Niche Market Responds To Media Woes

"The market is soft right now, depending on the class of business and upon who's quoting it, said Glenna Dake, senior vice president of underwriting for First Media, a division of OneBeacon Professional Partners in Fairway, Kan.

"We see companies competing in areas where they've never competed before. Some companies that traditionally have written only the larger accounts are now dropping down and taking on midsize and even some smaller accounts," she noted.

Ms. Dake said she believes the market will eventually harden because "it will have to, simply because the reinsurers of our class of business also reinsure property risks, and they have to recoup those losses somewhere." She added that increasing property rates "won't be enough to help them recoup everything they've lost from the hurricanes and earthquakes."

About three years ago, she explained, the media liability market was "very hard and we were seeing anywhere from 30-to-60 percent rate increases from some of our competitors."

By contrast, she said, now "it's like the bottom has dropped out and the pricing has gotten very low again."

"So it would be nice to see a semi-hardening to level us off so that we're getting a reasonable premium for the exposure we're picking up," she added.

Ms. Dake said First Media prefers small to midsized accounts for primary coverage, but will write excess for accounts of any size.

The media liability coverage includes traditional media exposures such as libel and slander in all types of media, and automatically includes electronic dissemination. Limits are up to $5 million, she said, noting, however, that the insurer can provide higher limits if necessary, and if the size of the account warrants it. On an excess basis, First Media can write up to $15 million, she noted.

As well as newspapers, radio and television stations, clients include advertising agencies, authors, and book, magazine and newspaper publishers.

The company also offers a program for "the smaller personal printers," she said, and a program covering personal appearances.

"This could include a freelancer writing a regular article in a weekly newspaper or making regular appearances on the college circuit talking about a specific topic," she said.

"We don't [cover] many celebrities. Usually if we write coverage for celebrities, it's for their appearances on talk shows." The policy, which is annual, would cover all talk show appearances in a year's time, she explained.

Ms. Dake said First Media covers a number of independent film producers and distributors, explaining that a distributor's policy is much different than a film producer's policy.

"The producer is ultimately responsible for the content of the film," she said, whereas a distributor "should be held harmless by the producer because all they're doing is distributing to the outlets so it can be sold, broadcast or aired."

She noted that as underwriters, "we have to be very careful because now the distributors are getting into the production area. If they are producing and distributing their own films, the exposure is much higher than a plain distributor working for a third party."

An occurrence has to trigger coverage under the terms of the policy, and the coverage clauses are very specific, she said. "That's why it's important for the agent to review the policy with the insured to make sure they are getting the coverage they really need."

Referring to the recent New York Times case involving reporter Judith Miller, who went to prison rather than reveal a source, she said, "Our policy does cover the insured's right not to reveal a confidential source." And if a reporter were to reveal a source without the source's permission, "the legal costs of responding to the subpoena would be covered," she said, adding that if this were the case, the source "could turn around and sue her for bad faith," incurring expenses from both sides of the issue.

With broadcasters and newspaper publishers, "you'll see more defamation-type claims," she said. "With advertising agencies and book publishers, you see copyright infringement," she noted.

With film producers it could be either. If it's a documentary, it could be a defamation suit. If it's a feature film for entertainment, there could be a copyright or trademark issue, she said.

"One of the things that especially the smaller producers don't realize," she said, "is if they're using a very identifiable site for their background, if it's privately owned, they have to get the owners permission to use it in a film."

David Hart, worldwide media product manager for Chubb Specialty Insurance in Warren, N.J., said that Chubb has a specific NewsMedia product with an all-risk form for newspapers.

He noted that media policies often cover only named perils, listing torts that had to be named when a suit was brought. "Our policy puts in wording, 'included but not limited to,' which means that while these torts can be alleged, it is not limited to these torts," he explained.

"An important feature…is that we offer subpoena defense expense coverage. We give a separate sublimit and a separate retention," he said. "So that if someone wants to subpoena a newspaper for reporter's notes, which we've all heard about, and they wanted to quash that subpoena, there is separate coverage for the defense expenses associated with that."

Mr. Hart noted that newspaper publishers should consider whether their policy has a "hammer clause." Such a clause, he explained, says the insurer can tell the insured or publisher, "We think that settlement is good and so we're going to buy out of the claim. If you choose to go on, it's at your own expense."

Chubb, he said, believes newspaper publishers should be able to control their own claims. "They have a choice of making the policy a duty-to-defend or to defend their own claim." This is especially important for newspaper publishers, he said, because "their reputation is on the line more so than other media companies."

Newspaper publishers, he added, typically don't like to settle claims because of the precedent that is set that can lead to more lawsuits.

Mr. Hart said that a plagiarism situation, such as that with former New York Times Reporter Jason Blair, is a "tort that would be covered under the policy," although he noted, "We haven't been on any of those claims in particular."

He added that the policy has a fraud exclusion that contains a carve-back for certain situations, like the type of situation involved in the case pitting ABC against Food Lion supermarkets in the 1990s.

The television network, he explained, did an expos? of the meat-handling area of a chain of supermarkets. To do this, the network reporters took jobs working in the meat department. But the supermarket chain brought suit against the network for fraud–for fraudulently getting jobs there, he said.

The case went to court, the network lost, and the supermarket "won a big award that on appeal was reduced to $1. But they spent millions defending the claim."

At that time, he said, fraud was not covered in any policy. "So now we have a carve-back on our form for this type of situation."

Exclusions to the coverage include false advertising, bodily injury and property damage exclusion, he said, adding that Chubb has a carve-back to the exclusion "so if there is some sort of negligent content, we would cover that claim."

An example, he said, is a newspaper that publishes an article on how to build a deck onto a house but leaves out a step about how to bolt it to the house–and somebody falls.

"And we've heard of map companies where people have followed the directions and fallen off a mountain, or had an accident because the road was shown to go on and it didn't," he continued.

General policy exclusions include pollution, employee discrimination and unauthorized access, "but we carved that out if they [insureds] have a Web site," he said.

Limits are generally up to $15 million, he said.

Chubb insures large and small organizations, he added, noting that Walterry Insurance Brokers in Clinton, Md., handles a program for the National Newspaper Association, written on a Chubb form. "They've handled the program for 20 years. It's been with us since 2000," he said.

"It's a tight-knit market. There are relatively few carriers compared to, say, D&O or the miscellaneous professional market," he said.

"Right now the market is very flat. Whether it will go up depends on if reinsurance markets take everything up. Then everything else follows," he said.

Art caption:

Extra! Extra! The headline news for media companies earlier this year was that the bottom had dropped out of the market. But media insurers hope an unlikely source–hurricane damage to reinsurers–will bring sanity back to boost pricing.

If Judith Miller:

Ripped From The Headlines. Carriers like First Media and Chubb respond to claims involving reporters and newspaper companies that refuse to reveal sources or to turn over a reporter's notes.