"Iron Man 2," the No. 3 grossing movie of 2010, featured an explosive scene set on the Monaco Grand Prix. Hero Tony Stark owns one of the F1 cars competing in the race and decides to race the car himself. Mid-race, villain Whiplash ambushes Stark and slices Stark’s car with his energy whips. The racecar rolls nose-to-tail before Whiplash slices the car into two pieces.
Pepper Potts, Starks’ Girl Friday, along with Stark’s personal driver, jump into a Rolls Royce and drive down the reverse route of the circuit, dodging other drivers. Stark climbs out of his car as other racecars pile up on the track. Whiplash slices several more cars until Stark is trapped by fiery wreckage.
Exciting scene? Or insurance hitch?
Like "Iron Man 2," many feature films present a wide range of risks. But careful attention can prepare most films for success. A movie-goer can explore the canals of Venice and cringe at a boxer’s punch, but the work required to put those images up on the screen isn’t all Hollywood glamour.
The entertainment industry is not exempt from many of the challenges that have plagued the property-casualty industry. Pricing continues to be soft and underwriting remains competitive. "There are new entrants coming into the film insurance industry," said Aaron Ma, vice president for LA Xcess, a Los Angeles-based wholesale broker. "And I anticipate a further softening, a double dip."
Related: Read about reality TV coverage, "When Insurance Meets Reality."
Cast, clothes and cameras
The cast presents one of the most significant risks. Coverage is provided for injury, illness or death. Cast coverage usually begins during preproduction, and applies all the way through production. "If an average film production takes 16 weeks," Ma said, "and if you are doing a film about a football team and the guy playing the quarterback breaks his throwing arm, you may have to push production back 4 weeks or get a new cast member." This is not unheard of: John Candy died in 1994 while filming "Wagons East!" and Heath Ledger died in 2008 while filming "The Imaginarium of Doctor Parnassus."
In "Wagons East!", Candy’s remaining scenes were filmed with a stunt double or re-written without his character. "Doctor Parnassus" had a greater challenge—after a temporary suspension of production, Ledger’s role was recast and the film rewritten, with three other actors portraying transformations of Ledger’s character as he travels through a dream world.
Underwriting a cast member is an extensive process. Insurers receive background and medical information, as well as past film experiences to determine how to best price the risk.
According to an article by Edward Jay Epstein at slate.com, Nicole Kidman injured her right knee during the filming of "Moulin Rouge" in Australia in 2000, which resulted in two claims for delays and a $3 million insurance loss. After production, Kidman’s injury caused her to pull out of the film "Panic Room"—after filming for 3 weeks. This almost resulted in production cancellation and a $54 million insurance claim, but the producers instead reshot the film with a replacement actress, but not without a $7 million payout for the delay and additional expenses.
Because of these claims, an insurer asked a 20 percent premium increase for Kidman’s coverage in the film "Cold Mountain." Kidman received coverage after putting a part of her salary in escrow and using body doubles for anything involving her knee.
There also is a significant amount of money involved in creating and building sets, wardrobes and costumes, particularly if the film is a period piece, said Lauren Bailey, vice president of entertainment at Fireman’s Fund. Coverage is required in case of a set fire or other disaster in which sets and costumes would need timely replacement to avoid production delays. "Shutting down a production can cost up to $250,000 a day for a major budget film," she said. Props, sets and wardrobe coverage are related to items "in front of the camera."
Production equipment also can represent a sizeable loss. Protection for cameras, sound equipment, lighting and other equipment used during filming can add up in cost, especially if the film is shot in a remote location.
Remote or international locations can present more hurdles. For example, if a camera, lights or other specialized equipment breaks on a film set in Los Angeles, it can be replaced quickly. However, if the movie was filmed in the Black Hills National Forest, like "Dances With Wolves," it can take a day or two to receive replacement equipment.
"If you are filming in countries that don’t have the infrastructure to support a film, it might take a week or more to get equipment," Ma said. Or cast members can fall ill while adapting to shooting in a Third World country.
Other exposures occur in foreign locations. Insurers consider filming that takes place in countries of civil unrest or terrorism. Films also rent out homes as shooting locations. Third-party equipment coverage pays for the insured’s legal liability for real property on location.
Overseas, many of the same exposures and coverages apply. Productions may need to secure local coverage for certain scenes in the movie. For example, if the film needed to rent vehicles, the insurer would work with a local office to secure those coverages. Bailey said that Fireman’s Fund turns to its owner Allianz, which has offices around the world. "We reach out to our local Allianz office and find what insurance agencies they are working with locally," she said.
Besides location, the type of film also plays a role in coverage. For example, a sports film has different needs than an animated film.
"We like what we call ‘talking head’ films—your dramas, comedies and romances," Ma said. The most difficult films to insure are sports films and films with stunts or pyrotechnic scenes. A specialized shoot that involves a building explosion that might run for 60 seconds on film can take 2 or 3 days to set up that one shot. If something goes wrong, that film incurs expenses.
Fireman’s Fund takes precautions to mitigate risk in these scenarios with a loss control consultation with the studio. Before production starts, the insurer reviews the script and is advised of the various elements in the scene, such as what kind of stunts, if motor vehicles are used, if there are high-speed chases or if watercraft or airplanes are involved. The underwriter reviews that information and consults with the loss control expert and identify all possible dangerous situations.
But accidents are unpredictable. Last September an extra on the "Transformers 3" set suffered a head injury in a multi-vehicle stunt. Gabriela Cedillo was driving her own car in the westbound lane, while stunt vehicles were towed in the opposite lanes. According to reports, a metal cable involved with the stunt vehicles snapped, slicing through Cedillo’s windshield and striking her. Cedillo’s car rolled about a mile, hitting the median concrete barrier. Production was halted, and Cedillo spent a month in the ICU. Her family has since filed a lawsuit against Paramount Pictures.
On the other hand, many advances have enabled high-speed chases or other pyrotechnics to be filmed more safely. For example, these scenes can be computer generated instead of live action. "There also are companies that replicate entire cities on a small scale," Ma said, "and it’s safer to blow up a building that is 1 ft. high." But it’s a cycle—technology does mitigate some of the dangers in specialty filming, but viewers want more realism and more explosions.
On the animation side, production companies aren’t seeking coverage for the typical cast exposures. "They would be concerned with something happening in post production or something happening at the facility where the work is being done, and those are similar to commercial coverages," Bailey said.
As for the future, Bailey sees more films being made in 3D. The risk remains the same when a film is shot on digital and then converted to a 3D format, but the process and the technology used may be different. 3D films would fall under two coverages: faulty stock coverage or negative coverage. Faulty stock pays for the cost to reshoot or correct unacceptable footage due to the inadvertent use of faulty raw stock, faulty equipment, faulty processing and faulty editing by way of damage caused by the editor’s handling of the negative film. Negative coverage includes all risk coverage, excluding the previous, and with other limitations.