financial consequences of the Test debacle
Date Published : 23/08/2006
Source : JLT Press
London: 23 August 2006
Pakistan's forfeiture of the final test will undoubtedly have resulted in a financial loss for many organisations. Those potentially affected include the English Cricket Board (ECB), Surrey Cricket Club, and the International Cricket Council (ICC), to the numerous corporations that have marketing and sponsorship packages
Specialist markets, such as Lloyd's, offer a type of Contingency policy called Cancellation insurance. There is a standard Lloyd's policy form called GC[A] NMA 2779, which is a template for creating a contract for loss of revenue (or increased expenditure) that directly results from an event being Cancelled, Abandoned, Postponed, Interrupted, or Relocated (the five covered perils). For a claim to be successful the Insured must satisfy insurers that one of these perils was triggered and that this was beyond their own control, and sometimes also beyond the control of the participants themselves.
Pakistan's forfeiture resulted from their refusal to take the field after tea on the fourth day as a protest after being accused of ball tampering. There could be some doubt that this a covered peril. Even if forfeiture was a covered peril, the loss also has to be beyond the control of the Insured and, possibly, beyond the control of the participants. This loss would appear to be within the control of the Pakistan team.
There is an additional peril that can be included, namely, Curtailment. This peril is usually defined as 'the inability once started to conclude the Insured Event as originally planned'. The events at the Oval certainly concluded the match in circumstances not original planned! This is the first time major Test cricket has been concluded in this bizarre manner so it was never ever contemplated that it would occur. If the stakeholders had included the peril of Curtailment there is a better chance that their policy would respond. But this demands expert attention in drafting the policy definition of Curtailment.
The circumstances at the Oval reinforce the need for major buyers of this insurance to be very sophisticated and get expert advice from their insurance brokers. This is because the GC[A] NMA 2779 in its basic format is quite restrictive and negotiations with underwriters can very often result in broadening the basic coverage significantly.