Magazine article Risk Management

On Making Movies

Magazine article Risk Management

On Making Movies

Article excerpt

Today's sophisticated visual effects make the perils of moviemaking obvious. It is often the subtle and unique qualities of a movie, however--those moments or cinematic vistas that were a film to be missing would diminish its entire essence--that test the creative prowess of those responsible for insuring, and ensuring, the successful completion of a production.

Picture the 1989 film Field of Dreams taking place during a drought; or picture A Simple Plan (1998)--with its Fargo-like winter backdrop-- taking place during the rainy season. These movies would have lost their visual impact had the natural effects--a field of corn stretching wider than the eye could see; a biting, omnipresent cold--been missing from the screen. In fact, because of the importance of these natural effects, both films were nearly scrapped. And then came insurance.

Completion Bonds and Underwriters

Moviemaking is a three-tiered enterprise: preproduction, production and postproduction. Preproduction, which follows the initial screenplay development, involves getting approval for the project, from the producers to the underwriters, and determining a start date for the picture. Among other things, the film's underwriters are responsible for providing a completion bond. This bond guarantees that the picture will in fact be completed.

Given the obvious risks, the terms of such bonds can be quite strict and require a great deal of initial work in order for all parties to agree on them. Insurance companies are often the stars of this aspect of filming, playing a key role in coming up with the proper coverage so a completion bond can be worked out, no matter how tricky the venture may appear.

Moviemaking, Risktaking and Those Who Bring It All Together

Not too long ago, realistic recreations of Mother Nature's special effects were a difficult task--just compare the flying witch in The Wizard of Oz (1939) with the flying cow in Twister (1996). Increased moviemaking sophistication--along with giving Mother Nature the occasional dramatic look--allows filmmakers to accomplish subtle yet powerful scenic backdrops.

Brian Kingman, senior vice president at Los Angeles-based AON/Albert G. Ruben, a brokerage firm specializing in entertainment insurance, has been working in the field for over twenty years.

"When I first got in the business, a big-budget film was ten or fifteen million dollars; now a big film is two hundred million dollars plus," says Kingman. "The size of the budgets, the complexities of filmmaking, and the special and digital effects have all become more sophisticated and more costly." Kingman also notes that the expectations of moviegoers have gotten "extremely high."

The level of coverage needed to insure projects of increased scope and grandeur are becoming quite expensive.

While planning the production of A Simple Plan, the directors and producers had a strict vision of what the scenery should look like. They wanted a dark, wintry look, requiring a thick blanket of snow and blizzardlike conditions that would last long enough to film the external scenes. This strict vision, however, did not sit well with the guarantors. Forecasts for the Minnesota area--where filming was originally planned to take place--were predicting the arrival of La Nina. This meant warmer temperatures and very little snow. The project needed increased financial assurances before the guarantors would be willing to agree to a completion bond.

Kingman was involved in much of the early planning stages and recalls how complex and financially risky the project was.

"They insisted that we go out and buy weather insurance for a three-hundred-and-sixty-degree, twenty-six-mile blanket of snow--without showing any ground," says Kingman. That is a two-inch-thick blanket of snow covering an area of over two thousand square miles.

By buying insurance to cover three scenarios, Kingman was able to successfully insure the film to the satisfaction of both the financial and artistic interests. …

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