New Insurance Policies Help Agencies Control Ad-Production Costs.

Posted by truecreek on November 9, 2009 under More Dam News | Be the First to Comment

Production insurance is a must.  Trust me.  Programs now cover travel delays, dangerous weather conditions for TV shoots.

By Rupal Parekh

NEW YORK (AdAge.com) — A few years ago Dianne Richter, an ad agency veteran who’s clocked time in the broadcast departments of shops such as JWT, Y&R and Saatchi & Saatchi, found herself on a nightmare of a commercial shoot. While driving to location, police had blocked the production team’s route for several hours after a suicide jumper perched himself on a bridge.

With daylight fading and under a tight production schedule, the team scrambled to rent boats to ferry their rigs and crew across the river to the set. Quick thinking saved the commercial, but those last-minute changes came at a steep cost to the client.

insurance

The good news for advertisers is that broader protections are being offered under recent changes in the U.S. insurance market. New, broader insurance programs are becoming available to fill gaps and cover things such as travel delays, dangerous weather conditions and other unforeseen issues that can crop up unexpectedly and quickly skyrocket production costs.

Traditionally, U.S. insurance policies for TV commercial shoots have covered claims only for physical damage. If a house being used in a commercial shoot burns down, for example, or if camera equipment is stolen. Arranging insurance is a small — not to mention pretty unsexy — step in the lifespan of a TV spot, but in a tough economy that has squeezed marketers’ budgets, it can help prevent extra costs from being tacked on when least expected.

The new protections are the most significant change in TV production insurance in the American ad market in years, said A. LeConte Moore, managing director at Dewitt Stern, a century-old risk insurance brokerage that specializes in insurance for media, entertainment and ad industries.

According to ad industry executives, the average cost of a TV spot these days runs about $250,000. But depending upon the complexity of the job — the location of the shoot, music rights, celebrity actors — the costs can reach a high-end of between $1 million and $2 million.

Insurance premiums tend to cost about 2% of a shoot, and the broader coverages being made available by the likes of Entertainment Brokers International, part of OneBeacon Insurance, today aren’t all that higher. So if a production budget is $200,000, and carries a $3,400 insurance premium, for another $200 a production can manage a variety of surprise contingencies.

“It feels like insurance on steroids,” said Ms. Richter, who now works at New York-based independent Droga 5, handling production estimates and contracts for the agency.

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