Producers and writers weren’t the only ones negotiating during the run-up to last week’s writers’ strike insurance companies were trying to make deals over customized strike coverage for the studios, too.

Brian Kingman, managing director of the Westwood office of Aon/Albert G. Ruben Insurance Services Inc., spent months haggling over “special circumstance” coverage for independent producers and some of the major networks before the strike. The same types of talks are now starting for feature film productions that could be affected by the writers’ strike.

Insurance doesn’t cover production delays due to strikes, but could kick in under special circumstances: when a covered problem causes a delay that pushes the schedule into the strike period.

Examples of covered problems could include an actor’s broken leg or a technical glitch.

The labor action began last week after producers rejected writers’ demands for increased residuals tied to online use of their work. Producers were asking to cut residuals, not increase them. The strike halted production of television shows such as “The Office” and “Desperate Housewives.” Late night talk shows went into reruns.

As the threat of a strike loomed early this summer, Kingman got to work hammering out deals between the various insurance companies, studios and producers he works with to cover potential events.

Kingman organized the talks as a broker. He wrote policies for several television shows and films and is in discussions for others.

Highly unusual

The special circumstance insurance kicks in only in unusual situations.

Should a hot actor of the moment, for example, break his neck while working on an episode of his hit network show two weeks before the strike deadline, production wouldn’t be able to resume until well after the walkout had begun.

“There is still a completely exposed budget at risk,” Kingman said. “We will go to underwriters and ask them to acknowledge storage and security of equipment, do inventory and the like. Are they willing to do it? Yes. They may charge more money in the way of overall premium, or they may just be sympathetic to clients.”

The special circumstance arrangements would cover set inventory and storage until production can resume. Those costs can total up to $1 million a month depending on the size of production. The companies would continue charging the blanket premiums, but could waive funds for secondary coverage.

Kingman expects other brokers and insurers to adopt similar arrangements. The key, he said, is negotiating the contingencies among all parties well in advance.

He’s already started to negotiate similar deals for feature film producers and independent studios in the case of a Screen Actors Guild or Directors Guild strike next year. The two unions’ contracts expire at the end of June.

The writers’ strike could affect the outlook for the actors and directors.

Nick Counter, chief negotiator for the producers union, has said he expected a long standoff with the writers. No negotiations were scheduled at press time. Writers said the next move was up to the studios.

Some underwriters said that special circumstance strike coverage, while still rare, would be looked at on a case-by-case basis for clients.

“We will look at anything our production companies need to cover their exposures, including unique one-offs like certain components of strike contingency,” said Joe Finnegan, vice president of entertainment for Fireman’s Fund Insurance Co. at the company’s Universal City office. “We would do it for the right price for us, clearly. We are a profitable insurance company, that’s why we’ve been in the entertainment industry so long.”

Finnegan said the company, which insures nearly 75 percent of all films in the United States, is presently working on a strike insurance product. He wouldn’t disclose specifics.

The networks and studios would be the beneficiaries of these new coverage elements.

“Clearly, everybody is getting hurt because of the strike,” Kingman said. “But this coverage gives producers some comfort that if everything is planned right and they think they can get things finished but something unexpected happens, they are covered.”

Later deals will not include those productions that have planned completion dates after the DGA and SAG contracts expire, Kingman said.

Plus, a long-term strike could hurt the insurance players, especially those like Fireman’s Fund, which derives 40 to 50 percent of its business by providing production polices.

“Duration is the key element for us as business folks,” Finnegan said. “You can’t just be beholden to the film industry because of events like this that could impact business in catastrophic way.”

The strike began early Nov. 5 after last-minute negotiations between the Writers Guild of America and the Alliance of Motion Picture and Television Producers broke down over key issues, such as writers’ payment when their shows are available on the Internet.

Writers in Los Angeles and New York started picketing the studios on Monday.

The last WGA strike took place nearly 20 years ago in 1988. It was a five month walkout that cost the industry an estimated $500 million or more.

Jack Kyser, chief economist for the Los Angeles Economic Development Corp., said that the development of strike contingencies in some insurance polices left him uneasy.

“This is somewhat unsettling because it would indicate that the studios are expecting this to be a long walkout,” he said. “Insurance may be coming out on top here for now no matter what, but if this drags on it will be nasty for everyone and reverberate throughout the local economy.”