The gaps that worry an entertainment insurance specialist most are not always the ones productions think about, and the fastest-emerging of them can wipe value off a project the moment a name turns toxic, according to Nellie Lindner (pictured), national practice leader for films and entertainment at BFL Canada.
The exposure Lindner puts near the top of the list is reputational risk, and she describes it as one of the industry's genuinely emerging threats. When a prominent figure attached to a project becomes the subject of an allegation, the damage is immediate and expensive – sponsors and partners rush to distance themselves, and anything carrying that person's name has to be unwound.
A well-known example, she noted, is the situation involving Tiger Woods several years ago, which illustrates how quickly reputational issues can unravel long-standing relationships with sponsors and partners. It remains a powerful reminder of the fallout that can occur when a public figure's reputation changes overnight. What makes it dangerous, Lindner said, is that the coverage exists but the awareness does not. Reputational risk can be insured – it is a distinct product, not part of directors’ and officers’ liability coverage – but it has to be underwritten against the individual.
"The underwriting is focused on the individual," she said. Insurers assess factors such as their public profile, social media activity and the contractual exposure before determining the available coverage and limits, whether that is one million, two or five.
The reason it is different today, she said, is speed. A single controversial comment or allegation can travel across social media in minutes, and the moment it does, the sponsors and partners tied to that person begin to pull away. Once that happens, she said, the financial consequences for sponsors, partners and productions are almost immediate and the repercussions can affect the reputation of all stakeholders. She compared it to another exposure clients underestimate – a risk that sits quietly until the day it doesn't.
"I want to say that reputational risk is one of those exposures that often goes unnoticed until it materializes, and when it does, the impact can be major,” she said, and she now places it near the top of the list of what productions should be thinking about.
Another concrete gap, by contrast, is one the industry already understands: there is no coverage for COVID. Communicable disease coverage for a new pandemic is not available, Lindner said, which means productions manage the risk themselves. The change from a decade ago is visible on set. Where visitors once wandered on freely, access is now controlled, and craft services shifted from shared buffets to individually ordered, disposable meals. With no policy to fall back on, she said, the mitigation comes down to operational controls. "You have to make sure that whoever shouldn’t be on set aren’t coming onto the set, and that if someone is sick, they stay home."
The third gap is weather, and here the problem is not that cover is unavailable but that almost no one buys it. Cancellation cover for outdoor shoots exists, Lindner said, but it is extraordinarily expensive, and productions rarely purchase it. The exposure is real: a single day lost to a storm can force an expensive reshoot. She gave the example of a shoot reachable only by boat, cut off when the weather cancels the crossing. "That entire day’s shoot may be lost, and it will have to be rescheduled and shot another day."
The deeper issue, she said, is scheduling discipline. Productions are supposed to build slack into their calendars – she cited a rule of thumb of roughly two weeks of wiggle room – so a lost day can be absorbed by shooting something else. But tight budgets and tighter schedules mean many don't. "Depending on how tight the schedules and what budget allows, productions use every day available to the," Lindner said, and without that buffer a weather day becomes a straight loss.
The thread running through all three gaps, she said, is the same one that runs through most underinsurance: clients don't buy what they can't yet picture needing. Reputational risk feels like someone else's problem until a name goes viral; COVID felt remote until it wasn't; the weather day seems affordable to skip until the storm hits. Awareness, in her telling, is the whole battle – and on the reputational side, the one she now watches most closely, the exposure can surface with no warning at all.
"You wake up one morning, and all of a sudden there’s an allegation tied to a name," Lindner said, "Right away, you know, sponsors, partners and others connected to that individual may start pulling away."
