The entertainment giant could find itself struggling to cover the cost of the massive losses from its film.
Although large corporations like Sony need to purchase coverage in order to be able to protect themselves against a tremendous range of different types of risks, an insurance news story is one of the many developing issues resulting from the cancellation of the release of the film called “The Interview.”
It has been reported that Sony stands to lose about $100 million as a result of the movie’s cancellation.
Sony decided not to release the comedy film as a result of hacks that it experienced and threats that it received to the theaters that chose to play it. The movie is based on a fictional story that was meant to be a comedy in which an assassination of Kim Jong-un, the North Korean leader, was attempted. The reason that this makes insurance news is that as the company chose not to release the movie, in order to prevent disaster – instead of waiting until disaster had struck and then making a claim – it makes the situation challenging to classify in coverage terms. This, according to the Gallagher Entertainment managing director, Brian Kingman.
This type of insurance news is a new one and tests new waters in the area of cyber terrorism.
According to Kingman, “These are unchartered waters we are faced with in the new world of computer terrorism.” He, himself, did not have any firsthand information with respect to the insurance practices at Sony. However, he also stated that “I don’t believe there is any insurance covering the voluntary withdrawal of the film from the marketplace.”
As Sony made its own choice not to release the movie to theaters, it will make it more challenging for the company to be able to try to collect under the protection that it has against terrorism. The reason, said Kingman, was that there must typically be “some damage to property,” in order for that coverage to apply.
The angle that Sony will likely try to take when making its claim could also involve its extortion insurance protection. That said, this could also present a challenge as media reports have suggested that government officials did not apply any credibility to the threats against the theaters that had intended to show “The Interview”.
At the same time, this insurance news likely won’t extend to the theater owners, themselves, as the odds of their facing a loss from the cancellation of this film, since they can easily choose another movie to fill the void left by the cancellation of the release of “The Interview”.