The Association of Independent Commercial Editors (AICE) has determined that the majority of its member companies have negative insurance, a policy which covers the film negative from the time it is received by the editorial house until final delivery. This coverage emerged as a viable option earlier this year (SHOOT, 5/14/99, p. 1), and was born out of talks among representatives of the AICE, the Association of Independent Commercial Producers (AICP) and the American Association of Advertising Agencies (4A’s).
An AICE national survey found that some 55 percent of its editorial company members currently have the coverage. AICE/East led the way with 75 percent of the chapter’s shops carrying the insurance policy. AICE national executive director John Held, who conducted the survey, noted that 40 percent of Los Angeles chapter companies had
negative insurance, as compared to about a third of Chicago chapter houses and approximately half of member companies in the San Francisco and Dallas chapters. Held said that more editorial shops are coming on board the negative insurance bandwagon, and he expects the percentages to increase significantly in the coming months.
National AICE board member Mitch Garelick, controller at Horn/Eisenberg, New York, affirmed that negative coverage is prevalent among New York editorial houses. Garelick, part of the aforementioned core industry team that conceived of and helped develop the insurance, said that agencies and clients have embraced it for the added protection and reasonable pricing. He noted that the policy clears up an ambiguous scenario where there could be a lapse in negative insurance coverage during postproduction. Some contend that the typical production house policy actually provides total negative insurance coverage until final delivery. But that has been subject to debate in recent years as chronicled in SHOOT. The perception that there might be a gap in coverage was heightened with a New York State Department of Taxation ruling in early ’97 that permitted direct payment by the ad agency to the editorial company (instead of an editorial shop having to be subcontracted and paid by the production house).
"The 4A’s has done an admirable job of getting the word out to its business people," said Garelick, noting that he isn’t aware of any New York agency questioning the validity of the additional charge—usually amounting to a few hundred dollars—for the insurance protection.
"Many ad agencies are embracing it [the negative insurance] because it eliminates concern over possible exposure," related AICE/East board member Bob Friedrich, who was also part of the AICE contingent that worked with 4A’s and AICP representatives to come up with the negative insurance option. "Their negative is completely covered from start to finish."
Cover Me
Friedrich, who is CFO of First Edition, New York, added that the number of insurance carriers offering negative policies has also grown. "Originally, no one offered the coverage; then [there was] one carrier," recalled Friedrich. "Now there are three or four [insurance companies] that are all competitively priced."
National AICE VP and Los Angeles chapter president Greg Laube, editor/partner in Brass Knuckles, Venice, Calif., said that Southern California shops are just beginning to examine negative insurance. "There’s been more of a wait-and-see attitude, since agencies aren’t asking for it as much out here as they are in New York. But my guess is that after the first of the year, it will start kicking in. Our company is tracking it and the cost factor is very reasonable for the client. I know our company will be buying the coverage."
The percentage of Chicago houses carrying negative insurance is also expected to rise. Phone calls to national AICE president Jeanne Bonansinga, editor/owner of Edit Sweet, Chicago, and AICE/Chicago president Tim McGuire, editor/principal in Cutters, Chicago, had not been returned at press time.
A couple of sources noted that some Midwest ad agencies aren’t immediately embracing the negative coverage. Among those are agencies that carry or agencies whose clients carry blanket insurance that includes full negative protection. Thus they have no need for the editorial house to carry optional negative insurance.
One veteran editorial house executive conjectured that in those cases where the advertiser and/or agency is carrying a blanket (also known as a wrap-around) insurance policy, it might make sense for the editing company to get a hold-harmless indemnification letter from the agency or client on the off chance something goes wrong with the negative. Production companies have been able to obtain indemnification when working on spots involving blanket insurance. As earlier reported, when blanket insurance started to emerge, the AICP developed an agreed-upon indemnification language in conjunction with those companies carrying wrap-around policies.
