From the Filmmaker Newsletter: The Role of Insurance in Restarting Production Amidst the Coronavirus Pandemic
Each Friday, Filmmaker sends out a free newsletter containing an original Editor’s Letter as well as news of film openings, events, etc. (the latter mostly streaming and online, these days). The Editor’s Letters usually aren’t posted online, but here’s last week’s, which deals with the uncertainty around obtaining production insurance in this pandemic environment. It’s been passed around quite a bit, so I’m posting it here for easier reference. If you’d like to receive the Filmmaker newsletter, you can subscribe for free here. — SM
“It’s what we call ‘a hard market,’” said the insurance broker on the phone. I didn’t need to Google what turns out actually to be a technical term a technical term to get the gist of his meaning, though. In fact, I didn’t even really need to call to ask about the current climate for insuring film productions at all. But intending to further dive into the “when will production resume?” question I’ve been discussing in this newsletter over the last few weeks, I thought it best to get some professional confirmation of my commonsense assumptions, and the broker — who spoke not for attribution — was kind enough to give me a few minutes of his time.
I particularly wanted to speak to him because while much has been written, or discussed in industry webinars, about new production protocols in the age of the novel coronavirus, generally speaking, for independent film, insurance coverage will be key to production resuming in any real way.
When any film starts production, one of the very first things done is to bind what’s known as a production package — a collection of various policies covering different contingencies. There’s third party property damage, for example, which covers damage to a rented location. There’s vehicle insurance — self explanatory. There’s general liability — if a light falls on someone’s head. And then there’s cast insurance. This covers the cost of production shutdowns, schedule changes, or the replacement of a cast member due to illness or accident. (The director and often another key crew member, like a DP, might also get covered here as well.) To be covered under cast insurance, actors are sent out for cast medical exams before shooting to make sure they’re healthy. In terms of the kinds of insurance producers take out on a film, cast insurance is where insurers have the greatest exposure in a pandemic environment. If a below-the-line crew member gets stick, a replacement can be hired. But if the lead actor gets sick, and the production shuts down — or is even possibly scrapped entirely — the potential losses are huge in relation to the insurance premium.
Prior to COVID-19, an actor getting sick would be a risk insurers would assume. But not now, the broker confirmed. In fact, it’s safe to say that going forward, and at least in the foreseeable future, productions will not be covered for any COVID-19 related claims, whether they relate to cast insurance or not. As I heard secondhand from the mouth of another broker, “You can’t get fire insurance when your house is already burning down.”
The above is fairly obvious, but it’s the path forward that is more interesting and which is a vital part of the answer to the “when will production resume?” question. As the broker explained, with productions shut down all over the world, the industry is looking at hundreds of millions of dollars of claims — the exact amount dependent on when and whether shut-down productions go back up (or not). Companies need to determine their current exposure before aggressively entering the market again. The industry is also looking for, he said, the government to step in and offer some kind of fund to help insurers weather COVID-related losses. Something similar happened after 9/11; the government signed into law the Terrorism Risk Insurance Act, or TRIA, which created a government backstop for terrorism-related claims.
A lot of people are talking about the U.S. film and television industry only really getting going when there’s a vaccine available. Said last week on a media conference call David White, national executive director of SAG-AFTRA, “As a general matter, it’s worth noting that a vaccine is right now maybe not a consensus but overwhelmingly viewed as the time when everything can go back to normal.” “Things won’t go back the way they were.”
The broker’s reference on my call to the 9/11-inspired TRIA legislation points to the broader point having to do with the current crisis. So much of our ability to reimagine production is dependent on government action on both the federal and state levels. For example, there’s another issue producers I have spoken to are grappling with: legal protection for productions from being sued by labor who might get the coronavirus on a shoot. Right now, this issue is being debated in Congress, with, broadly speaking, the Republicans in the Senate pushing for an employer liability shield pushing for an employer liability shield while Democrats look to make sure workers’s safety is protected. Indeed, no producer wants to be responsible for an unsafe workplace, and no crew member wants to work within one. Look for the industry, I’m guessing, led by the unions and large employers, to unite around common safety and hygiene practices, practices that by rigorously following individual productions would be insurable under or receive some form of liability protection.
There was more to my call with the broker — he told me about losses rippling through the re-insurance industry, which limits the ability of primary insurers to issue policies. And we talked about how large studios could possibly self-insure their films — something independent productions don’t have the financial might to do. But it’s nearing 6:00 PM and I’ve got to hit send. To be continued….
May 8, 2020