Indie Production Boom Threatened by Cost of COVID Insurance

Indie Production Boom Threatened by Cost of COVID Insurance

The sheer volume and variety of new projects available at the Cannes Film Market this year is evidence that COVID-19 did not shut down the independent movie business.

While the pandemic closed cinemas, upended distribution models and added multiple layers of complication to film shoots — from testing and masks to on-set social distancing and quarantine protocols — the indies found a way to get their movies made.

“At the start of the pandemic we thought the real challenge would be a mass shortage of films but it all went pretty smoothly,” says Jen Gorton, executive vp Sierra/Affinity (which had one of the biggest sales hits of last year’s all-virtual Cannes market in Lee Daniels’ The United States vs. Billie Holiday): “By early fall we were able to ramp back up on production and continue to deliver films.”

Others agree. “We put more films into production in 2020 than in any other year,” notes Thorsten Schumacher of Rocket Science, whose upcoming features include the Robbie Williams biopic Better Man from The Greatest Showman director Michael Gracey, a big presale title at the virtual Berlin market in February. “Making movies under COVID always costs more and it always takes longer but producers are getting it done. It’s really made me appreciate the independent market — all those buccaneer entrepreneurs, self-made distributors, producers and financiers — they don’t take no for an answer.”

The one group the indies have not been able to win over, however, is the insurance industry. After being battered by claims from productions forced to delay or shutter because of the pandemic, major insurance companies initially refused to offer COVID-19 insurance. That is changing but the cost of COVID coverage is still prohibitively expensive for most independent movies.

“I got a quote charging 100,000 euro [$140,000] for 1 million to 2 million euro [$1.4 million to $2.8 million] in COVID coverage in the event a key member of the film — the director or major cast — tests positive and can’t work,” says Andrew Lowe, producer and co-founder of Ireland’s Element Pictures, whose Joanna Hogg-directed feature The Souvenir Part II premieres in Cannes on Thursday. “That’s prohibitively expensive for most independents.”

Element has instead relied on government-backed COVID insurance schemes like those in the U.K., Australia or Germany — whereby the state acts as an insurer of last resort, pledging to reimburse producers for some of their COVID-19 induced losses. Other indies are just rolling the dice, self-insuring and praying an outbreak doesn’t disrupt the shoot.

“We’ve self-insured a lot and it’s scary as all heck, but we’re grinding our way through,” says Jonathan Deckter, president of Voltage Pictures, whose Cannes Market lineup includes the Renny Harlin-directed actioner The Refuge. “I can’t wait to see the end of the COVID-line item on my production budgets.”

And David Garrett of Mister Smith Entertainment says: “We created our own little private COVID insurance fund with producers and the director of films deferring part of their fees to pool money together and ring-fence our films to compensate for the lack of insurance. But insurance is still a major issue. It’s obviously a lot easier for the big streamers and the studios because they can just self-insure and cover any losses.”

For Poor Things, the new film from The Favourite director Yorgos Lanthimos, set to begin production later this year, Element Pictures relied on the deep pockets of Disney-owned Searchlight, and the safe bank of U.K.’s Film4, to cover COVID risks.

“Getting a film made with financing outside the studio system is still very challenging,” says producer Lowe.

There are few signs that will change anytime soon. If anything, insurance companies are doubling down—as evidenced by the recent $10 million lawsuit by Fireman’s Fund Insurance against Walt Disney Company challenging some of the COVID-19 claims made for production delays on the films Second Wave and Holiday Hiatus. Indie producers were dealt a further blow July 2 when a Los Angeles Superior Court judge dismissed a $150 million lawsuit brought by United Talent Agency against Vigilant and Federal insurance companies that alleged the insurers breached contracts by withholding COVID-19 coverage.

Instead of counting on the insurance companies to have their back, indie producers are hoping the issue goes away, as falling infection rates, rising vaccination numbers and even better safety protocols reduce COVID risks to a minimum.