Risky Business: Insuring the film and television industry

Unforeseen production delays due to cast injuries, damaged equipment, accidents and natural disasters can spell disaster for a film’s bottom line, according to a Lloyd’s panel debate at FILMART, Asia’s largest film trade show.

A typical feature film production can run at a cost of $150,000 to $200,000 per day, so when something goes wrong on a film set time is of the essence, according to Tommy Elliot, Regional Director at Lloyd’s coverholder Circles Group. “We need to work very closely with the film’s producer to assess what’s happened and try to mitigate any costs because the minute that the camera stops rolling, the money clock starts running,” said Elliot.

Speaking at the Lloyd’s contingency insurance event at FILMART in Hong Kong, Elliot explained that you can insure film productions of all sizes against these risks - corporate videos, documentaries, television commercials and full length feature films.

“At the end of the day, anyone producing content has an exposure to manage in case anything goes wrong with that production,” said Elliot.

To insure against these risks, underwriters will consider the type of production, the support, budget, the number of shooting days and locations as well as the cast and crew  members who need to be insured for cast non-appearance coverage. Insurance premium is then normally calculated and budgeted as a proportion of the total production budget.

Non-appearance biggest risk

The majority of claims come from cast or crew non-appearance, according to Elliot. The financial cost of losing a lead actor or director can be enormous. Elliot cites the case of a film production in Europe where the director suffered an illness during the production and post-production phases resulting in an insurance claim of around $2.3m. 

Fortunately the production house was able to claim under its cast non-appearance insurance, which covers the financial losses associated with accident or illness of key cast and crew members at any stage of the film production.

Standard film production insurance packages will also cover the other common areas of financial loss to a film production such as damaged or stolen equipment and support materials, non-delivery of equipment or cast and crew, natural disasters, terrorism and other unforeseen circumstances.

Asia film industry is underinsured

Circles Group expects demand for film insurance packages to increase in the next five years. “Film budgets in Asia are increasing and co-productions with western producers and foreign investors are increasing and we expect this will drive demand for more sophisticated and comprehensive insurance products which are tailored to local needs,” said Elliot.
“In our experience the film industry in Asia has been underinsured in the past because there hasn’t been a reasonably priced, locally available package solution until now. Producers have been forced to buy insurance on a piecemeal basis, risking gaps in their cover,” said Elliot.
When an incident happens, insurers will often send an independent loss adjustor to the scene. It’s essential to move quickly, according to Bob Scally Managing Director at loss adjusters Robert Scally and Associates. “We try to be there on the day of the incident. We work closely with the producer to help avoid production delays and losses and we then analyse the total impact and advise insurers on the avenue they should take,” said Scally.

However, in a creative industry this is not always a straightforward process explains Scally. “We were called out to a vampire film in China where the stuntman had been injured during filming. This stuntman was wearing a special vampire mask which could show complex features such as tears and blood. The sophistication of this mask meant we needed to quickly find another stuntman who had similar facial features to fit the mask as it would have taken a whole month to create a new mask.” 

It’s not only the costumes that need to look perfect, but the backdrops as well, according to David Boyle, Contingency Class Underwriter at Lloyd’s syndicate Sportscover. “Weather Day insurance involves film shoots that require a certain set of weather conditions before they can take place. For example, a travel agency might want to film an advertisement for a holiday destination and they might require uninterrupted sunshine for a period of eight hours, said Boyle.


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