Mumbai: The escalating tension between India and Pakistan is emerging as a big risk event for insurers and reinsurers, with ripple effects across sports, aviation, marine, and travel segments. With 18 matches remaining, insurers fear that a complete cancellation of the ongoing Indian Premier League (IPL) could trigger claims.
While it is an undeclared war scenario, reinsurers may cancel aviation policies, deny claims or withdraw treaties particularly in high-risk zones. The London reinsurance market, where most Indian aviation and marine risks are underwritten, is closely monitoring developments and may issue cancellation notices if the standoff worsens, sources said.
Amid the rising geopolitical tensions, the BCCI has suspended the remainder of the IPL 2025 for one week. The tournament was originally scheduled to conclude on May 25.
The postponement offers temporary relief. A full cancellation, however, would deal a severe financial blow to broadcasters, sponsors, and franchise owners.
New India Assurance and SBI General are among the key insurers on the program. There is a two-match excess per franchise - 12 of the 18 potentially cancelled matches could be eligible for claims, sources said.
"The situation is fluid, but any further escalation may force an early closure of the league," said a person familiar with the matter. "If the cancellation is due to a regulatory or governmental directive, most event insurance contracts treat this as an exclusion unless specifically covered."
On the marine and aviation front, reinsurers are preparing for a sharp increase in war risk premiums, particularly during the upcoming renewal cycle for Indian airlines.
Large aviation risks were insured on April 1 and will come up for renewal next year now. While existing policies remain valid, the London market may raise premium, depending on the duration and intensity of the standoff. Shutdowns at 27 airports have also led to insurers considering clauses to cancel travel insurance.
War risk premiums in the marine segment-which has already gone up amid the ongoing Ukraine Russia conflict-could rise another 300-500%, according to senior insurance executives. Insurers are also assessing the possibility of invoking force majeure clauses or exclusions for war like conditions.
While India and Pakistan have not officially declared war, insurers argue that the current situation is similar to previous conflicts such as the Kargil War in 1999 and the 1971 war.
While it is an undeclared war scenario, reinsurers may cancel aviation policies, deny claims or withdraw treaties particularly in high-risk zones. The London reinsurance market, where most Indian aviation and marine risks are underwritten, is closely monitoring developments and may issue cancellation notices if the standoff worsens, sources said.
Amid the rising geopolitical tensions, the BCCI has suspended the remainder of the IPL 2025 for one week. The tournament was originally scheduled to conclude on May 25.
The postponement offers temporary relief. A full cancellation, however, would deal a severe financial blow to broadcasters, sponsors, and franchise owners.
New India Assurance and SBI General are among the key insurers on the program. There is a two-match excess per franchise - 12 of the 18 potentially cancelled matches could be eligible for claims, sources said.
"The situation is fluid, but any further escalation may force an early closure of the league," said a person familiar with the matter. "If the cancellation is due to a regulatory or governmental directive, most event insurance contracts treat this as an exclusion unless specifically covered."
On the marine and aviation front, reinsurers are preparing for a sharp increase in war risk premiums, particularly during the upcoming renewal cycle for Indian airlines.
Large aviation risks were insured on April 1 and will come up for renewal next year now. While existing policies remain valid, the London market may raise premium, depending on the duration and intensity of the standoff. Shutdowns at 27 airports have also led to insurers considering clauses to cancel travel insurance.
War risk premiums in the marine segment-which has already gone up amid the ongoing Ukraine Russia conflict-could rise another 300-500%, according to senior insurance executives. Insurers are also assessing the possibility of invoking force majeure clauses or exclusions for war like conditions.
While India and Pakistan have not officially declared war, insurers argue that the current situation is similar to previous conflicts such as the Kargil War in 1999 and the 1971 war.
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