It is a well-known fact that Michael Jackson is one of the top money earners of the U.S. and the global music industry, but how easy – or difficult – is it to insure the King of Pop?
By: Ringo Bones
Since the untimely and tragic passing of Michael Jackson back in June 25, 2009, his planned This is It tour seems to have become an insurance company’s nightmare. But given the sums of money involved, will the parties involved in insuring Michael Jackson gain financially in the end? After all, Jackson’s musical talent is well backed by having the ability to earn millions.
Ever since his musical prowess enabled him to earn millions of dollars with relative ease, Michael Jackson has always been designated into the special coverage risk aisle as an insurance coverage client - Not to mention his lifestyle choice. The price of such coverage tends to be high because the broad statistical basis for computing most insurance rates – i.e. statistical analysis that applies to us ordinary folks – does not apply to Michael Jackson’s highly individual risk.
So when the broker who facilitated in insuring Michael Jackson’s This is It tour bends over an underwriter’s box at Lloyd’s of London to discuss an insurance risk tailored to Mr. Jackson’s particular case. It is safe to guarantee that such discussions will be a lengthy one. Although Lloyd’s has for years been famous it’s willingness to underwrite unique risks for which adequate tables of probability are not available. Such as the cancellation of a major event due to the untimely death of an apparently healthy 50 year old man still in the prime of health.
Michael Jackson’s cancelled tour could also become the biggest ticket refund in history add to that the tour promoter AEG Live may have trouble collecting on it’s insurance only complicates matters. Insurers had sold an 18 million US dollar policy through Lloyd’s the famous London-based insurance market that was intended to help AEG Live recoup costs if the concerts the company was staging with Mr. Jackson were cancelled due to accident, according to the insurance company’s actuaries.
The insurance policy also could have provided coverage in case of cancellation due to medical-related issues according to a Lloyd’s insurance actuary. But that part of the coverage was dependent on the results of a physical that Mr. Jackson was scheduled to take. Thus raising the possibility that the coverage might not apply. Although Randy Phillips CEO of AEG Live had witnessed Michael Jackson passing his physical exam with flying colors in preparation for the upcoming tour several weeks before Jackson’s tragic and untimely death.
According to Bermuda-based insurer Validus Holdings Ltd., a group of insurers were covering the This is It 50-date concert series through the Lloyd’s insurance market, including its subsidiary Talbot Holdings Ltd. But Validus said it had less than $3 million at risk. But no matter what the outcome of the insurance pay-outs will be, Michael Jackson’s estate can still manage to cash-in on the cancellation of the This is It tour slated for July 13, 2009. There are even plans to release the video coverage of Michael Jackson’s elaborate rehearsals and full run-through at the Staples Center on DVD. Including the rehearsal footage two days before he died. Thus making it a part of a very good insurance policy from a financial perspective.
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As the undisputed "King of Pop", Michael Jackson has always been a special case from the insurance company's perspective. Thus making it necessary for the Lloyd's of London to relegate Mr. Jackson to the part of the company's willingness to underwrite unique risks for which adequate mathematical tables of probability are not available. Lloyd's did insure back in the 1960s an animal actor - i.e. Rhubarb the Cat, and more recently Jennifer Lopez's "posterior" for several million dollars.
As they say in the insurance biz, celebrity insurance has to start somewhere. In this day and age, Lloyd's is a society of insurance underwriters who will insure almost any risk. Primarily for publicity purposes, celebrities often insure physical attributes. Back in the late 1950s and early 1960s, The Twilight Zone staple Monty Woolley had his beard insured against "destruction" by "fire, theft, hail or tornado". Back then, a cat named Rhubarb who performed in a movie, also made headlines when the "feline actor" was insured by a motion picture company. I wonder if President Obama's proposed health-care reform covers animal actors?
This probably started the fashionable trend culminating in Jennifer Lopez / J-Lo insuring her most notable attribute - her ass.
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