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Filming in foreign locations complicates risk: Report

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Shooting overseas may offer U.S. filmmakers exotic locales and significant tax breaks, but filming in foreign locations also increases insurance exposures, a Chubb Ltd. reports says.

Some of the major issues associated with overseas productions include safety of the cast and crew, workers compensation, and local insurance regulations, according to Katelyn Lay, Los Angeles-based vice president with Chubb Global Casualty and co-author of the report “Foreign Productions and Tours Add Risk for Filmmakers and Artists,” which was released earlier this month.

“When shooting overseas filmmakers should be familiar with the local insurance regulation that may affect their project,” Ms. Lay said. “Every country has its own insurance requirements and the production may have to work with an insurance company that has an admitted paper to make sure that they don’t run into regulatory complications.”

In addition to local insurance requirements, stunts performed while making movies can add to the risks.

In 2011, one stunt man was killed and a second was injured in an explosion on the set of the action film, The Expendables 2, during filming in Bulgaria. In December 2010, Australian stuntman Scott McLean suffered brain damage while filming a stunt in The Hangover Part II, which was filmed in Thailand. Mr. McLean still requires 24-hour care and oxygen due to the injuries he suffered, according to news accounts.

The report said that the complex nature of many film projects -– often including layered and cascading contracts that govern the project itself and the artists’ participation -- can make obtaining the appropriate insurance more difficult.

The industry’s unique use of corporate structures can also present challenges, Chubb said. Many successful actors and entertainers use so-called “shell” corporations for business and tax reasons.

The foreign exposure of shell corporations is usually limited to incidental travel to scout locations or to make personal appearances, the report said, but an individual artist’s exposure must be considered to ensure there is adequate coverage, particularly on foreign projects or engagements.

The report cited previous industry studies that showed of 109 U.S. feature films released theatrically in 2015, 19 were primarily produced in California and 12 each in Georgia and Louisiana. Other top locales for film production were the United Kingdom with 15 and Canada with 11.

The Chubb report notes that Britain is a favorite location, but employer liability can be a significant concern with minimum required coverage of £5 million ($6.17 million) and the potential for large claims. Canada “is a fairly litigious country, and demand remains strong for higher limits.”

“Every country has its own rules as to what is acceptable and what is not acceptable and what is required,” said Maureen McDonald, senior vice president with Aon/Albert G. Ruben Insurance Services, a unit of Aon P.L.C. in Sherman Oaks, California.

Ms. McDonald said that many countries do not have the same standards for safety and security as the United States.

“They have a different way of engaging individuals to work for them,” she said. “So here we hire people as employees and we get work comp benefits for the them, but that’s not necessarily the case everywhere in the world.”

She added that certain countries don’t have insurers that are comfortable with writing production risk or lack expertise, “so we’ll have a US company engage with them and that local company will merely provide the front.”

Ms. McDonald said tax credits are an important issue in film production and often filmmakers go to certain countries largely due to the incentives that are being offered.

“The incentives appear to drive a lot of the decision-making when it comes to locations,” she said. “Be sure there’s a clear understanding how coverage will respond in the event of a claim if you have any incentives.”