SPECIAL EVENT RISK MANAGEMENT: POLICY MAKES IT EASIER FOR SHOW TO GO ON

LONDON-What does a filmmaker do if a leading member of his cast breaks an arm, or fire damages a set?

A standard insurance package, known as a film producers' indemnity, comprises three main interruption and abandonment elements, according to Janic Baudrihaye, Europe manager of Chubb Custom Market, a unit of Chubb Insurance Co. of Europe S.A. Chubb, through its U.S. parent, is one of the largest and oldest insurers in the film industry.

The first element insured is the essential cast. This coverage usually protects the producers if the director or any of the leading five or so actors are unable to perform their duties due to health reasons or accident, according to Mr. Baudrihaye. An injury to a leading cast member can cause serious delays in filming and even result in a film having to be reshot or cancelled.

Examples of such losses in the past include the 1993 death of actor River Phoenix from a drug overdose; a riding injury that left Christopher Reeve paralyzed; the death of Canadian actor John Candy, which occurred during the filming of the movie "Wagons East," and a fatal helicopter scene involving Vic Morrow in the filming of "Twilight Zone" in 1982. In Mr. Phoenix's case, the film "Dark Blood" had to be scrapped, and actor Christian Slater replaced him in the movie "Interview with a Vampire" (BI, July 25, 1994).

But even minor injuries can result in major losses.

"You can get some pretty nasty losses from innocuous injuries," noted David Dare, a director of Crawley Warren Film & Entertainment, an underwriting agent for Lloyd's of London.

Mr. Dare said "Sharp," a major U.K. television drama, had to be partly reshot and the leading actor recast after the original actor hurt his knee.

In another production, the male lead developed a cold sore during shooting. As a result, the leading lady refused to shoot any love scenes with him, forcing his role to be recast and the film reshot, according to a loss adjuster, who refused to name the production or cast involved.

However, a leading cast injury or illness does not necessarily lead to a large loss.

Once the loss adjuster establishes the nature of the injury and how long it would likely sideline the actor, "we would then look at the script and the filming schedule and try to work around it by shooting scenes in which the incapacitated actor does not take part," said Howard Diamont, a director of London's specialized loss adjusting firm Gaebel, Watkins & Taylor Ltd.

The main priority is to keep "downtime to a minimum," he said. "The idea is to keep the camera turning, because the film unit is there, and the company is going to incur costs" no matter what.

Sometimes more creative action is taken to ensure filming continues.

In a recent British television production of Enid Blyton's "The Famous Five," one of the leading children in the drama broke an arm. Rather than hold up production for several weeks, the script was changed so that the character broke his arm as well, said Shaun Coyne, managing director of the entertainment and contingency division of London-based adjusting firm Crawford-THG Ltd.

Preventive action can also be taken. An underwriter, broker or adjuster has the authority to step in and recommend changes in stunts or shoots in order to avoid injuries.

Mr. Dare said he changed a scene where a naked actress was going to jump 80 feet into water.

"I said, 'No,' and she ended up jumping just five feet," he said.

The insurer and production company can choose to completely abandon a film in production as a result of the death of a leading actor or actress, in which case the insurance company will indemnify the producer for all the costs already incurred. But advances in technology have created new ways of completing production, noted underwriter Sandy Farris, the London operations manager for Entertainment Managers Insurance Services Ltd., the London arm of The Entertainment Coalition of Los Angeles. EC is a joint venture between CNA Insurance Cos. and Aon Group Inc.

"Technology has created many more options to complete a film," she said. Scenes in the U.S. film "Forrest Gump," where the lead character appears to shake hands with former U.S. President John F. Kennedy, show how seamlessly old and new footage can be linked, she said.

Even before more recent advances in technology, filmmakers employed more basic techniques of completing films. For example, in the early 1980s the film "Brainstorm" was completed despite the drowning of leading lady Natalie Wood, by using a stand-in and filming back shots, Ms. Farris said.

Damage to a film's negative is one of the most frequent causes of major loss, industry executives say. The producers' indemnity package covers damage to the negative as well as damage from faulty camera, stock or processing, Mr. Baudrihaye said.

Technology has once again created more options for producers and insurers to minimize financial loss from this problem, adjusters say.

A problem with the film negative sometimes can be solved with computer graphics enhancement, said Mr. Coyne. However, while this treatment can avoid an expensive re-shoot, it is not cheap.

The third element insured is interruption or delays due to damage to essential property, including equipment, sets and wardrobes, said Mr. Baudrihaye.

The importance of this coverage has been illustrated in the British film industry in the past few weeks. On June 13, a fire damaged one movie set of "The Avengers" at Pinewood Studios. The set still was unusable late last week. A spokeswoman for Pinewood said the fire still was under investigation and that the set was being refurbished. In this case the coverage was not needed, because production was continuing on other sets and locations.

Loss of a set can, as in "The Avengers" production, be managed by working on scenes that do not require that set. Another solution is the creation of a miniature replica of the damaged set, said Mr. Coyne.

Mishaps are not limited to major film productions. "A lot can go wrong, even on a two-minute commercial," Mr. Baudrihaye said.

For example, a car commercial Mr. Baudrihaye underwrote in Canada for $1.4 million, involved a black Hercules Cargo plane flying over snowy Canadian terrain. The new red car drops down via parachute and then is driven on ice by a James Bond lookalike as jets appear in the sky shooting missiles at it. The car plows through a snow wall and finally arrives at a mountain chalet to be greeted by a beautiful woman, whereupon the driver apologizes for being late because of difficult driving conditions.

"The advertisement was filmed in Austria, Paris and Montreal, with unprotected negatives being transported from one country to another," said Mr. Baudrihaye.

Despite the huge risks, "we had just a small incident when the car hit and damaged the camera," he said. Although the loss "wiped out the premium paid," it could have been worse.

"The stunt driver could have hit the camera, destroyed the negative and killed the director. As a result, one incident could have triggered virtually all the coverages in the package," he observed.

The standard package, meanwhile, can be extended as necessary.

For example, while few-feature film productions buy weather insurance, the advertising industry regularly buys such insurance because of the shorter production schedules.

Premiums for this insurance are quite high due to the high risk, particularly in the United Kingdom, which has high rainfall, according to Mr. Diamont.

Film producers also are increasingly buying errors and omissions coverage, said Mr. Baudrihaye.

This coverage, which protects against copyright and plagiarism lawsuits, as well as libel, invasion of privacy and slander, usually is bought for productions being distributed in the United States, he noted. Lawsuits are more likely in the United States.