandemic. If it were cancelled/postponed huge losses will be incurred by the organizers / owners. It’s very remote chance. Since its very remote, the premium is negligible. So, the Wimbledon organisers asked for the clause to be included in their wisdom and deliberated. It was decided to include the pandemic clause. Every year when insurance policy is renewed, it is renewed on the basis of the existing terms and conditions. When Wimbledon 2020 was cancelled under the pandemic clause, Wimbledon claimed approximately 138 million pounds, the money they would have made had the event been not cancelled. Since the event is cancelled, the insurers paid 138 million pounds under the pandemic clause – event cancellation.
Olympic organizers too belong to similar category. Under the pandemic clause when the Japan Olympics 2020 were cancelled, the Olympic organizing committee claimed and received 130 million pounds under the pandemic clause of their insurance.
Now to India. IPL is a huge event and is 12 years old. There are big names or stalwart assets like Shahrukh Khan (also owner of one of the team) Preity Zinta etc are a part of IPL. Similarly, the players – MS Dhoni is an asset first and player later; Virat Kohli etc. This event is insured but without the pandemic clause. An over intelligent Chartered Accountant/ Manger may have asked ‘why insure under pandemic clause’ and pay more premium? For the past 12 years this event is being organised successfully and never was cancelled. This IPL event itself can never be cancelled. Hence they renewed the policy without the pandemic clause. All happy with renewal.
675 years later, the pandemic struck. During 1347-1350 there was the Bubonic plague pandemic. During this period over 250 million people perished. So, almost 675 years later we are reeling under a pandemic called covid-19. The IPL was cancelled. There is no possibility that the event will be held in 2020. Bigger is the participation of the people and much bigger are the stakes in IPL. An estimated 1 billion dollars are lost due to the cancellation. As a seasoned insurance professional, my heart goes out for them. Why did they not prepare themselves for it? Anything is possible in this world! What appeared as an impossibility is a possibility! Lives are being lost, properties are being lost, businesses are lost. We could have reduced the losses. When I see an asset like Shahrukh khan or Virat Kohli being wasted for the year 2020, I can only say I am proud to be an Indian!
About the Author
Dr. K. Raja Gopal Reddy is a seasoned internationally qualified Insurance professional.
What you are reading here, may not answer all the questions we have, but has the absolute power of asking unsettling questions which increase the interest in the strange world, and show the contradictory wonders lying just below the surface of the commonest things of life. Look at this disturbing but beautiful thought of Friedrich Nietzsche “God is dead. God remains dead. And we have killed him”.
Dr. Reddy can be reached at: raja66gopal@gmail.com
