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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.

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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,

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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.

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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.

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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.
he 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

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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;

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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:

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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.

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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.

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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

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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.WorkmenInsurance:

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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.

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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.

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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

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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.

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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

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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,

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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.

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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.

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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,

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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

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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.

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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.

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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,

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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

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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.

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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

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and director from a small independent production house.

OFFERING YOU COMPREHENSIVE MEDIA INSURANCE

Today's Film and Media industry is evolving rapidly and presents a unique set of
challenges to the businesses and individuals working within it.

At Performance we have a real working knowledge of the Media sector and its
organisations, that's why we are the A - List choice to provide your business with
the protection it needs.

Our insurance cover is designed to meet the individual needs of those working in
a range of media related companies and we offer a range of highly competitive
covers as standard including:

Own or Hired in Equipment cover

Business Interruption Insurance

Public and products liability Insurance

Employers Liability Insurance

Cover for your business cash

At Performance we pride ourselves on providing the best possible service; we

understand the market and your requirements:

We provide a quick document turn around

Referral and No Claims schemes

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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

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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.

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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

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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.

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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

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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.

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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

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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.

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BIBILOGHRAPY

BOOKS

Film Insurance

By Anand Bhautik

WEBSITES
www.google.com
www.wikipidia

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