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We recently saw of an interesting info graphic about Hollywood Movies Business risks by Easy Life Cover. “Risky Business, Insurance and Hollywood” is its title. Hollywood spends upwards of $200 million dollars on insurance policies annually. The movie business is a high risk business (high probability of non success and/or “failure” and high cost of consequences). Here are a few Examples of Risk and Insurance in the Hollywood Movie Business.
Operational hiccups like stopping production can cost up to $250,000/d for a larger-budget movie and many such events can occur.
Since within the movie industry, it is the producers that take on the financial responsibility should an on-set incident, accident, or emergency situation occur.
So producers have to mitigate the situation by working with insurers who charge premiums which can range from one percent to four percent of a movie’s budget, depending on the outcome of their risk estimation. For example, if an actor is a ‘problem actor’ and the insurance company rules them to be a “risk beyond usual range”. Then the insurance premium will rise significantly.
Cast insurance for $100 million movie might cost $350,000 for ten to twelve actors. However, This could rise to anywhere from $700,000 to one million dollars with the addition of one ‘problem actor’.
More info can be found here.