and another interesting article I think... didn't see them posted before and will just keep insurance discussion in here...
Will Insurers Pay For Jackson’s Concerts?
Coverage details sketchy, but singer’s death will prompt event cancellation claim
Published 7/6/2009
The sudden death of Michael Jackson might trigger one of the biggest event cancellation claims in the insurance industry’s history, as speculation about coverage for 50 sold-out performances scheduled by the “King of Pop” at London’s O2 Arena ran rampant last week.
However, details remain sketchy, with few coming forward to say they have a piece of the potentially massive exposure.
Sources within the industry have suggested that Robertson Taylor may be the lead broker on the risk. John Silcock, chief executive of the London-based firm, declined to comment on the matter.
Bart Nash, chief press officer for Lloyd’s of London, confirmed that some event cancellation coverage for the Jackson comeback concerts was placed in the Lloyd’s market, but he indicated that, upon an initial look, the amount is small.
Regarding the ultimate exposure for event promoter AEG Live, Mr. Nash said he had read that the total potential liability could reach £300 million—some $494 million at current exchange rates—although it is unclear how much of that was insured.
A representative from AEG Live declined to comment on its exposure, or to confirm even if it had adequate insurance in place. However, in a May article by Reuters, AEG Live CEO Randy Phillips said his organization was well insured for the events.
Published reports last week in the United Kingdom indicated that AEG might have only been able to secure coverage for the first 22 concerts, for a limit of £130 million ($214 million).
Mr. Nash said whatever coverage AEG Live had was no doubt spread out, including among some U.S. insurers, because insuring 50 shows for a volatile performer like Michael Jackson could be risky and expensive.
He added that refunding tickets—the O2 seats 20,000—is not the only exposure for the event. Wages for those who had event-related employment may have to be paid, and other expenses could cause further problems for the insurer or AEG Live, he noted.
Brian Kingman, managing director for Gallagher Entertainment, a division of Arthur J. Gallagher & Company, said coverage for Mr. Jackson’s shows may not have been too difficult to secure, as the market is fairly soft for nonappearance contingency risks. Mr. Kingman has previously served as a broker for Mr. Jackson as well as for Madonna on one of her tours.
In the case of Mr. Jackson’s tour, Mr. Kingman said he believes the risk was placed in London, and depending on how the policy was written will ultimately decide whether the loss is covered.
The health of the performer also comes into play, Mr. Kingman said. It is typical, he explained, for a sickness to be covered only if the performer undergoes a medical examination before a tour. In the May Reuters story, Mr. Phillips said Mr. Jackson passed a physical “with flying colors.”
However, any event cancellation claim by the promoter for Mr. Jackson’s planned London concerts could be complicated by medical questions surrounding his death, one legal expert said.
Randy Maniloff, a partner in the Commercial Litigation Department at White and Williams LLP in Philadelphia, commented that although promoter AEG Live said Mr. Jackson had passed a medical exam with “flying colors,” the methodology of that physical could be an issue when it comes to insurance coverage.
Mr. Maniloff said insurers could look into the results of the medical exam given that Mr. Jackson died relatively soon after passing it. “Given that his death seems inconsistent with the supposed results of the medical exam, it’s certainly an issue to look into,” he said.
The medical exam, Mr. Maniloff added, is as fair game as anything in the application process, and he noted that whenever there is a big loss in such a short period of time, fingers are always pointed and the process becomes complicated.
The extent of cancellation in this case—50 sold-out concert dates—is significant, Mr. Maniloff said, adding he thinks insurers should look into all areas of coverage. “It’s not a routine thing,” he said.
However, with respect to the medical exam, some key factors come into play.
First, Mr. Maniloff said insurers’ success in questioning the exam could depend on which party chose the doctor. If the insurers chose the doctor, he noted, that could be a factor in their ability to raise issues. If one carrier picked the doctor when there are multiple carriers on the risk, the other carriers may take issue with that, he added.
Additionally, Mr. Maniloff said standards are high to prove any kind of fraud or misrepresentation in the application process, although fraud and misrepresentation may not even be as much of an issue as the process of the exam itself.
One insurance professional who is heavily involved in securing event cancellation insurance coverage within the entertainment industry, who spoke on background, said medical exams for a short-term tour are generally not intense.
The performer, he said, usually discloses pre-existing conditions, and underwriters have discretion whether to cover or decline coverage for those pre-existing conditions.
If there is a pre-existing condition that the performer fails to disclose, and that leads to an event cancellation, insurers will not cover the loss, he added.
Insurers will likely look into how medical exam questions were answered to determine if there was any material misrepresentation, he noted.
While there is some speculation that prescription medication may have played a part in Mr. Jackson’s death, the insurance professional said event cancellation insurance coverage will likely depend on whether the use of such medication was disclosed, and whether insurers chose to accept or decline coverage for complications arising from the medication.
The sudden death of Michael Jackson might trigger one of the biggest event cancellation claims in the insurance industry’s history, as speculation about coverage for 50 sold-out performances scheduled by the “King of Pop” at London’s O2 Arena ran rampant last week. However, details remain sketchy, with few coming forward to say they have a piece of the potentially massive exposure.
Sources within the industry have suggested that Robertson Taylor may be the lead broker on the risk. John Silcock, chief executive of the London-based firm, declined to comment on the matter.
Bart Nash, chief press officer for Lloyd’s of London, confirmed that some event cancellation coverage for the Jackson comeback concerts was placed in the Lloyd’s market, but he indicated that, upon an initial look, the amount is small.
Regarding the ultimate exposure for event promoter AEG Live, Mr. Nash said he had read that the total potential liability could reach £300 million—some $494 million at current exchange rates—although it is unclear how much of that was insured.
A representative from AEG Live declined to comment on its exposure, or to confirm even if it had adequate insurance in place. However, in a May article by Reuters, AEG Live CEO Randy Phillips said his organization was well insured for the events.
Published reports last week in the United Kingdom indicated that AEG might have only been able to secure coverage for the first 22 concerts, for a limit of £130 million ($214 million).
Mr. Nash said whatever coverage AEG Live had was no doubt spread out, including among some U.S. insurers, because insuring 50 shows for a volatile performer like Michael Jackson could be risky and expensive.
He added that refunding tickets—the O2 seats 20,000—is not the only exposure for the event. Wages for those who had event-related employment may have to be paid, and other expenses could cause further problems for the insurer or AEG Live, he noted.
Brian Kingman, managing director for Gallagher Entertainment, a division of Arthur J. Gallagher & Company, said coverage for Mr. Jackson’s shows may not have been too difficult to secure, as the market is fairly soft for nonappearance contingency risks. Mr. Kingman has previously served as a broker for Mr. Jackson as well as for Madonna on one of her tours.
In the case of Mr. Jackson’s tour, Mr. Kingman said he believes the risk was placed in London, and depending on how the policy was written will ultimately decide whether the loss is covered.
The health of the performer also comes into play, Mr. Kingman said. It is typical, he explained, for a sickness to be covered only if the performer undergoes a medical examination before a tour. In the May Reuters story, Mr. Phillips said Mr. Jackson passed a physical “with flying colors.”
However, any event cancellation claim by the promoter for Mr. Jackson’s planned London concerts could be complicated by medical questions surrounding his death, one legal expert said.
Randy Maniloff, a partner in the Commercial Litigation Department at White and Williams LLP in Philadelphia, commented that although promoter AEG Live said Mr. Jackson had passed a medical exam with “flying colors,” the methodology of that physical could be an issue when it comes to insurance coverage.
Mr. Maniloff said insurers could look into the results of the medical exam given that Mr. Jackson died relatively soon after passing it. “Given that his death seems inconsistent with the supposed results of the medical exam, it’s certainly an issue to look into,” he said.
The medical exam, Mr. Maniloff added, is as fair game as anything in the application process, and he noted that whenever there is a big loss in such a short period of time, fingers are always pointed and the process becomes complicated.
The extent of cancellation in this case—50 sold-out concert dates—is significant, Mr. Maniloff said, adding he thinks insurers should look into all areas of coverage. “It’s not a routine thing,” he said.
However, with respect to the medical exam, some key factors come into play.
First, Mr. Maniloff said insurers’ success in questioning the exam could depend on which party chose the doctor. If the insurers chose the doctor, he noted, that could be a factor in their ability to raise issues. If one carrier picked the doctor when there are multiple carriers on the risk, the other carriers may take issue with that, he added.
Additionally, Mr. Maniloff said standards are high to prove any kind of fraud or misrepresentation in the application process, although fraud and misrepresentation may not even be as much of an issue as the process of the exam itself.
One insurance professional who is heavily involved in securing event cancellation insurance coverage within the entertainment industry, who spoke on background, said medical exams for a short-term tour are generally not intense.
The performer, he said, usually discloses pre-existing conditions, and underwriters have discretion whether to cover or decline coverage for those pre-existing conditions.
If there is a pre-existing condition that the performer fails to disclose, and that leads to an event cancellation, insurers will not cover the loss, he added.
Insurers will likely look into how medical exam questions were answered to determine if there was any material misrepresentation, he noted.
While there is some speculation that prescription medication may have played a part in Mr. Jackson’s death, the insurance professional said event cancellation insurance coverage will likely depend on whether the use of such medication was disclosed, and whether insurers chose to accept or decline coverage for complications arising from the medication.
http://www.property-casualty.com/Is.../Will-Insurers-Pay-For-Jacksons-Concerts.aspx