When Britney Spears takes the stage this December for the first of a heavily hyped 100-show two-year residency at Planet Hollywood in Las Vegas, the loudest cheers may come from her insurance underwriters.
Along with the sound engineers and roadies who help stage a concert, insurance underwriters play a large role in making sure a star can get onstage and grab the microphone. Insurers are also key during those times when stars do not show and concerts get cancelled.
On Wednesday afternoon, a Los Angeles jury found AEG Live was not liable in the wrongful death lawsuit filed by the family of late pop singer Michael Jackson, in a case where lawyers in court papers had suggested the damages could exceed $1 billion.
The fact that AEG Live found itself at the centre of the wrongful death suit had sent shockwaves through the music world in past months, with concert promoters as well as well-known entertainment insurers like AON/Albert G Ruben and Lloyds of Londonexpected to beef up policies for acts they insure and potentially raise some prices.
Even though AEG was not held responsible, insurance experts believe the case has spurred the industry to re-think policies and find ways to prevent similar situations down the road.
The role of Conrad Murray, convicted for manslaughter for his role in administering a fatal dose of the surgical anaesthetic propofol to Jackson, is already prompting changes, say underwriters. In the future, the star or his promoter may be required to carry separate insurance on his entourage.
"The biggest stars all have doctors and their own staff," said Lorrie McNaught, senior vice president at Aon/Albert G Ruben Insurance Services Inc, a large entertainment insurance firm, which has handled many of the world's biggest tours over the last 12 months.
"If you have a security guard who winds up punching someone in the face or kills someone, who is responsible?"
"Is it the artist, the bodyguard, the promoter? I think promoters will require stars to indemnify their own staff," said McNaught. "Even if AEG was not held responsible, I still think this case will make attorneys find ways to tighten contracts."
An attorney for Lloyds of London involved in the Michael Jackson case declined comment for this story.
The price of premiums also may go up, according to one concert producer who did not want his name used. Currently, promoters pay 3 per cent to 5 per cent of the value of the policy, meaning that AEG paid between $530,000 and $875,000 for the $17.5 million policy it took out with Lloyds of London for Jackson's "This is It" tour.
AEG, which had initially sought to collect on the $17.5 million policy after Jackson's death cancelled the tour, dropped a claim against Lloyds amid revelations in leaked emails that show AEG executives were concerned about his stability ahead of his planned London comeback tour.
Insurers routinely send doctors to do medical exams - and occasionally hire investigators for background checks - before placing multi-million dollar policies for the stars.
After the Jackson trial, the reams of information they need will skyrocket, said Adam Steck, CEO of SPI Entertainment, who recently brokered a deal for an 18-show run by rocker Meatloaf at Planet Hollywood in Vegas, starting September 26.
"We're in a high risk business," said Steck. "The case will require artists to disclose medical conditions and the producer will need to insure and vet them properly, meaning more red tape. This could affect ticket pricing at the end of the day."
In its wrongful death suit against AEG, Jackson's family claimed AEG negligently hired Murray as Jackson's personal physician and ignored signs Jackson, who died in 2009 at 50 from an overdose of propofol, was in poor health.
AEG Live argued Jackson's prescription drug and addiction problems predated their deal and that it did not hire Murray or see he was a danger to the star.
Even though Lloyds didn't pay off on Jackson's death, legal and insurance experts say artists' coverage will now carry many more exclusions - specific instances of prior injuries, drug use and now perhaps negligence by staff that won't be covered - giving promoters and insurance firms an out from paying claims if stars do not fulfill obligations due to negligence by a person on the star's staff.
"There will be exclusions for personal assistants, doctors, anybody but the performer," said Jon Pfeiffer, an entertainment attorney in Los Angeles.
"If an assistant or professional does something wrong, the artist will go after the assistant and not AEG."
Insurers wound up settling with Spears after she sued a group for almost $10 million in 2005, after she was forced to cancel the European leg of a tour due to a knee injury.
Spears and her promoter had bought "contingency insurance" from several companies including Liberty Syndicate Management Ltd, French company AXA's AXA Corporate Solutions, one of the more common policies that cover abandonment, cancellation or postponement of a concert.
The companies initially refused to pay Spears for losses arising from the cancelled shows, claiming she failed to disclose surgery performed on her knee five years earlier.
Spears had passed the insurance company's required medical exam a year before the tour was to begin.
John Callagy, attorney for Spears in the case, told Reuters it became apparent the insurance companies were aware of her prior knee injuries from earlier insurance applications.
Mary Thompson, president of Las Vegas-based Capstone Brokerage, said she expects Spears probably bought "contingency insurance" for her Planet Hollywood residency but now it includes new stipulations following the pop star's widely publicized breakdown a few years go.
Tougher drug use monitoring and higher insurance pricing arose after 23-year-old actor River Phoenix died in 1993 of a drug overdose while under contract for two movies.
When he died, two insurance companies paid nearly $5.7 million to the producers of "Dark Blood" and "Interview With the Vampire," but then sued his estate in a federal court in Florida to get their money back, claiming he violated his contracts by lying when he said he did not do drugs.
The court ruled against the insurers, which then appealed the ruling. An appeals court in Florida then granted the Phoenix estate's motion to dismiss the insurer's claims, ruling the actor's death rendered his performance impossible, an event which was covered by the insurance policy.
"As a result of this case, the insurance companies became more careful about how they priced contracts and covered performers they deemed risky," said Zev Jacob Eigen, associate professor of Law at Northwestern University School of Law.
"The Jackson case stands to be another cause for recalibration in the industry because it impacts the same questions about scope of coverage and obligation to monitor behaviors of performers," said Eigen.
Stars themselves may be rushing to their insurance brokers as well. Performers like Spears often buy a "personal policy" to protect their "industry value" in case they can no longer perform. "Famous singers often insure their voices and you can only imagine the body parts that porn stars might be insuring," said Eigen.
"For a lot of entertainment professionals, this is a significant issue," said Thompson of Capstone Brokerage. "To protect their value, they may have to be willing to do a monthly drug screen, physical exams, random drug testing."
