Page 24 - DCOM309_INSURANCE_LAWS_AND_PRACTICES

Unit 2: Risk and Insurance

Notes

Notes The frequency and severity of any risk must be completely beyond the control of
the person taking the insurance.
But in life assurance some could argue that there is no uncertainty about death: it is one of
the few certainties we have. Life assurance is, however, still involved with fortuitous
events as it is the timing of death that is beyond the control of the person affecting the
policy.

Caselet At ` 50 crore, Mahabharat is the Highest Insured
Film

aran Johar’s My Name Is Khan, starring Shah Rukh Khan and Kajol, was the
highest insured Bollywood production at 46 crore so far. Now, the animation film
KMahabharat has surpassed its record, with an insurance cover of 50 crore. If that’s
not enough, the insurance for the Amaan Khan – directed film was renewed thrice as it
took seven years to make.

Presenter-producer Jayantilal Gada says, “We had to make a presentation for Amitabh
Bachchan (who has lent his voice for Bheeshma in the film) after he had expressed
reservations about being ‘cartoonised’ for an animation film. The idea was to show him
what we were planning to make.”
Gada adds, “For that, we had to create other characters as per our imagination... around
100 people worked on it. If anything related to our concept leaked out, our project would
have been in jeopardy, and hence we bought such a high insurance cover for it.”
However, it wasn’t that easy as there were various aspects — the concept, stars lending
voices for it and someone filing litigation against the makers — to be considered. He says,
“Finally, an Indian company tied up with six foreign companies before the policy
materialised. While the Indian company covered 10 per cent, the foreign companies covered
the remaining 90 per cent. And it was only after we started working that we realised that
the insurance was valid for only two years, the time it took to make the presentation for
Amitji. By the end of the film, we had renewed the policy thrice as it took seven years to
reach the finishing line.”

Source: http://articles.timesofindia.indiatimes.com/2013-12-17/news-interviews/45256951_1_
insurance-cover-mahabharat-bheeshma
The classes of risk and their insurability:
(a) Static and Dynamic Risks: Changes in the prices of essential commodities consumer
tastes and technology are dynamic risks. All these risks have financial consequences, but
are still not considered insurable as they are unpredictable.

Did u know? Static risks have nothing to do with changes in the economy but arise due to
perils of nature, dishonesty or infidelity. The property may be ruined or dispossessed and
there is a financial loss from such risks and they are predictable and hence insurable.
(b) Pure and Speculative Risks: Risks that produce only loss but no gain are pure risks but
speculative risks involve possibility of gain and are almost similar to wagering or
gambling.

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