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PINEWOOD, England-Despite ever-increasing production budgets and larger risks associated with filmmaking, Europe's film insurance market remains extremely competitive.

Risk management in the European film industry also is increasing, according to brokers, loss adjusters and underwriters.

"I have been in this business for more than 20 years, and there are more (underwriting) companies involved now than ever before," said Sandy Farris, London operations manager for the London unit of The Entertainment Coalition, a Los Angeles-based joint venture of Aon Group Inc. and CNA Insurance Cos.

"The marketplace is extremely competitive," she said, noting that exposures increase as production budgets continue to grow both in the United States and Europe.

"Film producers are getting a pretty good deal" at the moment, observed David Dare of Crawley Warren Film & Entertainment. Mr. Dare, an underwriting agent for a $20 million Lloyd's of London film indemnity facility comprising multiple syndicates, admitted it is "fairly difficult to make a profit" writing a film account.

Film indemnity policies are becoming less expensive thanks to an influx of insurers eager to write the business (see story, page G6).

Said London-based film underwriter Janic Baudrihaye, "A major price war started in L.A. in 1988, when too many insurers decided to go after film business, too small a niche."

Mr. Baudrihaye, Europe manager for the Chubb Custom Market of Chubb Insurance Co. of Europe S.A., noted that before 1988, just three companies dominated the film insurance industry.

While the competitive market is good for buyers, the pressure to lower rates does not allow underwriters to sufficiently price coverage for high-risk productions, he said.

Competition also has made higher self-insured retention levels less attractive to filmmakers, particularly in Europe, where retentions are way below those adopted in the United States, Mr. Baudrihaye said.

Ms. Farris agreed. "Rates and deductibles need to go up," she said.

"The market has been competitive for at least the last five years, and pricing reflects that," agreed Kevin O'Shea, managing director of leading film broker Aon/Albert G. Ruben in Pinewood, England, near London.

Said Mr. Baudrihaye, "Rates are half what they were 18 years ago and risks are more dangerous."

"If you look at the average size of a production, you are looking at millions of dollars of exposure. It's a very volatile business which can produce multimillion-dollar losses," he said. Many filmmaking countries, let alone insurance companies, do not have enough annual premium revenues to absorb a large loss, he said.

"The productions are larger than they have ever been" in Europe and in the United States, said Ms. Farris.

Europe's film industry is fortunate to have the London insurance market close by, observers say.

"The London market is pivotal in Europe," noted Ms. Farris.

Said Mr. Dare, "Quite a considerable number of (continental) European productions are insured in London," adding that London-based underwriters also write much of the reinsurance for U.S. film insurers.

Meanwhile, several insurance executives noted there is an increasing time pressure on productions, which decreases producers' flexibility to mitigate losses if problems arise on the set.

Film companies are "trying to do more with less people, and the net result is that they are trying to put more into less time. Something that 10 years ago would have taken 10 weeks to film now takes eight weeks," said Mr. Dare.

"There is tremendous pressure on budgets and no slack in the schedule," he said, noting that as a result, "losses rise in proportion."

Although few European production companies have full-time risk managers, unlike the major U.S. studios, they use the expertise of brokers such as Aon/Ruben, which has a fully staffed office in Pinewood Studios, and London-based Media Insurance Brokers Ltd.

Pinewood also has an onsite specialist company dealing with related health, safety, fire and accident issues, said a Pinewood spokeswoman.

Pinewood Studios, one of the United Kingdom's major film studios, has seen its sets in steady use for the past five years, and the boom appears likely to last.

The industry now is getting grants from the U.K. Lottery amounting to hundreds of thousands of pounds per production. Earlier this month, the incoming Chancellor of the Exchequer proposed a tax break for British productions in his first budget, which was pending late last week in Parliament.

London studio and production staff and technicians also have an excellent reputation in the film industry, Ms. Farris said.

Andrew Allen, director of Media Insurance Brokers Ltd., said European production companies have picked up tips from U.S. risk managers who have been to the United Kingdom during the filming of U.S. productions in recent years.