Media Liability Market Getting Tougher

Capacity, he noted, has a direct connection to an insurer's appetite for risk and "the media line is volatile because the vast majority of the populace does not consider the media trustworthy." This attitude, he said, results in "verdicts for plaintiffs for astronomic sums."

The good news, Mr. Rudkin said, is that many such verdicts are overturned on appeal. But the bad news is that media outlets incur "incredible legal expense" in mounting a defense.

With media cases, "It often requires an appeal to have the law applied," and legal fees that hit $10 million or more are "not unheard of and not uncommon," noted Mark Rebein, president and chief executive officer of Kansas City, Mo.-based Media/Professional Insurance, a subsidiary of Aon Corp.

Mary Schust, a senior vice president for underwriting for Media/Pro, mentioned that litigation is increasing for the media because "a lot more cases are not being granted summary judgment and are going closer to trial." Judges, she said, "want to see these cases tried."

Mr. Rebein remarked that many cases arrive even though they are not "well-grounded." Ms. Schust cited a listener who sued a radio station for a slip and fall in the shower–claiming to have been startled when the disc jockey, as an April Fools joke, provided a time check that was an hour later than reality.

Industry professionals said, currently, one of the key factors at play in the media legal arena is the U.S. Supreme Courts ruling last summer in Tasini v. The New York Times. The court found that publishers were required to seek new permissions from freelancers if they wished to sell their works or reuse them in an electronic media version.

Last month, in a similar copyright case, a photographer was found to retain the rights to previously-published photos that were released in a CD-ROM format.

The full impact of such cases are "just beginning to unfold," according to Chad Milton, senior vice president and national practice leader for media at the Marsh office in Kansas City, Mo.

In an analysis he published, Mr. Milton suggested that since Tasini claims involve "hundreds of thousands of articles nationwide over the last 20 years, the total-damages exposure could be huge."

He reported that one unnamed distributor of articles online settled such a claim for $7.5 million.

Mr. Rudkin, at First Media said Tasini would diminish publishers' interest in putting material on the Internet, but he said such activity was only "a miniscule portion of their overall income."

Although the collapse of the dot-com marketplace has seen the demise of many stand-alone Web publications on the Internet, media insurers said that would have little effect on their marketplace. "They were minimal buyers because of budget restraints," said Geoffrey Allen, senior vice president for e-Solutions practice leader for Willis media market.

Mr. Milton had a like analysis. "The dot-coms, for the most part, werent a big source of media business," he said.

In the current hard market climate, even those customers that account for a large amount of business have to pay a lot more, Mr. Milton said. For renewals, "Im seeing a minimum of 30 percent up to 50 percent for good media accounts," he related.

Accounts with a history of claims can usually get coverage, but Mr. Milton said that it is much more expensive, that policyholder risk retention is increased and the coverage is more restrictive.

Willis Mr. Allen said he is "expecting renewals to be up substantially in the 30 or 40 percent range or better" and that "underwriting standards are being toughened," adding that the stiffening of standards "doesnt imply they were lax before, but [that] they will be enforced rigorously."

For larger, more difficult risks, Mr. Allen said retentions will move up. Such will not be the case, he said, for "your vanilla, small-to-medium risk."

Leib Dodell, vice president for media and intellectual property for Chubb Specialty Insurance in Simsbury, Conn., said the changes are part of a correction for an underpriced soft market.

In the past, he said, "You had half billion dollar media conglomerates with retentions of $50,000, which didnt make sense." He said his company is making a concerted effort with larger retentions to give insureds a big stake in defending claims against them.

Mr. Dodell and others also mentioned the exit of Employers Re from the market, as a price driver, noting that the companys exit meant less competition for those remaining. Employers Re left the marketplace two years ago after 69 years in the business.

For unwary insurers, Mr. Rebein noted the media professional liability market "is a tough animal" and unless a carrier "has the commitment to sit through long and expensive claims they are not going to last." Some carriers, he opined, "are not willing to put skin in the game."

Mr. Rudkin cautioned that one mistake some firms have made in the past is to attempt to write media coverage with an emphasis on production as opposed to underwriting. When carriers make that their focus "in a niche market with volatility, [they] ask for trouble," he advised.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, November 12, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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