Five Insurance Policies That Exist in India and Probably Should Not

Kidnap and ransom, fine art, film production, hospital professional liability and personal cyber cover. Five genuinely available Indian insurance products that sound invented, are entirely real, and exist because somebody had a loss nobody had thought to insure.

Insurance has a reputation for being the dullest industry in the economy, which is a reputation it has worked hard for and largely deserves. But every so often an underwriter somewhere agrees to price a risk that no sensible person would have thought about, let alone quoted, and the result is a product that sounds like a prank and is in fact a filed, approved, available policy you could buy this afternoon.

Here are five of them. Every one is real, every description of what it covers is accurate, and the only liberty taken is tonal.

One: kidnap and ransom insurance

K and R cover does roughly what the name suggests. It reimburses ransom payments, and more usefully it funds the response: a specialist crisis consultant flown in, negotiation support, legal costs, medical and psychiatric care afterwards, and in some wordings loss of income during the period. Indian corporates buy it for executives posted to higher risk geographies, and it sits alongside the rest of a multinational’s liability programme as an entirely ordinary line item.

The genuinely strange part is a near universal condition of the policy: you are generally required not to disclose that you hold it. Telling people would increase the risk, because a person known to be insured is, in the brutal arithmetic of the thing, a more attractive target. So the product is sold on the condition that it remain a secret.

Consider what this does to the buying process. Somewhere there is a company that has bought this cover, and the number of people permitted to know that fact is roughly four. The person whose life it protects may well not be one of them. The renewal notice arrives into an inbox that must not forward it. And the broker, who has just placed a technically demanding policy in a specialist market, is contractually forbidden from mentioning it in a single case study, which in the insurance industry counts as a form of punishment.

Two: fine art insurance

Art insurance covers paintings, sculpture and collectibles against fire, theft, accidental damage and the perils of transit and exhibition. The Indian market is small but real, driven by a growing collector base, galleries, auction houses and the simple fact that Indian modern art has appreciated to the point where hanging it on a wall is a financial position rather than a decorating choice.

Where it becomes philosophically interesting is the claim. Suppose the work is damaged and then restored, beautifully, by a conservator. What is it worth now? Not what it was worth before, because the market knows. Policies deal with this through a concept called diminution in value, which is the gap between what the piece was worth intact and what it is worth now that it is a restored version of itself.

Which means an insurance company is required, as a matter of contractual obligation, to form a view on how much less people want a painting once it has been through something. There is a loss adjuster in this world whose job is to assess emotional damage to an object. And somewhere in that process a very reasonable person in a very reasonable office has to write down, in a field on a form, the rupee value of a canvas having been sad.

Three: film production insurance

Film insurance is a package, and in India it is increasingly non optional, because studios and financiers will not release money without it. The components are cast insurance, which responds when a key cast member dies, is injured or falls ill and production is disrupted; negative or digital media cover, for the loss or corruption of the footage itself; props, sets, wardrobe and equipment; third party liability on location; and weather or extra expense cover where the shoot is exposed.

Cast insurance is where the comedy lives, because it is the section that forces an actuary to think about a specific human being doing a specific stupid thing. The canonical scenario is the lead actor falling off a horse. It is canonical because it keeps happening. A horse is a large, opinionated animal with no financial stake in the production.

The practical result is that somebody has to decide, in advance and in writing, which parts of the shoot the star is allowed to do. There are productions where the insurer has effectively vetoed a stunt, which means the most risk averse person on a film set is a man in Mumbai who has never visited it. And then there is the medical: an actor, at the peak of a career built on looking invincible, sitting in a clinic being asked about their cholesterol so that a treaty reinsurer three time zones away can sleep.

Four: medical establishment professional liability

Individual doctors have long bought professional indemnity. Medical establishment cover is the institutional version: it insures the hospital or nursing home itself against claims of negligence arising from the services it provides, including the acts of employed medical staff, and it funds the legal defence, which is frequently the larger expense. In an environment where consumer forums hear medical cases routinely, it has moved from optional to structural.

The oddity is not the product, which is entirely sensible. It is what sits underneath it. Pricing this cover requires an insurer to build an opinion, in numbers, about how likely a given hospital is to make a mistake. There is a rating file somewhere containing the institutional error rate of a building full of doctors.

And so an underwriter who has never performed a procedure ends up asking a hospital questions its own board has never asked it: how many of these do you do a year, who supervises the ones at two in the morning, and what exactly happened with that matter in 2019. Occasionally the proposal form is the most rigorous clinical governance review the institution has had all year, which says something about insurance, and rather more about clinical governance.

Five: personal cyber liability insurance

This is cyber insurance for an individual rather than a company, and several Indian insurers now sell it for a premium measured in hundreds of rupees. It typically responds to unauthorised transactions on your bank account, card or UPI, identity theft and the cost of restoring your identity, phishing and social engineering fraud, the legal costs of pursuing cyber stalking, bullying or defamation, and data restoration if your devices are hit by ransomware.

It is a genuinely useful product and it exists because the losses are now ordinary. Which is the quietly alarming bit. The insurance industry does not create a mass market retail product for a rare event. It creates one when the event has become routine enough to price with confidence.

So the existence of a cheap, widely available personal cyber policy is itself a data point, and not a cheerful one. Somewhere an actuary has enough Indian UPI fraud data to model it reliably, which means the rest of us are the dataset. The policy is affordable precisely because the thing it covers happens constantly. You are not buying protection against the unthinkable. You are buying protection against Tuesday.

Why the strange ones exist

There is a serious point underneath all of this, and it is the reason the list is worth reading rather than just laughing at. No insurer invented any of these products because they seemed amusing. Every one of them exists because somebody suffered a loss that no existing policy responded to, and the gap was expensive enough that a market grew to fill it.

A collector watched a painting’s value fall after restoration and had no recourse. A production lost a schedule to an injury and discovered the financier had no protection. A family had money taken out of an account by someone who was never going to be found. Each of those was once a novel, unthinkable loss. Each is now a line in a policy wording, priced to two decimal places.

Which is also how to read your own cover. The question worth asking is not whether a risk sounds serious enough to insure. It is whether, if it happened to you tomorrow, any policy you hold would respond. Most of the weird products on this list started life as somebody discovering, far too late, that the answer was no.

Two of the five are genuinely mainstream now: read about cyber insurance if you run a business holding customer data, and professional indemnity insurance if you or your firm give advice, treatment or professional services for a fee.