Five years ago, Lindsay Lohan seemed poised to be the next, big starlet in Hollywood. Now, years of legal trouble have led to her being sentenced to 90 days in jail and her acting career appears to be in serious jeopardy.
Still, there have been many other improbable comebacks to the silver screen by actors who were once counted out. Look at Robert Downey, Jr.’s triumphant return as Iron Man. But a little known fact about the movie business is that the insurance that covers the financial backing put up for films can sometimes play as big a part as the actors. And if an actor becomes “uninsurable” due to erratic behavior and run-ins with the law — as Robert Downey reportedly used to be — it makes any studio think twice about committing to him or her for a role.
I recently chatted with Douglas Turk, executive vice president of the world’s leading entertainment industry insurance broker Aon/Albert G. Ruben (which is currently celebrating its 50th anniversary and has insured these and many other movies), to find out if Lindsay’s time in jail will make her uninsurable for producers and just learn a little more about how the whole process works.
Jared Wade: Even before Lindsay Lohan was sentenced, studios were having trouble placing insurance on her. How about now? Will she be totally “uninsurable” once she gets out of jail?
Douglas Turk: The issue is more on assumption of risk and cost as opposed to insurability. Anything is insurable — it’s really a question of price. Producers will need to determine the cost/benefit for Lohan’s role in a production to determine if her involvement will yield a positive result even with the inevitable higher costs.
Wade: Why does Hollywood take out policies to cover actors?
Turk: For the most part, insurance is in place to protect the financing and investment of a film and to protect against the risks that could stop the production. Certain actors are considered essential elements of a film, which is saying that they are critical to the completion of a film. Without their involvement the film could not be completed. If one of the essential elements is unable to fulfill their requirements, it puts the film at risk and, eventually, the financing (debt and equity).
Wade: Generally, are policies taken out on all actors? If you become “uninsurable” does that mean you can’t work?
Turk: For most major productions, insurance covers the actors. If an actor is considered high-risk and cannot get insurance cover at a reasonable rate, a producer may still proceed with the production by retaining more of the risk themselves. It will become more difficult for actors to work, but not impossible.
Wade: Can this insurance cost become prohibitive enough that studios generally try to steer clear of “high-risk” casts? You’re essentially multiplying your risk of shooting interruptions with each problematic cast member, right?
Turk: Again, this goes back to the cost/benefit analysis of the producer and financiers. If the actor is too high-risk and costly, the producers will look to other actors to fill the roles. A group of high-risk actors may change the dynamic of the film with the financers and require re-casting if the risk is judged to be too high.
Wade: What types of triggers are insurers looking at when they make their underwriting decisions?
Turk: The underwriters have seen all the news stories and understand the history of high-risk actors, so they will proceed cautiously when reviewing the risk by asking very detailed questions about the production, location, cast and crew. Insurers will also require specific activities (risk control) that could include active participation on set to ensure that the actor fulfills his or her obligations. This would be complemented by specific exclusions on the policy as well.