The insurance sector spent a sizeable 130m on UK advertising last year. Less well known is the colossal sum of money that ad agencies have had to spend on insurance premiums to guarantee that production shoots are covered against bad weather conditions.
Premiums of up to 25,000 per day are paid to insure against bad light, snow, tornadoes or even the impact of the turbulent weather system known as El NiÃÂ±o, wrecking an expensive shoot.
Brokers report that the cost of insurance has remained static; actually it has been artificially held down, despite the fact that more bad weather claims are now being made. Only 30 per cent of shoots are now covered as agencies and clients prefer to take the risk rather than add 150,000 to the cost of a six-day shoot. However, according to one broker, four out of five agencies which do take out insurance against bad weather make a claim.
The cost of insurance is calculated at a daily rate and an agency has to choose in advance which day or days on a particular shoot it will insure. Some just insure the last day of the shoot, which means if all the previous days have had bad weather, a claim can still be made.
The daily cost of production – hotels, equipment, actors fees – is used to calculate the price of insurance. The premium is roughly 30 per cent of the cost of keeping the production team on location for an extra day. But with some shoot budgets now hitting 1m, 30 per cent of a day’s budget can easily amount to 25,000.
Not surprisingly, the most expensive type of weather cover is for sunshine, which includes blue skies and shadows. According to one agency source, it costs 32.5 per cent of a day’s production cost to insure for sunshine in Australia during its winter. Sunshine cover for Australia in its summer costs 20 per cent.
Hamish Pringle, vice-chairman and director of marketing at Saatchi & Saatchi, sums up the view of many in the industry. “Three or four days insurance at a premium costs 100,000. It’s loony amounts of money.”
Of those ad agencies which do insure, the majority use brokers to shop around for the best deal from underwriters – White & Wilson and Lucas Fettes are agency favourites.
White & Wilson managing director Deborah White says the reason the rates have not gone up, despite the rising number of claims, is that it is already so expensive. She claims only three out of ten exterior shoots have weather insurance with the current rates and that if it was to cost any more the figure would fall even further.
John Cockayne, director at Lucas Fettes, echoes this view: “It is fair to say we are getting claims more frequently than in the past and logic decrees that this would cause rates to go up. But in fact we have trimmed the rates,” he says.
That should be good news for those who see El NiÃÂ±o – which is throwing the world’s rain belts off course – and global warming as phenomena that are here to stay. “My theory is El NiÃÂ±o means no destination is safe. It used to be if you went far enough you’d be OK,” says Jim Kelly, managing partner of Rainey Kelly Campbell Roalfe.
The agency shot the current Vauxhall Astra ad, complete with helicopters, in Spain and although hit by fog, did not fall behind schedule.
However, there are endless stories of shoots being sabotaged by severe weather conditions when least expected. When Young & Rubicam went to the Arizona desert to shoot its Pirelli ad featuring French athlete Marie José Perec, faces fell as the crew pulled up to a frozen lake. According to sources, it took a lot of persuading to get Perec to run in the water – once the ice had been cleared.
The Arizona desert was also the culprit in one of advertising’s most famous bad weather tales. In the late Seventies, Collett Dickenson Pearce flew a team to Death Valley to film an ad for Benson & Hedges featuring an iguana.
John Salmon, the then creative director at CDP, says: “Because of the location and the helicopter it was the most expensive ad the agency had ever considered doing. When we got there, it was pouring with rain and it went on for a week. It wasn’t insured and money was going down the drain. Gallaher, the client, was very supportive, and said ‘do it whatever the cost’ and it ended up costing about twice the original estimate.”
The cost issue has, in the past two years, led to the rise of “no claims” bonuses. Banks Hoggins O’Shea uses White & Wilson which has negotiated a no claims bonus of 50 per cent for shoots booked 21 days in advance. The client pays 50 per cent of the fee upfront and, if no claim is made, the remaining 50 per cent need not be paid.
Ruth Hannett, head of TV at Banks Hoggins O’Shea, says: “If you are insured for a large amount it may be worth not making a claim, and using the 50 per cent no claims bonus on post production.”
Post production can be used to paint in blue skies when they were, in fact, grey, and to add shadows to simulate a summer day. Frank Lieberman, chairman of the Institute of Practitioners in Advertising commercials production policies group, says: “Imagine you have a palm tree bent in half from the wind; with post production you can make that tree straight.”
But post production itself is very expensive. “The machines used are hired out at 700 an hour and it can take a day to do ten seconds of film,” says Hannett.
Improved technology in post production and the high price of weather cover have combined to turn several agencies away from weather insurance. Kelly says: “They [insurance companies] are charging quite high premiums and what is more, seven days before you go you have to pick which day you are going to shoot. It’s like a betting shop, and you have to question the wisdom of doing it.”
Damien Horner, business development director at Mustoe Merriman Herring Levy, shares this view: “An increasing number of agencies don’t bother with insurance because it is so ridiculously expensive.”
The decision on whether to take out cover lies with the client, as it is the client which pays, but usually the agency advises on and organises any insurance.
Of course, one way out of this expensive dilemma is listening to accurate weather reports. Noble Denton Weather Services is used by 150 film companies which want accurate, five-day forecasts.
To test this accuracy, last Friday Marketing Week enquired about weather for the coming week. So if last Tuesday (yesterday) London had a north-north-easterly wind of force three to four, with half to three-quarters cloud cover in the morning and brightness in the afternoon, then we know that weather prediction is a viable option.
If it wasn’t, the 70 per cent of outdoor shoots which do not take cover, and instead take a gamble on increasingly turbulent weather, could be right. Alternatively, agencies could start writing more moody ad scripts which require wind, rain and frostbite to sell their products.