Covid, Production Insurance & Indie Film
I have been reading articles, talking with insurance companies, bond companies and others about insurance industry for Indie Film Productions in the US. The challenge is that Indie Films need the required insurance to cover a film when it is funded through the Indie method of Banking-Minimum Guarantees-Equity-Distributor-Completion Bond.
The bond company and the bank will require insurance. The major studios and networks can ’self-bond’ to some degree with their vast credit lines. After all, a $5 million gamble on a 3 camera show in a media drought for Viacom CBS (market cap: $22 Billion) is probably worth the risk.
But for Indie Films and media, the unavailability of insurance caused the collapse of the Theatrical-Auteur-Indie business. As noted in a Hollywood Reporter article (Jan 6 2021) entitled ”A New Year’s Nightmare: COVID 19 Litigation Piling Up”, the wave of litigation will have to make its way through the court system in two to what – five – years for rulings, etc., for cases to go forward or be eliminated.
If the claims go forward, then expect premiums to go up – way up! A friend supervising a movie Covid team worked on a major film in the US in September. He was spending $350,000 per week on all the COVID protocols. This amount is clearly unsustainable for an Indie Film.
Other bullet points:
- Film production claims account for about 60% of entertainment losses at Allianz
- •A typical $50 million picture runs at about $250,000 in production fees per day.
- •Rates are 10% to 12% of some (production) budgets. On a $10 million movie it’s about $1 million — that’s a big premium,” said Kingman.
- •Civil authority, cast and imminent peril policies have bled claims.
- •Production companies commit to a location 90 to 120 days in advance, but a spike in hospitalization rates could lead authorities to pull a film’s permits a month before shooting should start.