Policies issued to films have underlined that anything arising from Coronavirus won’t be covered
Hiren Kotwani (MUMBAI MIRROR; April 1, 2020)

On March 14, cinema halls started to down shutters in the wake of the Coronavirus pandemic. Five days later, filming came to a halt and major releases, like Rohit Shetty’s Sooryavanshi (scheduled for March 24) and Kabir Khan’s ’83 (April 10) have been deferred. With one of the biggest entertainment industries of the world forced to take a break, it’s not surprising that trade experts are pegging the potential losses at over Rs 800 crore. While Angrezi Medium is covered by insurance for Distributors Loss of Profit/Revenue, as cinemas were ordered shut a day after the film opened in theatres, the same does not apply to deferred releases and halted productions.

A senior official working for an insurance company that also sells policies for films, says, “Since February, Coronavirus is excluded as a clause for any loss incurred by filmmakers during production. Film releases being postponed or filming rescheduled due to the outbreak are not covered by the policies. While epidemics are usually covered when policies are sold to the clients, Coronavirus has been excluded from pre-existing conditions. It’s like an insurance company won’t cover costs of a surgery if you buy a policy after diagnosis and learn that you need to undergo one.”

While losses incurred during production, as recognised in policies, cover riots, curfews, strikes, bandh calls and unexpected natural calamities, insurance companies are currently non-committal on the issue of production work that was halted following the directive from film bodies. Sumant Salian of Alliance Insurance Brokers informs that industry folk have been enquiring, more closely than ever, about all the aspects covered by their policies. “As of now, no one knows the quantum or severity of the loss. But our clients have been calling to ask about all the scenarios in which they are protected. Since February, all policies issued for films have a specific exclusion endorsement which underlines that anything arising directly or indirectly from Coronavirus is not covered. Our clients tell us that they will curtail losses by managing things with their vendors. Since they’ve had a long association, vendors are understanding and making adjustments in their own way.”

Shooting schedules cancelled due to the outbreak are also not covered under production risk and neither are deferred releases protected by Distributors Loss of Profit/Revenue policies. “Deferring shoot schedules is a precautionary measure and delaying releases is a commercial call. As a prudent citizen or a businessman, if I take the call to be ready to take a hit on business because I don’t want to risk my employees, it is a precautionary measure. Likewise, deferring a release when the situation is adverse around a pre-decided date is voluntary. Distributors Loss of Profit/Revenue policy comes into effect only after the film releases,” Sumant points out.

The shutdown has hit daily wage workers, vendors and cinema halls harder. “Each of the national mutiplex chains are already pegging their losses at Rs 40 crore and upwards. Single screen theatre owners, too, are facing such fixed losses,” reveals a senior insurance professional on condition of anonymity, adding, “While the distributors buy policies for films, the exhibitors’ policies are for the entire year. So, if cinemas are shut for a month or two, that loss is irrecoverable, unlike the producers and distributors who can still earn after the release is delayed.”

Sumant adds, “Theatres have staff on rosters, so they are bound to pay salaries even if they are shut for a month or so. Moreover, they have fixed costs like rent, electricity and maintenance. In the industry, apart from a considerable number employed with production companies on monthly salaries, light men, set workers and spot boys, among others, are daily wage earners. They will be hit the most.”

Another industry insider says that vendors working with theatres, like catering teams, those installing standees etc, will also be affected and losses can only be gauged when the shutdown ends. Sumant sums it up: “Insurance companies are expecting a surge of claims. But the quantum can only be ascertained when the shutdown is revoked and things return to normal.”