Because a publishers liability policy primarily serves as a buffer for defense costs, a proliferation of media-related lawsuits will push pricing upward over the next few years.
In October 2012, popular media news blog Gawker published a two-minute clip from a sex tape featuring Terry Gene Bollea, widely known as Hulk Hogan, without permission.
Soon afterward, Bollea sued the company for $100 million in damages, claiming invasion of privacy, infringement of personality rights and intentional infliction of emotional distress. This spring, a Florida jury found Gawker liable—awarding Bollea $115 million and $25 million in compensatory and punitive damages, respectively.
Just three months after the verdict, Gawker filed for Chapter 11 bankruptcy and sold to Univision, closing the website.
For publishers liability insurance, Joanne Richardson, managing director, U.S. media at Hiscox, says the suit “put a chilling effect through the market.”
In the event of a media-related lawsuit against any organization, “a comprehensive media liability policy goes a long way in terms of managing expenses for the insured,” says Jason McDonald, senior underwriter – management and professional liability insurance at Philadelphia Insurance Companies. “By and large, these policies are about defense costs and claims expense coverage. We see a lot of claims that end up being damages-related, but a lot of the expenses we pay are all related to defense of said claims.”
The primary value of a publishers liability policy, then, lies in serving as a “buffer for those types of expenses and those types of lawsuits,” McDonald explains. “I’ve seen several cases of insureds who win the lawsuit, but bankrupt themselves in defense of it. You win the battle but lose the war.”
That’s why over the next two to three years, McDonald expects such lawsuits to push publishers liability pricing upward. “There are several factors [prompting increases], but one of the common denominators is that contemporary society is very litigious,” he says. “We see a lot of lawsuits for pretty much every type of wrongful act under the sun these days. That’s driving a lot of the claim activity on the insured side, and definitely a lot of claim expenses on the carrier side.”
Overall, factors that impact publishers liability pricing include a client’s loss history and any material changes in business operations. “Insurance companies are looking for well-run publishing entities that have a strong legal staff to properly vet content against copyright infringement or defamation,” Richardson explains. “Pricing is largely based on the genre of the content and the exposures associated with it.”
“As with most sectors, the market is soft and we expect pricing to remain fluid. However, premium levels for a certain risk can be fairly spread out,” agrees Diane McNally, senior underwriting manager – OneBeacon Entertainment.
For example, some of the new entrants to the publishers liability market have “more of a tabloid, sensational style,” Richardson points out. “Those are the trickier ones to get placed. In those areas, I’m seeing a little bit of a tightening in the market—there’s a lot more scrutiny around those type of risks.”
Further complicating the publishers liability insurance equation is the fact that traditional publishing risks like newspapers and magazines no longer dominate the space. In today’s increasingly digital age, the publishers liability market is broadening to include not only online news platforms like Gawker, but also any organization that publishes any kind of content—including on social media platforms.
What types of emerging risks are entering the publishers liability space? And how will publishers liability coverage needs change in response? Keep an eye on IAmagazine.com and upcoming editions of the Markets Pulse e-newsletter to find out.
Jacquelyn Connelly is IA senior editor.