Insurance companies are facing their own tough challenges in the film business.
“There are a number of issues,” says Fred Milstein, managing director at Aon/Albert G. Ruben Insurance Services, with the simplest being that “there happens to be a lot of insurance capacity available in the marketplace and that depresses rates — which is good for film producers but more difficult for insurers.”
Milstein is among the movie business mavens speaking at the Intl. Film Finance Forum May 13 in Cannes presented by Winston-Baker in association with Variety.
“A number of insurers have realized that it is not good to be all things to all people — they are looking to be niche specialist companies,” he says.
Steve Ransohoff, co-president of Film Finances agrees that it’s a buyers market.
“Production insurance is an extremely competitive market where the prices have dramatically fallen over the last five years. If prices get to a certain point, it’s difficult to make money,” he says.
Milstein says another concern is making sure that new technologies are properly covered.
“There’s digital, 3D, there is so much going on with the Internet, there are cyber liability issues; production companies need to make sure policies are responding to new, evolving areas of risk,” he says.
Ransohoff also thinks insurers need to adapt to new technology.
“Years ago, if you made a $200 million movie, it (the physical film) used to be stored in a laboratory. Now the film is on discs spread out around the city. There’s different issues on safety and security on how to insure those assets.”
One issue that is coming up quite a bit is “reputational risk.”
“Producers are looking to cover that (reputational risk) more and more — we do a considerable bit of reality television, we’ve been working with (producers) a lot in the past year with disgrace-type coverage and reputational coverage,” says Milstein.
But while more insurance companies are getting into the film industry, those newbies may not be the best bet for a producer.
“There is always talk of new companies coming in, but it’s a very difficult business, a lot of companies have come and gone from the market,” says Ransohoff, whose company deals with the completion guarantee business.
“We’ve stayed in the business so long (because) we provide good service to people and have a pragmatic approach to doing things.”
Seeking to get ahead of the game, Aon is working with another such company, which Milstein wouldn’t name, to put a couple of new products together.
“We can change up the way things are done, we are always looking at the best new thing whether it is digital production or credit enhancement. What are the client’s risks and how do we help mitigate those, is the exposure covered with a state-of-the-art form?” says Milstein.
Market sees looser capital