Reference no: EM133362992

Case Study: Lady Gaga just wants to dance, but might previous bad romances with insurance providers prove her downfall?
Gaga, who will headline the Super Bowl halftime show on Feb. 5, reportedly intends to perform on the top of the dome that covers the NRG Stadium in Houston. According to the New York Post, event organizers are trying to figure out how to get her up there safely, while also having heart palpitations about what ensuring her stunt might cost. (Gaga's representative didn't respond to a request for comment, but the 30-year-old entertainer has teased fans with Instagram posts that show her preparing for the show
from a tented dance floor in her backyard.)
Most of the insurance companies would probably say "no way" to covering such a stunt, says Tim Gaspar, owner of Los Angeles-based insurance agency Gaspar Insurance Services. "Insurance companies are not in the business of taking risks, though it seems like they are."

The upside for daring policy providers is the higher premium they can charge. Gaspar estimates that Gaga's daredevil impersonation would likely run the show's producers between $100,000 and $200,000 in insurance fees. Even then, the least risk-averse insurers still won't cover Gaga if she decides to just get onto a helicopter and jump onto the stadium's fabric roof.

If Gaga hasn't decided how exactly the event would be carried out, that would also pose a challenge to insurers. "We usually get information about the show long in advance so we can work with creative," says Susan McGuirl, head of the North America entertainment division at insurer Allianz Global Corporate and Specialty, noting that everyone from weather forecasters to local health and safety authorities "interact to ensure anything like this goes off appropriately."

Gaga's audacious move to reportedly sing from the rooftops would be a break from last year's half-time show, when headliners Coldplay were panned for being too tame. And while Beyoncé's "Black Lives Matter"-inspired cameo grabbed headlines, it was seen as too political for one of the few mass-televised events left.

One of the problems with Gaga's potential stunt is that there's little actuarial history of what happens when an entertainer of Gaga's repute performs on a rooftop. Gaspar estimates that an insurer for a less risky Super Bowl Halftime show would likely charge about $40,000 for the approximately 30-minute event, with feet-firmly-on-groundeadliners costing $12,000 for $1 million in liability. The biggest concerns for insurers are usually cancellations due to the weather or workers' compensation, all of which insurers have plenty of data on and can price into their policies.

In-air performances and coverage of esoteric items like celebrity body parts are an entirely different story. Only so-called surplus line insurance providers, which operate out-of-state and whose fees aren't capped by local regulations, are likely to offer such policies. A syndicate of Lloyd's of London, the insurance marketplace that is known for covering celebrities' body parts, is a likely candidate to offer a quote for such a policy, industry insiders say. Allianz, which has covered the Super Bowl halftime show in the past, is also a big player. (Lloyd's wasn't available for comment.)

Gaspar, whose company insures events, says that daring agencies will require Gaga to follow the same safety regulations that apply to laborers working on skyscrapers. "They will require her to be in a harness and bolted to a structure 100% of the time, he says. "And they will want to know who made the harness and what it's bolted to."

The NFL told Forbes last year that it doesn't pay acts to perform, but only covers production expenses. It's unclear if that includes insurance.

Of course, Gaga's history with other insurers could make it harder for her to gain coverage. In 2010, Navigators Specialty Insurance Co. refused to pay out on Gaga's $3 million policies when she was involved in a $30 million legal dispute with her pre-fame producer.

Ultimately, insurance companies like covering people with "no history of insurance claims that stay under the radar," says Gaspar. "Her history could make a challenging situation a bit more challenging.

Questions:

1. Why were insurers reluctant to insure Lady Gaga against injury during her performance at the 2017 Super Bowl?
2. Based on what we learned this week, why would the resulting premium that insurers would charge for a stunt like this, be a high insurance premium?
3. What safety precautions were mentioned in the article?
4. Are there other precautions that you would recommend based on what you saw in the video of Lady Gaga's performance?