Joe Finnegan isn't afraid of animals. At least not personally.
But as vice president of the entertainment division at insurer Fireman's Fund, he became alarmed when he saw what director Sean Penn had in mind for Into the Wild — the poignant film released last year about a young man who abandons his middle-class life and treks to Alaska to become one with nature.
In addition to the film's potentially hazardous shots among cliffs and whitewater rapids, Penn needed a bear.
"Wild animals are called 'wild' for a reason," Finnegan says. "When you put them around people, anything can happen. There's an old saying in the underwriting world: Horses and actors don't mix."
That's why the largest insurer of Hollywood movies — in a playful annual exercise to attract attention on the eve of Sunday's Academy Awards — deemed Wild to be the riskiest film of 2007.
When it comes to taking chances, though, few in Tinseltown place more important and unusual bets than the small army of actuaries who insure studios and financiers from any number of potentially devastating losses.
Most independent producers and even some big studios won't touch a film unless it's insured against potential problems including production delays from injured or incapacitated actors, bad weather, equipment breakdown or damage to essential elements of a film.
On a flick with a $100 million production budget, which is common for potential blockbusters, "If an actor gets sick one day and is unable to shoot, it's a $1 million claim," says Finnegan. "It's not an inexpensive, low-exposure business. It can be quite high hazard."
Cast coverage can account for about 1% of a film's budget and carries a deductable equal to about one day's worth of shooting. Major studios often buy an annual policy that covers several movies and supplement it if a particular film needs special attention.
Independent films need to have these policies to land a different kind of protection, called a completion bond, that compensates backers if the movie doesn't come in on time and on budget. These bonds can account for an additional 2% of a film's costs.
Providers "would not bond a film that did not have insurance," says Gene Williams, worldwide entertainment manager for Chubb Commercial Insurance. "But it is very common for a film with no bond to still have insurance."
It takes a lot of experience to evaluate a film's potential risk, which is why only a handful of companies compete for the estimated $200 million Hollywood spends each year in premiums. In addition to Allianz Group's azFireman's Fund, major providers include Chubb cb, Travelers trv and HCC Insurance Holdings hcc.
Coverage usually has to be tailor-made for each production, as well as changes that affect the entire entertainment industry.
This month, Fireman's Fund introduced its first policy to protect some producers if the Screen Actors Guild goes on strike, a possibility in late June.
In addition, Chubb this week introduced coverage for problems that occur after the initial shooting ends such as damage to hard drives used to store digital images, computer viruses and communications breakdowns. "It was a long-overdue updating and ended up being a more revolutionary change than we originally intended," says Williams.
A delay that involves today's pricey computer effects, and the small pool of programmers who know how to create them, can cost hundreds of thousands of dollars a day, he says.
Insurers also need iron nerves to devise policies for some stars who are known for their erratic conduct and lax attention to health.
"An actor who's been in and out of rehab and has a historical problem on the set is going to cost a lot of money and a fairly hefty deductible," Finnegan says.
Because his firm requires everyone it covers to go through a medical exam, "I know the reliability of every actor in the business."
One possible exception is Robert De Niro: Fireman's Fund sued the star of Taxi Driver in 2006, alleging that he misrepresented his health in 2003. He was diagnosed with prostate cancer two days after filing a medical certificate with the insurance company and three days after he underwent a biopsy. The diagnosis led to a four-month delay in the filming of Hide and Seek, and a payout of more than $1.8 million.
Fireman's says that the information "was critical to our decision to offer insurance coverage." De Niro spokesman Stan Rosenfield says the actor "did nothing wrong." The case is scheduled to be heard in California state court in March.
That claim pales next to the $10 million insurers paid after comic John Candy died of a heart attack during the filming of the 1994 film Wagons East, which had to be rewritten and completed with stand-ins.
As insurers try to gauge risk, they sometimes wield as much power as producers and directors.
Woody Allen said in the book Conversations with Woody Allen by Eric Lax that he couldn't hire Robert Downey Jr. for the 2005 film Melinda and Melinda because no insurance company would cover him after repeated problems stemming from substance abuse. Downey has since re-established his career.
Actress Nicole Kidman faced a problem after insurers paid $3 million for production delays when she hurt her knee working on the 2001 film Moulin Rouge. The knee problem resurfaced during the filming of Panic Room, which led to a costly decision to bring in Jodie Foster to replace her.
When insurers balked at covering Kidman for Cold Mountain, she landed the part by agreeing to put much of her salary in escrow — and use body doubles for scenes that might put stress on her knee.
But entertainment insurance companies aren't in business to say "no." Their biggest challenge is to figure out how to appraise unusual, even bizarre, risks.
"If there's enough time, talent and money, then anything's insurable," says Brian Kingman, director of strategic account management at brokerage firm Aon/Albert G. Ruben.
Insurers treat many of these cases as top secret for confidentiality reasons.
Fireman's Fund says, though, that it underwrote the Iowa cornfields needed for Field of Dreams, treasures at the Louvre when The Da Vinci Code was filmed there and even the thousands of rats used in Indiana Jones and the Last Crusade.
The company insured Pirates of the Caribbean against hurricane damage to costumes — which were protected in special containers — as well as the film's ship, the Black Pearl, when it sailed from the Bahamas to San Pedro, Calif., through the Panama Canal.
Bart's not just any bear
For last year's The Bourne Ultimatum, Fireman's Fund wrote a policy that considered potential medical problems at location shots in London; Madrid; Tangier, Morocco; Paris; and Riga, Latvia; as well as the chance that airport X-ray machines might damage negatives of the film.
And Into the Wild didn't involve just any bear.
"It was Bart the Bear. He's famous: In every bear movie you've ever seen, if the bear is trained, it's Bart," says the film's insurance broker, Christie Mattull, senior vice president of the DeWitt Stern Group.
"When an animal is trained, then it's more expensive to insure," she adds. "If you have a bear from the zoo, he's worth whatever a bear costs, maybe $5,000. But if a bear's trained to dance and pretend to attack on command, then he's worth $250,000."
What's more, because Penn likes to change shooting plans during a production, "I was constantly talking about where they were and what they were doing, and I'd have to renegotiate with Fireman's Fund."
But that was nothing compared with what had to be done for the 2002 flick K-19: The Widowmaker, starring Harrison Ford.
"We actually got a Russian nuclear submarine," Mattull says. "That submarine had to be towed from Florida to Nova Scotia for filming, and we had to insure that — it couldn't move under its own power — and make sure the tugboats wouldn't be sucked down if the submarine sank."