Insurance To The Rescue, From Death To Corn

When actor Oliver Reed died this month of a heart attack while filming "The Gladiator" in Malta, DreamWorks found itself in a quandary. Should the studio use existing footage and continue as planned, or should the producers recast the part played by the 61-year-old British thesp and start shooting anew?

Either way, the loss is covered by insurance. If DreamWorks needed to reshoot the entire movie, the insurance payout might have been equal to the film's budget, put at $90 million.

Thankfully for the insurance company, the film was close to completion, so any settlement should be fairly minimal, an insider said. "(Reed) is so good in the movie, we don't want to replace him. It will only be a relatively moderate (payout)," the source said. Neither the producers nor the insurers' reps would comment on the figures.

Whether the film is a $100 million studio picture shot on the summit of Mount Everest or an indie flick made on a shoestring budget, producers must insure their films. "Banks won't lend you money, municipalities will not issue a license and you can't get a completion guarantee without it," Aon/Albert G. Ruben Insurance Services Inc. senior vp Brian Kingman said.

Aon/Ruben and counterparts U.S.I., Near North Insurance Brokerage of California Inc., Truman Van Dyke Co. and Speare & Co. and DBA Blade Insurance are the most-patronized brokerage houses in town, linking Hollywood producers with suitable insurers. Fireman's Fund, Lloyds of London, CNA Financial Corp. and American Insurance Group are the most popular insurers for producers.

The brokerage houses act as go-betweens for filmmakers and insurers. "We represent the producer, not the insurance company -- even though the insurer pays us," Near North senior vp David Oliver said. "Our fee is generally 5%-25% of the premium."

Brokerage firms typically represent a studio's entire slate. For example, Aon/Ruben handles the insurance for all Fox and Warner Bros. productions. Oliver said, "It's a word-of-mouth business. We keep our ear to the ground" when looking to find new clients.

Completion bonds, perhaps the most-publicized type of entertainment insurance, guarantee that a film will be finished on time and under budget. Completion bonds may mean the difference between getting it "in the can" and watching it go down the drain.

Policies for producers come in many forms, however. There are dozens of specialty insurance policies that cover key production elements, including cast members, props, sets, wardrobe, film stock and video tapes.

One MGM risk management director likened specialty insurance to personal car insurance. "You go years without an accident, but when you