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The current ‘‘Pandemic Risk Insurance Act of 2020,’’ or PRIA Bill circulating in the U.S. House of Representatives today proposes partnering the Federal Government with private insurers to provide otherwise excluded coverage for Business Interruption due to COVID-19 for many sectors of the U.S. economy. Unfortunately, the current version of PRIA misses the exposures faced by one of this country’s most successful and growing manufacturing sectors - Media Production.
From Louisiana to Georgia, North Carolina and Pennsylvania to Ohio and New Mexico, the manufacturing of films, television and streamed shows, as well as web-based new media has become prolific in varied regions and states over the past 30 years. Calling it “Hollywood” is convenient, but wrongly polarizes response to an industry that is not Red or Blue. Film and television production populations are made up of 90 percent blue collar workers, the vast majority of whom are members of I.A.T.S.E. or the Teamsters.
Motion picture production teams of all stripes face unique exposures and loss triggers that will likely require governmental help in risk transfer for the industry to “open” again in the United States. A government insurance or reinsurance program could be targeted to support existing media sector insurers, allowing shows to absorb theextra expense of shutting down for 15-30 days in the wake of a Covid-19 event. This would kick-start production in areas where it is safe to do so, and even promote use of virus control best practices protocols in the process.
This government insurance layer would be paid out just as all other claims would, exactly as described in the current PRIA Bill. Use of an industry standard claims adjuster and auditor would verify that the production incurred extra expenses above the normally budgeted cost due to a Covid-19 related incident, paying out after the deductible is satisfied.
If the Federal government could earmark even $400M to be used for such a backstop, production would return to the United States as soon as it is safe without what could well be a devastating delay due to lack of insurability and an attendant loss of financing, banking, and surety bond support which would necessarily move U.S. motion picture-making overseas for the foreseeable future. With adherence to proper protocols, it is very possible that most of the fund would never be paid out.
The contents of this article are for general informational purposes only and Risk Strategies Company makes no representation or warranty of any kind, express or implied, regarding the accuracy or completeness of any information contained herein. Any recommendations contained herein are intended to provide insight based on currently available information for consideration and should be vetted against applicable legal and business needs before application to a specific client.