When AEG Live found it difficult to insure Michael Jackson, should it have formed a Bermuda Captive Insurance Company and purchased significant amounts of reinsurance? Randy Philips, CEO of AEG, was reported as saying the firm would be willing to "self-insure" to get the shows to go ahead.
Details show that AEG Live had persuaded Michael Jackson to stage the 50-date run at the former Millennium Dome. Insurers were reluctant to take on such a liability after the original 10 dates were expanded to 50 dates.
If the shows had gone ahead, they would have been Michael Jackson's first solo shows in 12 years. More than $85 million worth of tickets are reported to have been sold.
Whether the producer has purchased the right type of entertainment insurance remains to be seen. Did Michael Jackson sign full reimbursement contracts? Does the producer of the show become another creditor of Michael Jackson?
Entertainment insurance is always written in the surplus lines market, as pricing and form coverage are always negotiable. For many years, Lloyd's of London was the leader in writing "no-show insurance coverage." The insurance forms used are highly negotiable and pricing varies with risk. Jackson was a highly targeted risk and underwriters at Lloyd's have up-to-the-minute private investigators providing valuable information back to Lloyd's. Talbot Holdings Limited, only one of the syndicates on the Lloyd's slip, kept its exposure to loss at less than $3 million.
AEG Live and Seatwave both purchased "no show" insurance coverage. Historical concepts show that when an entertainer dies, many times the purchasers of the tickets keep the tickets as memorabilia, which gain value to entertainment collectors throughout time. Pricing for this type of coverage is usually written on a rate on line basis, which Lloyd's underwriters historically are noted for. Wording in Lloyd's insurance forms are not usually regulated by the state insurance departments, so buyer beware. Jermaine, Jackie and Tito Jackson should have someone experienced in the insurance coverage business look at the wordings on the policy for their brother. Rumor has it that only the first 10 shows have coverage because many of the insurance underwriters were concerned about Michael Jackson's ability to put on 50 shows.
Lloyd's has been the home of exotic coverages for years, having written movie stars consistently, including coverage on Betty Grable's legs and Van Coburn's hands. When I worked at Lloyd's, we were writing personal accident policies on Israeli diplomats in an accident and health syndicate.
In conclusion, there is always the possibility that Lloyd's coverage does not apply in case of a claim. Read the wording carefully. Earnings at Lloyd's Syndicates have skyrocketed with the advent of corporate owners instead of individuals.
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