Lights! Camera! Insurance!

No insurer would cover James Bond given the extreme punishment he inflicts upon his body – not to mention the property damage he causes – in service to Her Majesty, The Queen. Daniel Craig is a different matter. The latest actor to play the suave superspy, Craig, like other incarnations of 007 before him, must be insured before setting foot anywhere near a set.

Why insurance is necessary was clearly demonstrated during the filming for Spectre (2015), the 24th film in the James Bond series. The then 37-year-old actor suffered a meniscus tear during a stunt and underwent arthroscopic surgery. This resulted in a significant delay.

With daily shooting costing up to half a million dollars a day for a blockbuster, losses can quickly mount if filming is delayed. Between the dangerous stunts, the kaleidoscope of explosions and human error, a lot can go wrong on a set. Most studios and independents will not start a film unless it’s insured against potential delays from injury or incapacitation of actors, damage to props, sets and costumes, and equipment breakages. Insurers must also consider extra expenses such as damage to film material. Historically this meant 16mm or 32mm film, but nowadays this covers storage on electronic devices such as chip cards.

As part of their daily work, insurers analyze scripts, shooting schedules and budgets. In their assessment, among other factors, insurers look at the cast involved, the stunts, the locations where they will be shot and the sensitive medical history of the actors.

Nicole Kidman is one actress who was plagued by a health problem. After insurers paid $3 million in production delays when she injured a knee on the 2001 film Moulin Rouge, the injury prevented her from filming Panic Room (2002) and Jodie Foster was brought in as a costly replacement.

Typically – depending on genre, insured budget, deductibles and other risk factors – premiums can range from 0.6% to 1% of a movie’s total budget, which could amount to between $1 million to $2 million for a $200 million movie. Coverage usually has to be tailor-made for each production, and with blockbusters costing $200 million or more, there is a lot riding on the risk assessment getting it right.

Insurers typically see a lot of red flags, but usually find a compromise in discussions with the client and by risk appropriate underwriting actions. However, anything involving a member of the main cast doing their own stunts has proven to be very risky to cover. For instance, a famed documentary channel once inquired about a presenter being swallowed by a python – that was a definite no.

Typically, the underwriter assesses the risks in meetings with brokers and clients, special effects managers and technical crews well before the first day of shooting. For blockbusters, however, a risk engineer is often on-site to assess the risks and liabilities involved in stunts.

After a thorough risk assessment, it could well be that insurers will require changes to the script because of risk aggravating factors like asking to add stunt doubles or to rewrite scenes to limit the risks the actors are involved with.

Globally, the entertainment and media industry has been growing by 5.1% annually for the past four years and is expected to continue. Although figures are difficult to come by, Hollywood still commands the most insurance premiums with an estimated $400 million annually, followed by the UK with approximately $40 million to $50 million and then France and Germany at $20 million to $30 million each. China is around $45 million and growing.

New market formats such as online streaming from players like Amazon and Netflix are challenging the status quo.

Today, those companies are among the largest producers of content worldwide. Companies have truly gone global and are looking for an insurance partner that can support them with a standardized global approach.

I think it is fair to say that without insurance there would be no film industry, and without insurance, there would be few backers to provide the big finance needed to put the magic on the silver screen. Lights! Camera! Insurance!

Furtschegger is the head of Entertainment International at Allianz Global Corporate & Specialty (AGCS). Allianz Global Corporate & Specialty has a long link with the film industry stretching back to Hollywood’s early silent era in the 1890s through the Fireman’s Fund Insurance Company. From the Keystone Cops and Charlie Chaplin to Harry Potter and the latest Marvel superhero films, AGCS has protected thousands of Hollywood blockbusters, independent films and documentaries, as well as commercials and television productions.