"When we were in the London audience of 'Phantom,' I became aware of a man sitting next to me who may have been in his 90s," recalls Margery Boyar, co-manager of the Theatrical Division at J & H, Marsh & McLennan's Arts and Entertainment Group. "When the chandelier dropped, swooping down, right above our heads, he gasped and grabbed his chest. I was terrified he was having a heart attack. He wasn't. In fact, he was having a great time. But it made me wonder: Will heart-attack insurance become, in the not-too-distant future, a routine purchase for producers at least of some productions?"
Boyar's tongue is firmly planted in her cheek. Still, this subject is close to her heart. After all, she brokers the sale of insurance policies to theatrical producers. J & H, Marsh & McLennan is the preeminent insurance brokerage firm in the entertainment world. Among its many on and Off-Broadway productions: "A Funny Thing Happened on the Way to The Forum," "The King and I," "Chicago," "Titanic," "Full Gallop," "When Pigs Fly," and "Smokey Joe's Cafe."
Only a handful of insurance brokerage firms boast theatrical subsidiaries, and it has become a highly specialized little universe. "Besides knowing our own work, we really have to understand theatre from the inside," says Boyar. "We have to be in tune with the issues a producer might face, such as what is the likelihood of a star missing a performance or two, and approximately how much will that cost a producer in lost revenue? There's a specific insurance policy--non-appearance as it's known--that covers that contingency."
Insuring against the risks is, of course, not new in theatre. What is new is the mammoth price tag involved and the detailed extensiveness of the policies. The most notable reason for this in many cases is the state-of-the-art technology that Broadway shows employ. There's "Titanic" 's sinking ship (the stage was actually reconstructed to tilt), "Miss Saigon" 's landing helicopter, and the aforementioned swinging chandelier in "Phantom." In some cases, the companies from which the producers lease the high-tech equipment are liable for its upkeep. Still, if in the unlikely event a show cannot open one night because of a technological breakdown, it is the producer who is ultimately responsible for making up the losses--paying the actors and the theatre's rent whether or not it's dark. Admittedly, he will probably recover some of his losses, but it's his responsibility to have the added coverage.
"There are other considerations today, not the least of which is that we have become a very litigious society," says Carol Bressi-Cilona, senior vice-president at DeWitt Stern Group, Inc., another prominent insurance brokerage house specializing in theatre. "And producers have to protect themselves against suits. That's one of the main reasons all kinds of possible contingencies are anticipated and insurance purchased to cover them.
"For example, actors interact more with audience members than they have in the past [plenty of that in "Scapin"], and in some shows actors are literally swinging over the audience's heads ["Candide"]. It's highly improbable that anything will go wrong, but these trends raise the risk of injury to both audiences and performers. The fact is, large-scale suits and the insurance purchased to protect against them is an American phenomenon. There is just nothing like it in Europe--either on a film or TV set or in a theatre. Insuring a show abroad is a fraction of what it is here!"
Here are sopme insurance basics: To begin with, every producer nationwide is required by theatre owners to buy a primary $1 million commercial liability policy that covers accidents or injuries that audience members might experience in a theatre. In addition, Broadway producers need an extra $10 million "umbrella" commercial liability policy. Off-Broadway producers are expected to purchase a $2 to $5 million umbrella policy. Equity Approved Showcases, on the other hand, have very limited budgets, so the primary $1 million commercial liability policy is all that these producers are expected to buy.
Margery Boyar points out that many Off-Broadway houses are much newer, or more recently renovated, than their Broadway counterparts. Still, she adds, the venerable old Broadway houses have been on the scene for the long haul, so their safety track records are already proven. "The only real difference between coverage on and Off-Broadway," she says, "is that on Broadway there are greater expenses because producers have larger exposure [to potential suits]. The theatres are bigger and admit more people."
She stresses that expecting a Broadway producer to purchase a minimum of $11 million in commercial liability really isn't all that much. "Think about it. If there's a sudden crush at the doorway and one woman slips and breaks her hip, has to have surgery, and rehabilitation--and can prove that the theatre was liable--that's thousands upon thousands of dollars the producer will have to pay her. Now imagine what the cost could be if at that one event--the crush at the door--several elderly people slip or are slammed up against each other or a wall and end up sustaining many twisted ankles and cracked ribs!"
SUB: What If the Set Burns?
Then there is the theatrical production package, costing half of one percent of the show's capitalization. It covers, among other things: property damage; the Equity Floater (a list of rules governing how much actors can be reimbursed for damaged or lost personal property); catastrophic accident insurance; and, most significant, business interruption insurance.
The last, business interruption, is perhaps the biggest risk a producer faces. Put simply, this means a loss of business time--and thus revenue--for whatever reason: the star is sick, the computer (now operating all lights and sets) is down, the set has burned, costumes are stolen. And as a result the show is closed for a period of time. Clearly, the producer's expenses have to be covered for the duration. Not surprisingly, the producer is encouraged to purchase a property loss policy (covering burnt sets and stolen costumes among other things) if he has not bought the entire theatrical production package, which includes property loss. Property loss, for instance, could equal $60,000, whereas business interruption could top $300,000.
"Property loss is actually more of an issue on tour than in a Broadway house," says Robert Boyar, senior vice-president of J &H, Marsh & McLennan's Arts & Entertainment Group. "Until about 30 years ago, no one really thought too much about property loss and what that might mean to business interruption. The watershed was what happened to a Broadway-bound show on tour called 'Good News.' As the set-carrying caravan drove under an overpass, a man on the overpass dropped a lit cigarette onto the canvas-covered van and the entire set burst into flames. It was irreparable and had to be recreated from scratch. The show was closed for a period of time and the event pointed out the need for a property loss policy!"
SUB: What If the Star Doesn't Show?
Non-Appearance--a(thorn)20star failing to show--is an especially pricey and complex area. Here the producers have to sit down with the insurance brokers and try to determine how valuable that star is to the show's survival. There are gradations. Some performers are stars--don't have understudies, enjoy a real following--but are clearly not mega-stars. So if they miss a performance the business interruption loss, especially in terms of box office revenue, will not be the same as that of a household name not showing--Julie Andrews or Christopher Plummer.
Producers and insurance brokers also have to gauge just what the odds are that a star will miss a performance. What is his reputation? Does he have a stormy personal life? Is he a boozer? Is he accident prone? What has his track record been like in the past?
"Some stars are known to miss a lot of work," notes Carol Bressi-Cilona. "Others don't. Brian Bedford, recently starring in the now-closed 'London Assurance' did not have an understudy. Still, the Roundabout's producers did not take out a non-appearance policy on him. That's because Bedford has a reputation for never missing a performance. The producers were willing to take a chance!"
Insuring against non-appearance is considered so risky that only a handful of mega-underwriters--Lloyd's of London, Chubb--will offer these policies.
SUB: What If Someone Cries "Plagiarism"?
Errors and Omissions--or E and O as it's known in the industry--is a hot policy today because it deals with the emotionally charged area of plagiarism, slander, and libel. "It is standard for every producer mounting a new play to have this policy," says Robert Boyar. "Obviously, the playwright claims that the play is an original work and the producer believes him. Still, there's always the possibility that once a play opens someone will come out of the woodwork and claim the play is his or was inspired by something he wrote earlier [plagiarism], or the characters are based on members of his family and are not flatteringly portrayed [libel]."
Admittedly, claims of this kind are far more likely, Boyar points out, if the play is turned into a movie and big bucks and high visibility are at stake.
Still, theatre is by no means exempt. Just think of the whopping cost if "Rent" 's dramaturg, Lynn M Thomson, who claimed her contribution was equal to co-authorship--and wanted major compensation--had won her much-publicized case two weeks ago.
Similarly, Peggy Klaus, an early director of Rob Becker's one-man hit, "Defending the Caveman," who is not given a credit--indeed, the program lists no directoral credits at all--now asserts she is co-creator of the work and wants compensation. This case is pending.
Revivals of works in the public domain--don't contend with these problems. However, recreations of one sort or another--"Full Gallop," for example--are ripe for suits launched by the estates of the deceased celebrities. That's why it's so important for the producer to make sure he has the legal rights to the property; this is frequently a long, convoluted, and expensive process.
Robert Boyar describes one hot touring company where the legal arrangements struck him as tenuous at best: "The show 'Beatlemania,' a Beatles recreation in which the performers were dead-ringers for the Beatles. Yes, they had paid for performance rights to the music, but the show still made me uneasy. The underwriters would not insure it initially. Yet after six months of touring nothing had happened. So the producer's personal broker--not me--now approached the underwriters, and this time the underwriters sold the producer the insurance. The upshot: the underwriters ended up losing millions of dollars when the show got to L.A. and the Beatles sued successfully!" Boyar adds that state laws governing this legal hot potato vary. In California it's easier to win an infringement case than elsewhere.
SUB: What If an Actor Breaks His Arm?
Actors and crew members in shows are also entitled to a host of protections, and the producer has to make sure he's in a position to cover risks. Here we're talking about workers' compensation--a stagehand falls off a ladder and sustains a concussion--and the loss of personal property. The coverage for personal property loss is the Equity Floater. Recently Equity raised the ceiling to $15,000.
"What this means is that if an actor's property is stolen or damaged in a Broadway or Off-Broadway house--this does not apply to an Equity Approved Showcase--the producer may be liable for the loss up to $15,000. The producer is, in fact, expected to provide secured areas for actors' valuables during a performance. Frequently, the assistant stage manager collects them and then stores them in a locked drawer."
Workers' Compensation--regulated by each state--is the big insurance policy, because there are no ceilings on the level of compensation if an actor/stagehand is injured and requires extensive medical care. Still, there are potential grey areas. As everyone knows, if a performer hurts himself during a rehearsal or performance the insurance company has to provide compensation which might include the cost of hospitalization, surgery, retraining for another career, if necessary and even death benefits to a surviving spouse, if death is the result of that injury.
But what exactly is a producer liable for if an actor injures himself during an audition? Does it make any difference if the actor's foot is broken by a falling prop, or if he tears his hamstring during a dance audition?
Theoretically there should be no difference, says Robert Boyar, since casting is a part of the employment process and ultimately designed to help the producer make money. However, sometimes these cases have to be adjudicated.
SUB: Are Showcases Covered?
Where do Equity Approved Showcases stand in all this? What exactly are an actor's rights in performance, rehearsal, or even at an audition if he is injured? What kind of insurance coverage is this producer obligated to purchase?
As noted he has to have a primary commercial liability policy worth $1 million to protect audience members. But he must also provide workers' compensation to actors/stagehands in the event of injury on the job.
According to the Equity Approved Basic Showcase Code: "The Producer shall provide liability insurance at all interviews, auditions, rehearsals and performances and shall make the name of the insurance carrier available to the Actors at the place of the interview, audition, rehearsal and performance. In the event of an injury the Producer shall advise the Actor of the procedure for filing a claim."
Adds Margery Boyar: "What a lot of actors mistakenly believe is that if they are not earning a salary in a showcase, they are not being paid and therefore not entitled to workmen's compensation. The fact is they are being paid although the currency is different from that of a salary. Exposure and experience are in lieu of a salary. That is their payment and they are also getting a small stipend for travel expenses.
"Equally important," she continues, "actors are working in time slots and venues of the producer's choice and for that reason, too, they are eligible for workmen's compensation."
Boyar cites an unexpected anecdote to drive home the point: "At an anti-Westway rock concert some years ago, a member of the audience who volunteered to set up the instruments on the stage slipped on a coke bottle and seriously injured his back. Believe it or not, he got workmers' compensation for his injuries although he was clearly a volunteer and not earning a salary. But because he had been given free tickets, a free drink, and a free T-shirt in exchange for his services--and thus had been paid--he was viewed as eligible for workers' compensation.
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So, what will producers be liable for down the pike? What new insurance policies will they have to purchase?
"We can't cover against the vagaries of a star's temperament or a commercial failure, but everything else is already largely covered," suggests Robert Boyar. Still, he foresees some developments. "Because theatre is a big and growing field and as a class its clients are viewed as responsible, I believe more underwriters will be getting into it and premiums will come down. I also suspect the deductibles that producers have to pay will come down.
"One area that we've already launched and will be broadening is providing workmen's compensation for American actors in London. This policy, we believe, will facilitate exchanges between our two countries.