The man in our mirror

The Michael Jackson case will change the tune for concert,artist insurance

Written by Reuters | Published: October 6, 2013 3:47 am

On October 2 afternoon,a Los Angeles jury found AEG Live was not liable in the wrongful death lawsuit filed by the family of late pop singer Michael Jackson,in a case where lawyers had suggested the damages could exceed $1 billion.

The fact that AEG Live found itself at the centre of the wrongful death suit had sent shockwaves through the music world in past months,with concert promoters as well as well-known entertainment insurers like AON/Albert G Ruben and Lloyds of London expected to beef up policies for acts they insure and potentially raise prices.

Even though AEG was not held responsible,insurance experts believe the case has spurred the industry to re-think policies and find ways to prevent similar situations.

The role of Conrad Murray,convicted for manslaughter for his role in administering a fatal dose of the surgical anesthetic propofol to Jackson,is already prompting changes,say underwriters.

“The biggest stars all have doctors and their own staff,” said Lorrie McNaught,senior vice president at Aon/Albert G Ruben Insurance Services Inc,a large entertainment insurance firm,which has handled many of the world’s biggest tours over the past 12 months.

“If you have a security guard who winds up punching someone in the face or kills someone,who is responsible? Is it the artist,the bodyguard,the promoter? I think promoters will require stars to indemnify their own staff,” said McNaught.

Currently,promoters pay 3 to 5 per cent of the value of the policy,meaning that AEG paid between $530,000 and $875,000 for the $17.5 million policy it took out with Lloyds of London for Jackson’s This is It tour.

AEG,which had initially sought to collect on the $17.5 million policy after Jackson’s death cancelled the tour,dropped a claim against Lloyds amid revelations in leaked emails that show AEG executives were concerned about his stability ahead of his planned London comeback tour.

Insurers routinely send doctors to do medical exams—and occasionally hire investigators for background checks—before placing multi-million dollar policies for stars.

After the Jackson trial,the reams of information they need will skyrocket,said Adam Steck,CEO of SPI Entertainment.

“We’re in a high-risk business,” said Steck. “The case will require artists to disclose medical conditions and the producer will need to insure and vet them properly,meaning more red tape. This could affect ticket pricing.”

In the suit,Jackson’s family alleges that privately held AEG Live,one of the world’s top concert promoters,negligently hired cardiologist Conrad Murray as Jackson’s personal physician and ignored signs that the singer was in poor health.

Jackson died in 2009 in Los Angeles at age 50 from an overdose of propofol.

Even though Lloyds didn’t pay off on Jackson’s death,legal and insurance experts say artists’ coverage will now carry many more exclusions—specific instances of prior injuries,drug use and now perhaps negligence by staff that won’t be covered—giving promoters and insurance firms an out from paying claims if stars do not fulfill obligations due to negligence by a person on the star’s staff.

Insurers wound up settling with Britney Spears after she sued a group for almost $10 million in 2005,after she was forced to cancel the European leg of a tour due to a knee injury.

Spears and her promoter had bought “contingency insurance” from several companies,including the more common policies that cover abandonment,cancellation or postponement of a concert.

The companies initially refused to pay Spears for losses arising from the cancelled shows,claiming she failed to disclose surgery performed on her knee five years earlier.

Spears had passed the insurance company’s required medical exam a year before the tour was to begin.

John Callagy,attorney for Spears in the case,said it became apparent the insurance companies were aware of her prior knee injuries from earlier insurance applications.

“The Jackson case stands to be another cause for recalibration in the industry,” said Zev Jacob Eigen,associate professor at Northwestern University School of Law.

Stars themselves may be rushing to their insurance brokers as well. “Famous singers often insure their voices and you can only imagine the body parts that porn stars might be insuring,” said Eigen.

“For a lot of entertainment professionals,this is a significant issue,” said Thompson of Capstone Brokerage. “To protect their value,they may have to be willing to do a monthly drug screen,physical exams,random drug testing.”

Sue Zeidler

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