Unlike most Indian movies that have a happily-lived-ever-after theme, there is no love lost between the Indian film industry and insurance companies.

So, it is quite common for insurance companies to walk away from giving cover to even mega budget films at the slightest provocation.

There are examples galore, the latest being the Rajnikanth-starrer Rana.

The film is set for a 2012 release and is estimated to have cost Rs 180 crore (Rs 1.8 billion).

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But insurance companies have declined to cover the film, being produced by Eros, on grounds of Rajnikanth's health.

Even though the megastar is fully fit now and is raring to go, insurers don't share his enthusiasm.

"We are wary of providing covers to senior actors like Rajnikanth and Amitabh Bachchan because of their health concerns," said an official at United India Insurance, one of the largest players in the sector.

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Rajnikanth's last movie, Endhiran, had New India Assurance providing cover for the production and cast of the movie for Rs 40 crore (Rs 400 million) with a premium of Rs 25 lakh (Rs 2.5 million), while United India Insurance covered the exhibitor's liability for the film for around Rs 50 crore (Rs 500 million).

At the heart of the problem is lack of mutual trust.

While insurers accuse the industry of lack of transparency and professionalism, the latter says unlike their counterparts in developed countries, insurers here are too interfering.

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This is quite in contrast with the practice in the West where the two parties have a far healthier relationship.

For example, Angelina Jolie starrer Salt won accolades from underwriters in the US for being the 'Riskiest Film' of 2010.

This is because the actress did her own stunts.

If she was injured during the shoot, a single halt in production would have cost $250,000 a day or more.

Insurers give many examples of unprofessional behaviour of Indian movie actors.

For example, on the day of the shoot of the recently released Shaitan, Arshad Warsi -- one of the the lead actors -- decided to opt out.

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The insurers also cite the controversy regarding Madhur Bhanderkar's Heroine, which has suddenly become uncertain after the announcement by the lead actress of the film, Aishwarya Rai Bachchan, that she is pregnant.

Insurers also say producers are reluctant to divulge film scripts, shooting schedules, names of workers involved in the project or any other details.

On the contrary, in the US, leading insurers like Munich-based Allianz SE-promoted Fireman's Fund, which has over 80 per cent share, sign completion bonds with studios asking guarantee from the producers and financiers that the film will be completed on schedule and on budget.

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In India, the premiums cost 0.5-1 per cent of the sum insured and the covers offered can be customised according to the need of the production houses.

However, the sector has not grown much as clients are not fully sharing information which restricts underwriting," said a senior official at Bajaj Allianz General Insurance, which has insured the films Little Terrorist, Jodha Akbar and Tare Zameen Par.

A senior executive of an entertainment company admits that the film industry in India is slightly unstructured and yet has a significant confidentiality component.

But, insurance companies must understand this.

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For example, no producer would like to give out a copy of the script which insurers demand before providing cover.
"This makes us uncomfortable," he says.

The average sum insured for a single movie in India is Rs 25-80 crore (Rs 250-800 million) depending on the total budget.

The total industry premiums and the claims incurred from film insurance, both ranges between Rs 15 crore (Rs 150 million) and Rs 20 crore (Rs 200 million).

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Producers generally seek higher cover for some actors, say in the region of Rs 1.5-2 crore (Rs 15-20 million), but insurance companies are not willing to provide covers beyond Rs 25-30 lakh (Rs 2.5-3 million).

Film insurance underwriting in India provides three types of covers -- production cover, errors & omissions and distribution cover.

These include any risks related to production/shooting of a film like fire, injury or death of lead star cast, abandonment of project, copyright infringement and any eventuality that does not allow natural business after the release of a film.