If you'd pulled a Rip Van Winkle over the past few years and just awakened to the land of media and entertainment errors and omission coverage, you'd be encountering a brave new world.
"I don't think there's any doubt in this age of media convergence that every business in some sense or another is involved in entertainment," says Leib Dodell, who joined Aon's Kansas City-based Media/Professional Insurance as president and CEO a year ago, after seven years with Chubb and Axis. "Attracting new customers--and retaining existing ones--means creating compelling, entertainment-oriented content."
Much of this content, Dodell also says, is coming from new sources not covered by traditional forms of errors and omission coverage. Corporate Web sites can often be prime examples of creative usage of a new and globally powerful medium.
Likewise, Dodell notes, there are now an endless number of desktop publishing ventures, coproduction projects and new product-design creative work. In the world of the exponentially expanding Internet area, Media/Professional Insurance offers a specific liability policy to deal with unique exposures that might arise in this many-faceted field.
In addition, points out Gene Williams, a vice president of Chubb Group of Insurance Cos. and the entertainment practice leader for Chubb worldwide, new financial structurings in the entertainment and media business are being brought to bear on all areas of insurance, including errors and omissions.
"We are seeing more and more complex, multiparty financing of feature films, including multinational coproductions, which require the underwriter to have a much greater understanding of financial matters than in the past," says Williams.
Adds Nashville, Tenn.-based Peter A. Tempkins, a managing director of the DeWitt Stern Group Inc., a full-service broker that has been active in the entertainment and media sectors for more than 100 years, "We live in a world where you have to be constantly aware of what's happening internationally. In providing coverage for a worldwide concert tour, for example, everyone must be cognizant of the special circumstances of each separate performance venue."
Also, Dodell, 41, who started his career as an attorney for Williams & Connelly in Washington, D.C., says that the rapid spread of electronic and digital communications technology has raised a new set of privacy issues, including actions against employees or outsiders having access to a company's proprietary information without proper authorization.
Dodell's full-service underwriting firm serves the gamut of entertainment and media companies, from a large number of independent film and TV producers, to advertising agencies, magazine and newspaper publishers and public relations agencies, among others. Its paper--rated A+ by A.M. Best--is written by Scottsdale Insurance Co.
The danger of today's rapidly changing errors and omissions market, notes Bates Richmond, until recently vice president of the corporate risk-management group he built at Clear Channel Communications Inc., "is that a lot of it is unknown. From a corporate risk manager's standpoint, you have to be very careful and painstaking in determining what may be at risk and to what extent, and therefore, what price should be put on it."
Adds Richmond, who prior to working for Clear Channel led the risk-management group at Compaq Computer Corp., "This is an area where the advantage can go to the underwriter very quickly if a full and open discussion does not take place."
Another major issue that has come to the fore in the errors and omissions realm in just the past few years is parent-company pressure to consolidate the errors and omissions policy purchases among a number of its subsidiaries, often ones that are almost exactly alike in nature, but which traditionally had worked with separate brokers.
A classic example is the category of advertising conglomerates, which may have a dozen or more individual agencies under the parent company but which historically have operated quite independently, for a variety of reasons.
In the past, each of these member agencies would produce standard TV commercials, however each production company would work with its own broker on its own errors and omissions policy.
That is changing. LeConte Moore, managing director of Marsh USA's entertainment and media division, has pioneered a type of errors and omissions coverage he characterizes as "buying in bulk," or "aggregate buying." Which is just as it sounds: Combining the errors and omissions needs of similar but previously separately covered business functions, or units, and making a bulk buy.
Here's a case in point. Many recording labels formerly required producers of music videos to purchase their own errors and omissions coverage. Under Moore's direction, the various labels took control and initiated a volume purchase. "It really drives down the cost and improves the coverage," says Moore. "Sometimes the cost is cut in half."
So, if you're involved in producing content--whether it's for entertainment or media ventures, in traditional or nontraditional realms--the lesson seems clear: No Rip Van Winkles. Probably not even a nap.
a former editor and publisher, contributes frequently to Risk & Insurance®.
April 15, 2005
Copyright 2005© LRP Publications