DeWitt Stern at 110

With risk a hallmark of entertainment production, the insurance brokerage has plenty of business.

Earlier this year, producers of "The Loss of a Teardrop Diamond" were rushing to finish the film in time to make the Toronto International Film Festival. Shooting the adaptation of an original screenplay by Tennessee Williams in Alexandria, La., director Jodie Markell thought she had a key scene in the can.

Then disaster struck.

Kodak sent the filmmakers a special nighttime film stock for the scene. During delivery, airport security screeners put the raw stock through an X-ray machine. When looking at dailies, the filmmakers noticed the strange, bright colors indicative of ruined film. Everything they had shot had to be redone.

That's when Peter Marshall, a former Lionsgate and Trimark Pictures executive who is now senior vp at insurance brokerage DeWitt Stern, took a frantic call.

"When clients are in trouble, like what happened in Louisiana, that's where we shine," Marshall says.

He quickly became a go-between for "Teardrop" producers and the film's insurance underwriter to make sure the production had both the money and a plan to reshoot. Complicating matters further was a tropical storm lurking off Louisiana's coast. But the film was completed in time for Toronto, says Molly Mayeux, a line producer.

Risk is a hallmark of entertainment production, especially as budgets continue to climb. As a result, the role of insurance companies -- Fireman's Fund, Chubb, Travelers, and HCC Insurance Holdings -- has grown exponentially in recent years.

That's where middlemen like DeWitt Stern come in. The privately held brokerage, which is about to kick off its 110th year, has become a Hollywood player in its own right.

Specialists review claims, lawsuits and developments such as airport security procedures to advise clients on the type of insurance policies they need. After meeting to discuss a film's budget, they then negotiate with insurance carriers for the "broadest coverage for cheapest price," firm owner Jolyon Stern says. And when disaster strikes, the firm leans on the carrier to make good on its policy.

"I like to think of (producing films) like opening wine," says Kirk D'Amico, president of Myriad Pictures. "One out of 11 bottles will be corked. DeWitt Stern tends to know what the insurance companies will do and how far they will go to settle the claim. These types of companies are crucial to the entire process and often unsung heroes in keeping small- and medium-sized companies alive and not falling into black holes."

The number of black holes that can threaten a production is breathtakingly large. Producers insure against cast injuries, equipment malfunctions, kidnapping, political interference, the outbreak of disease, car crashes, intellectual property lawsuits and much more. Suzy Wozniak, senior product manager for new business at Fireman's Fund, says coverage ranges from $3 million to $200 million per picture and that deductibles cost anywhere from $25,000 to $1 million.

"These are not cookie-cutter policies," Marshall says. "They involve a great deal of negotiation to get the right terms."

The involvement of brokers (or "risk management specialists," as they sometimes like to be called) rarely ends when the insurance policy is signed.

"We recently had a situation where an actor wanted to bring his $1 million Lamborghini onto the set," says LeConte Moore, managing director at DeWitt Stern. "I heard about it on Friday at 4:30 p.m. and spent the weekend figuring out how to get this car insured."

When claims are made, insurers often push back. But Marshall says that if a broker has done his or her job, the claims process isn't as contentious as often perceived.

"Many people have a vision of insurance that it's stupid, the less the better, and that you can buy it from a reptile," says Marshall, referring to the popular Geico Insurance ads. "The good insurance companies are the ones that exist to pay claims and the bad ones are built to avoid claims, and we're here to tell the difference."

DeWitt Stern has only recently emerged as an important player in film and television circles. For decades in Hollywood, one insurance brokerage firm -- Aon/Albert G. Ruben -- was dominant.

But the strength of Aon and the industry's No. 2 go-to brokerage, Marsh & McLennan, have taken a beating in the past few years over a practice called "tying." Brokers like Aon and Marsh service corporate clients, yet it's insurers like Chubb or Fireman's Fund who actually dole out commissions to brokers. In recent years, officials like Eliot Spitzer, the former governor and attorney general of New York, have investigated whether brokers steered clients to particular insurance firms to squeeze extra fees and business.

The "tying" charges didn't directly involve the entertainment industry, but the resulting attention from state regulators and lawsuits from stakeholders impacted both Aon and Marsh. Subsequently, many of these firms' top executives, including those whose primary area of focus was entertainment, departed for smaller firms.

DeWitt Stern took some key executives from Aon and Marsh, and it is one of several new insurance brokerage players that have suddenly found opportunities in Hollywood. DeWitt now competes head-to-head with a new generation of boutique firms like Gallagher Entertainment.

"Aon's meltdown has given a sleepy mom-and-pop shop like DeWitt some ability to pick up some steam," says Brian Kingman, a former managing director at Aon, now at Gallagher. "There's only a few people who do this, but they've been spread around now."

The company, founded by DeWitt Stern Sr. in 1899, first began thriving by convincing insurance companies like Fireman's to expand coverage to people who were not part of the Blue Book, a directory of high-society individuals. A generation later, the firm passed to DeWitt Stern Jr., but it wasn't until grandson Jolyon got involved in 1963 that the firm started to notice entertainment.

Fresh out of college, with an interest in arts, Jolyon saw Broadway as a realm that could benefit from more insurance. His father warned him to steer clear of showbiz.

"He told me not to get involved with theater people because the first thing they'll ask you is whether you can invest in the show," Jolyon Stern says.

Jolyon decided to go the theater route anyway. His first client was Gene Walsh, the general manager behind shows like "Lion in Winter" and "The Impossible Years." Jolyon went to Fireman's Fund to ask for a nonappearance policy on "Impossible" star Sam Levene and was quoted a $600 deductible on a $10,000 policy.

"By luck, they quoted me half of what they should have," Jolyon says. (It costs more than $25,000 to insure a Broadway show now.)

Over the next few decades, DeWitt Stern became the theater world's go-to insurance broker. Today, DeWitt Stern negotiates more than 80% of all of Broadway's insurance policies.

On top of that, the firm's clients include Carnegie Hall, the American Ballet Theatre, the New York City Opera, the Brooklyn Academy of Music, and most of New York's most prestigious cultural institutions. As a starting point, these organizations take out "civil authority" policies, covering any unforeseen social calamities that shut down streets and theaters (a policy that helped the theater world recover from the aftermath of 9/11). They also take out nonappearance policies that cover the financial harm suffered when lead actors and actresses can't perform.

Experience in the theater world has enabled DeWitt Stern to jump on the missteps of Aon and Marsh to establish a foothold in film and TV.

In the last five years, the firm has opened offices in Los Angeles, San Francisco and Chicago. It recruited Moore from Marsh, capturing a well-respected broker whose experience includes big prizefights for HBO, massive golf tournaments and every presidential inauguration ceremony since Ronald Reagan's. It also picked up Richard Eisenberg, a legendary insurance veteran from Aon, who has been in the business since the 1970s. Eisenberg's first project was 1971's "A Clockwork Orange," and he's reputed to have invented the "negative pickup."

The firm hasn't been without suffering. DeWitt Stern recently lost one of its top movie insurance brokers, Christie Mattull, who took with her some premium clients and capitulated some of the firm's momentum.

But overall, in the past half-decade, DeWitt Stern has captured remarkable growth, winning business from new clients including Time Warner, the Weinstein Co., Groundswell Prods. and a new animation company to compete with Pixar from Nike's Phil Knight.

Its recent success also might foreshadow a demystification of insurance in entertainment. The firm has hosted meet-and-greet "blend parties" for indie filmmakers and insurance executives at Sundance and Toronto. And it touts a "paperless workplace" designed in part to appeal to a film and TV world that prides itself on working quickly and keeping strict schedules.

"Brokers have always been afraid to introduce their clients to carriers," Marshall says. "But we thought that if we could establish shorthand and respect between those in the film world and those in insurance, we could help our clients navigate difficulties better when they find themselves in trouble."