The Story Behind ASCAP's Affordable Insurance for the Music Industry
By Anne Freeman
One of the more daunting challenges facing ASCAP's membership, and most participants in the music industry, is finding affordable health, property, and liability insurance coverage to protect themselves, their careers, and their families in an industry not known for providing financial stability and insurance benefits.
ASCAP was determined to do something about this problem, and in 2000 created MusicPro Insurance® in partnership with the Sterling and Sterling Insurance Brokerage firm. MusicPro Insurance Agency LLC, which is a licensed insurance broker based in Woodbury, New York, now offers affordable and convenient insurance coverage through MusicPro Insurance® in the following areas to anyone involved in the music industry:
- Instrument and Equipment Insurance
- Studio Liability Insurance
- Tour Liability Insurance
- Travel Accident Insurance
- Health Insurance
- Life Insurance
- Long Term Care Insurance
Other insurances that may be available, depending on your state of residence or employment, include:
- Composer's Liability Insurance
- Homeowner's Insurance
- Renter's Insurance
- Automobile Insurance
- Small Business Insurance
- And more
ASCAP Senior VP of Marketing Phil Crosland recently spoke to songwriter and Editor in Chief of MusicDish's "The Aspiring Songwriter" column about how this all came about, who is eligible for coverage, and details about the various insurance policies that are available to all music professionals. The interview, excerpted here, can be read in full at www.musicdish.com.
The Aspiring Songwriter: Let's talk about a great benefit that is available not only to ASCAP members, but to all songwriters, publishers, musicians and other music industry professionals, and that is ASCAP's MusicPro Insurance®. How did MusicPro Insurance® get started?
Phil Crosland: Well, people such as yourself, Anne, are struggling with writing songs and getting them picked up. We asked, "How can we make your life easier? How can we help pave the way for success?" We offer a series of discounts and benefits that you wouldn't normally get because we represent over 200,000 songwriters, composers, and publishers. We have buying power that's amazing. This really sets that stage for MusicPro Insurance® because what happened is that in 1998, we launched the ASCAP Member Card. By the way, we had 65,000 ASCAP members when I joined. Now we have over 200,000 members, so the growth has been tremendous. One of the reasons, Anne, is because of the Internet. There has been a real opportunity to have your music performed. Prior to that, there were far fewer opportunities to have your music performed on radio, so we had far fewer members because of that.
GETTING THE WORD OUT: MusicPro ads have appeared in several major music magazines |
TAS: What was your first objective?
Phil Crosland: When I arrived at ASCAP, musical instrument insurance was the first issue to look at. Our musical insurance had maybe 100 people who had signed up for it. We offered it, but it was relatively unknown. The agency that was administrating it for us was Sterling and Sterling out of Long Island, New York. They are a top 50 worldwide insurance brokerage. They package custom deals, and there is a very entrepreneurial guy who runs it named David Sterling. The first time I met him, I asked him, "How can we get ASCAP members better insurance for less money?" He thought about it for a while and then he said, "You know what would be interesting? What if we started our own insurance company?" He said, "You have the music industry contacts through ASCAP, I have all of the insurance know-how, plus we have great relationships with some of the best insurance companies in the world." This was about four years ago. We formed a 50- 50 partnership with Sterling and Sterling. The interesting thing here is that ASCAP co-owns MusicPro Insurance®.
The first thing we did was to make a deal with The Firemen's Fund, which offers a $50 minimum premium for instrument insurance. Our competitors' premiums start at $300 - $500, so it's the lowest minimum premium out there. So we launched MusicPro Insurance® with the promise of better musical instrument coverage through the Firemen's Fund � it's a great policy � at the lowest rates available.
TAS: How does someone qualify for MusicPro instrument insurance?
PC: You have to be a music professional. Some portion of your income should be earned by music. If you are a member of ASCAP, you would qualify automatically. You would qualify, Anne, as staff of MusicDish. You are a music professional because part of your income comes from that. You could be teaching piano lessons on Sunday afternoons and you'd qualify as a music business professional. Somebody at Julliard, who is enrolled in an advanced music education program, qualifies. A music teacher at a school qualifies. A music professional is defined in the broadest possible way. What the Firemen's Fund asked us to do is to define a "music professional." That allows you to qualify as a music professional for this preferred rate for insurance coverage by the Firemen's Fund policy.
TAS: Let's say I am a typical aspiring songwriter. I don't have a CD that I'm selling, but I'm performing at local open mics, maybe pitching some songs to artists or publishers in the hopes of getting something picked up and recorded. Would I qualify as a music business professional for MusicPro Insurance® coverage?
PC: Absolutely. You are a music professional. The easiest way to qualify would be to join ASCAP, but ASCAP membership is not required for coverage. Let me tell you, though, what's involved. ASCAP is responsible for the marketing of MusicPro Insurance®. Sterling and Sterling is responsible for the insurance, the back office and the selling of the policies. We positioned MusicPro Insurance® as convenient and affordable insurance coverage for the music professional. That's our marketing position, that's what we are: we are convenient because everything is on the MusicPro Insurance® website, including the ability to pay for this insurance; we have an 800 number; you can e-mail; and we have a staff of five or six people who can deal with questions. It's affordable because of the reasons I've been articulating about this great policy. It's the most affordable insurance that music professionals can get. You just have to qualify, and you can do that on the MusicPro Insurance® website by checking off any number of things, such as you earn income, compensation or reimbursement of expenses in connection with performing, teaching, writing, producing or publishing music.
We started to market MusicPro and it occurred to me that we could spend a lot of money building a brand. I did take out some pages in the trade press to build the MusicPro brand. We started to run these ads and an interesting thing started to happen. Some music organizations called us and asked, "How can we get this for our members?" We decided early on we didn't want to restrict MusicPro Insurance® to ASCAP members. It could have been a great competitive advantage for us if you had to be an ASCAP member to benefit from this insurance. But, for two reasons, I didn't do that. Number one, and most important, the higher the risk pool you have in insurance, the lower the rates. So, if our objective is the most affordable insurance coverage for ASCAP members that I can possibly get, then I want to get everybody in music to buy a policy. Then the rates will keep coming down and we can really deliver on our promise.
The second reason is that right now we're breaking even on this. The idea was not to spend our members' money on building this company if we could just break even as we go. We're investing everything that we get. But once we start making a profit, and we're now over 3,000 policies, half of all the profit that comes to ASCAP from MusicPro Insurance® will go to distribution to ASCAP members, or it will offset our marketing costs, or something else like that. If we make a couple of hundred thousand dollars on MusicPro Insurance® as profit � since we are a nonprofit organization � that the profit will just go back to our members.
What's interesting here is that we're now endorsed by NARAS (the Grammy� People), we're endorsed by MENC, which is the Music Educators National Conference, which represents 80,000 music educators across the country. We are endorsed by Local 802 of the American Federation of Musicians here in New York, which is the number one local, and about 15 other music organizations, including BMI. BMI endorses MusicPro for its members.
TAS: What other insurance coverage does MusicPro now have in the offering for music business professionals, other than instrument insurance?
PC: We've expanded to cover everything from musical instruments and equipment, to studio liability, to tour liability, and more. Tour liability is very difficult right now. I don't know if you are aware of this, but if you are into Hip- Hop/Rap music and want to tour, it's almost impossible to get insurance companies to cover your tour because of the problems that some artists have when they are on the road. So, tour liability is custom work. Our MusicPro reps set that up with individual artists. Some other policies include:
Studio Liability: Studio liability is important because a lot of people have studios in their homes or apartments. They think that their studio is covered by their homeowners' policy. If something happens in the studio, they think that they're covered by the homeowners' policy. Not true. If you have a business in your home, it is clearly exempt by all homeowners' policies. So even if you're giving piano lessons in your home and student comes in and trips on your stairs and falls, you are liable and your homeowners doesn't cover it because you're earning revenue in your home.
Health Coverage: Health coverage is included, which we started about 2 years ago. Health insurance for an independent contractor is impossible. This country is in a terrible health insurance situation. We have at least 400,000 songwriters affiliated with the three performing rights organizations who have no coverage at all. These are people that we know don't have health insurance. It reflects what we're seeing on a national level in the U.S. Health insurance has just become so expensive for independent contractors; more than half don't have any health coverage.
Ideally, it would be nice for ASCAP to get group rates, but we would need 70-80 percent of our members to sign up for our health insurance to get group rates. If you don't do that, you get something that is called "negative selection." Negative selection means that if you go to any organization and say, "We don't care if ten or 10,000 of your members sign up. We'll take any ten or more. If they sign up, fine." Who signs up? People who can't get insurance anywhere else. It just blows the whole thing apart. You can't do that. You need a broad base of people to sign up. We can't get 70 percent of our members to sign up. Those who really need insurance may have a spouse that has insurance and they're not going to sign up with us. Or, they can't afford it, even with a group rate. People who are just starting out of college can't afford it, for example. So, what have we done about that? Well, we did the next best thing.
We make individual health policies available, but we make available a wide choice and we do it through something called "Ehealth Insurance." E-health Insurance is available on the MusicPro Insurance® website. We have a contract with them. They make available to music professionals the lowest cost policies in any market available in all but maybe one or two states. You go in and type in your zip code, your date of birth, and the number of dependents. Then you just push submit and you'll come up with about a dozen or two dozen options rank ordered by monthly cost from which you can choose. You don't have to put any personal information in at all. And, by the way, the MusicPro Insurance® website is completely encrypted and safe, as you would expect from ASCAP. We're very conscious about security.
Is the health insurance coverage perfect? No. It's still expensive. But at least you can go and say, "I want major medical coverage. I'm reasonably healthy and I have a family. I don't need a ten or twenty percent co-pay from a company. What I need is coverage for anything over $2,000." So, instead of paying $500/month for a more complete policy, you might pay $80/month for specific coverage. Our members and MusicPro Insurance® customers have found it a real value and are signing up for it. I don't want to misrepresent this, however. You could go to E-health Insurance as an individual and for the most part, those policies are going to be available. We're doing it as a service so that music professionals know that the service is there. It's a quality company � we've checked it out and we've put our name behind it.
Personal Accident Insurance: If people have nothing else, they should be carrying accident insurance. If somebody is in their twenties or thirties, chances are that they won't be falling ill, but they might have an accident. So, that is something they should cover and it's really inexpensive.
Long-term Care: Long-term care is one of the fastest growing insurance programs available today. Long-term care responds to the gap between Social Security, Medicare and Medicaid payments, and the reality of what it's going to cost, should you � God forbid � become incapacitated. If that were to happen, you have, basically, two choices: either bring someone into your home to care for you or go to a nursing home. No one really likes to think about it, particularly young musicians, but the reality of it is with the cost of nursing homes being $20-30,000 a year and in the New York/tri-state area, it's horrendous.
People say, "Well, the government will probably cover that for me." Medicare covers none of it. Medicaid does, but in order qualify for Medicaid, you have to be at the poverty level. What happens is - and I've seen many families go through this - if you have to go to a long term care facility, any assets that you've built have to be exhausted first. That's your savings, your investments, the value of your home, everything goes, and then you can qualify for Medicaid. So, you virtually have to declare bankruptcy and then you can qualify for Medicaid. Then you have to go into one of these state authorized facilities, which you wouldn't want to go in. I don't want to make this a really grim thing, but I signed up for my own group plan as an employee of ASCAP for long-term care. We have a program through MusicPro and we've had success in people signing up for longterm care.
TAS: Does ASCAP currently have any services for things like financial planning to help people make decisions about what insurance coverage they might need? For the working musicians who are trying to decide how to spend their hard earned dollars, and if they don't know which insurance coverage to select, how can they get help? If they don't make enough income to purchase all the insurance coverage they'd like, how do they choose which insurance coverage is the most important for their career and family?
PC: That sounds like a financial planner function. There are two ways to approach this. We have in our benefits program for ASCAP members an East Coast financial planner and a West Coast financial planner. They are both current, part-time musicians. They understand the challenges. We make that service available. Our financial planners are a great resource about the kinds of financial questions that musicians would ask. How to protect your income? How to invest your income? What kinds of things should I be aware of? What I like about our planners is that they are not trying to sell; they're trying to do what's right for individual people. I think they are quite good. I would recommend them. Also, talk to our representatives at MusicPro Insurance® in terms of what kind of coverage do you really need. Our insurance reps have insured everything from a Rolling Stones tour to people earning ten bucks a year from their music. They are not trying to sell more coverage than you need.
TAS: This sounds like a great opportunity for your ASCAP members, and for musicians, songwriters and others in the music business in general, because you don't have to be an ASCAP member to participate in these benefits.
PC: It's a great opportunity not just for ASCAP members, but for music people everywhere. That is the message I'd like to get across. The other thing that I would love to get across is that this is part of ASCAP's initiative to really benefit ASCAP members, and that's the driving force behind it.
For more information, visit www.musicproinsurance.com.
Anne Freeman is an ASCAP songwriter and Editor in Chief of MusicDish's
"The Aspiring Songwriter" column. Visit www.musicdish.com.
