The Michael Jackson death mystery continues to crescendo towards the expected announcement of his cause of death.  The announcement will have an impact on numerous level the most obvious is being any criminal liability. The announcement will also have an effect on both insurance coverage and civil liability arising out of his death.

It is being reported that concert promoter AEG spent well over $20 million in preparation for Michael Jackson’s 50-date run to have started July 13 at O2 Arena in London. The promoter sold about $85 million in tickets for Jackson’s comeback stand against an expected profit of approximately 115 million.

AEG chief exec Randy Phillips  has stated that AEG may  break even or make a profit regardless of the failed concert series. They have offered Jackson ticket buyers the choice of a refund or to receive the actual concert tickets as souvenirs in lieu of the full refunds. 

Insuring Jackson was not an easy task in itself.  With Jackson’s history of canceling concerts, AEG reportedly had trouble finding suitable insurance.  They were allegedly able to finally secure coverage for the first 23 million.

In order to get a better understanding of these issues I contacted one of the countries top producers of special events insurance.

James Chippendale is the President of  CSI Insurance Group.  They are the leading hospitality and entertainment insurance specialist in the country, placing coverage for some of the country’s top recording artists, live music venues, concert promoters, special events, nightclubs, bars and restaurants. This includes artists such as Ludacris, Busta Rhymes,Better Than Ezra, the Nation’s largest events such as Lollapalooza,Austin City Limits Music Festival and even President Obama’s Victory Party Inauguration.

What will be the primary liability and coverage issues with regards to the failed Michael Jackson concert series?

“Whether AEG had Key Man Insurance in place will be of prime importance.  AEG’s insurance carrier is no doubt anxiously awaiting the results of the toxicology report from the autopsy. The  ”key man’ insurance policy should cover accidental death. On the other hand, recovery of insurance proceeds is often prohibited  where  intentional, willful acts are involved.”

What is Key Man Insurance?

“Key man insurance is a sub-type of life insurance pout in place where one person’s skills and abilities can make an enormous financial difference”

Who Needs It?

“Key man insurance is meant to cover the company’s losses in the event of the death of a key employee or in the case of a concert the star performer or band member whose inability to perform would prevent the event from going forward.”

What Is It?

“Key man insurance is generally a term life insurance policy, with the length term being the time until that employee retires. The company pays the premiums on the policy and receives the death benefits if the key performer, Jackson in this case, unexpectedly dies.”

Will there be underwriting Issues?

“This again will ride on the results of the toxicology report.  The Insurer or insurers will no doubt be closely scrutinizing the AEG application for insurance.  They will be looking closely at all disclosed pre-existing medical conditions and drugs Jackson disclosed he was taking at the time of application.”

If the AEG insurance carrier believes there could be reason to deny coverage, what steps will they take?

“The first thing they will do and what they have probably already done is to issue what is known as a Reservation of Rights to AEG.”

What Is A Reservation Of Rights?

‘Reservation of Rights are common in the insurance industry.  It is basically a letter that would be sent from the insurer to AEG  putting them on notice that for a one or several reasons there may be no coverage for a particular claim under the insurance policy covering Jackson or other aspects of the concert.”

We have heard a  lot about AEG allegedly having coverage with “LLOYDS”.   Can you explain what Lloyds is and how it works as an insurer?

“A broker would place the risk with LLOYD’S.  In the case of the Jackson concert I believe it was Robertson Taylor.  The broker commission would be 20-25 percent”

“LLOYD’s is a network of syndicates  ( individual companies ) they each take part of the risk. An  example would be a company that needed 100,000,000 in coverage for a specialized risk that he could not obtain coverage for elsewhere.”

“Company A may take on the “lead syndicate” at 60 percent of the risk or 60k.  There could be dozens of companies below each taken on a small percentage of the risk.”

Why do companies go to LLOYD’s and not standard carriers for such coverage?

“There are only about 5 insurers in the United States that write this type of coverage. No mainstream also know as “standard market” insurer  would take this kind of risk. LLOYD’s  is the market of global choice for high risk events such as this”

Who would have insisted on a personal doctor for Michael Jackson?

“Either the insurance carrier, AEG or both”

My thoughts:

There also the looming issue of whether Michael Jackson died as a result of medical negligence.  More specifically, if he died as a result of the negligence of Dr. Conrad Murray who was allegedly hired by concert promoter AEG to monitor Jackson’s health.  This in itself will raise various insurance issues. If there was medical negligence, we will certainly see a malpractice/wrongful death suits against Dr. Conrad as well as other doctors involved.  We should also expect a suit AEG for negligence in the selection of and monitoring of  Dr. Conrad if the toxicology results so warrant.

My opinion? I am always leery of a “negligence by enabling” type  claim.  They always smell of an abrogation of personal responsibility.   When, however, you have licensed medical professionals involved the buck is supposed to stop there.  In my humble opinion, it is a treating doctor’s  ethical responsibility to put a stop to the prior medical enabling.  It was Dr. Conrad’s responsibility.  If he failed in that responsibility he should be held to the applicable standard, criminal, civil or both.

In the meantime, long after the  memory is gone the lawyers will continue to churn on….