New Fraud Futures Market: “Insurance or betting against Hollywood Movie Flops”

Get ready i-bankers, traders, greedy aholes and big dreamers, a new futures market is coming. I predict there will be insurance and selling futures against Hollywood movie flop in the next two years. I smell lobbying for this one, more than likely its being brought to DC already.

HERE’S one for “The Hunger Games” crowd: What if, in that blood-tingling climactic scene near the Cornucopia, Katniss Everdeen (Jennifer Lawrence) had skewered poor Peeta Mellark (Josh Hutcherson) with a wayward silver arrow?

In the real world of Hollywood, questions just like that nag Paul Holehouse.

Mr. Holehouse, 63, isn’t some oddball “Games” fanatic. But he does play an unusual, and unusually high-stakes role in modern moviedom. His job is to ensure that, as they might say in “The Hunger Games,” the odds are ever in his company’s favor.

He is a longtime risk consultant for the Fireman’s Fund Insurance Company, the go-to insurer for the American entertainment industry. This 149-year-old company is best known for workaday automobile and homeowner’s insurance. But it has also carved a lucrative niche for itself in Hollywood and beyond.

The Fireman’s Fund, part of the German insurance giant Allianz, won’t insure against box-office losses — the Hollywood equivalent of a six-alarm fire. Not that “The Hunger Games,” which opened on Friday, is expected to fall flat. On the contrary: the movie, which cost about $80 million to make, could have opening-weekend sales of more than $100 million, far more than the first “Twilight.”

Mr. Holehouse’s job is to assess the risks associated with actually making movies like this — risks as varied as the health and habits of the actors to the dangers posed by the stunts, sets and locations. Even in the best of circumstances — a sweet romantic comedy, say — figuring out what might go wrong is daunting. But with “The Hunger Games,” a dystopian drama involving a futuristic fight to the death? Come on.

Lions Gate Entertainment hopes that “The Hunger Games” will vault it into the Hollywood big leagues. But even before the director, Gary Ross, began shooting the film, Mr. Holehouse had to do some serious risk analysis. (Neither Lions Gate nor the Fireman’s Fund would discuss the cost of the insurance, which for action movies accounts for as much as 4 percent of a movie’s total production costs, say studio heads and insurers.)

Mr. Holehouse traveled to North Carolina to check out the location, deep within DuPont State Forest. He took into account bugs, poison ivy, falling trees — anything that might pose a threat to the actors or the production schedule. He considered a chase scene across fast-running water, as well as the dangers posed by abandoned warehouses that were used as part of the set — and, of course, all swords, arrows and other weaponry.

Then there were the bears. When the movie’s location manager spotted a bear heading toward the set one day, the cast and crew were told not to bring food to the set.

“Over time, bears do find food and people,” Mr. Holehouse says. “We all had to drive off out of the property to have our lunch and dinner.” A park ranger helped keep the bears away.

OF course, insurance has been part of the motion picture business since the early days. Ben Turpin, a cross-eyed comedian remembered for his work in silent film, is said to have bought an insurance policy with Lloyd’s of London, payable if his eyes ever uncrossed. Betty Grable insured her legs for $1 million. Jimmy Durante took out a $50,000 policy on his nose.

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