Kerry London News

Film Completion Bonds: Guaranteeing Film Production 

Thursday 26th May
Film Completion Bonds: Guaranteeing Film Production 

Our Film Insurance experts had a great time at the 75th annual Cannes Film Festival 2022. Cannes is considered one of the most prestigious film festivals globally. After their movies performed well at the festival, it influenced the launch of many influential filmmakers’ careers, including Quentin Tarantino and Guillermo del Toro.

Like most film festivals, Cannes is where producers and filmmakers bring their movies to secure funding and distribution. A film completion bond is an important step to getting an independent film on the festival circuit and sold to distributors because it’s a financial guarantee for investors. 

Competing for talent and investment 

Demand for filming facilities from Hollywood and streaming platforms such as Netflix has fuelled investment in the UK film industry and presents more opportunities for film makers. The drive to produce quality content has boosted the expansion of existing studios such as the UK’s flagship Pinewood and 20 new sites across the country. Research property firm Lambert Smith Hampton predicts the UK’s film studio space could grow significantly larger than Los Angeles. 

Streamers are being drawn to the UK because of the film and high-end television tax credit system, which allows producers to claim back up to 25 per cent of their UK overheads (capped at 80 per cent of the overall outlay). Introduced in 2007, the aim was to keep big productions like the Harry Potter franchise in the UK. Whilst this presents more commissioning opportunities for independent films, other pressures such as intense competition for studio facilities, crew, and acting talent means the pressure to have secure funding in place is even more important.  

Ben Roberts, CEO of the BFI.  “I think that the streaming services have definitely had an impact on the well-understood distribution model for a film, which is upsetting the typically understood value chain of how a film reaches an audience and how you finance a film against that value chain.” 

Production risk management 

The last few years have proved difficult for film production. Many issues have impacted schedules and caused delays, most notably the pandemic, but other issues can occur, such as the death of an actor or celebrities injuring themselves on set. Losing an actor during production can change how a film moves forward and delay filming schedules. The impact of Carrie Fisher’s untimely death during the filming of The Rise of Skywalker was a huge and devastating loss.  

A film completion bond is a safety net for film producers and investors because it covers issues such as delayed delivery and exceeded budgets. Bonds are an insurance policy that a producer takes to investors, lenders, and distributors, to guarantee they will deliver the film according to plan or their money back. Filmmakers that secure loans will almost always require a completion bond to release funding, so it’s essential to get one in place as early as possible. The budget threshold for bonded films ranges between £2m up to £50m for larger independent productions.  

When is the best time to bond your film? 

In most cases, it’s best to seek a bond well in advance, several months or a year before principal photography begins. Once onboard, film bond companies provide expert guidance in preparing a film for production, post-production, and eventually delivery. However, certain aspects ought to be prepared beforehand. Bond companies require production documents, core crew and actors, and the financial package to be arranged before they can organise cover. 

The 5 stages of bonding a film: 

  1. Initial approach through the broker 
  2. Due diligence of production documents 
  3. Underwriting the insurance 
  4. Monitoring the production 
  5. Delivery of the production

The top-grossing UK independent film in 2021 was The French Dispatch (£4.6m), which undertook some of its production work in the UK. This was followed by The Hitman’s Bodyguard (£3.8m) and Spencer (£2.8m). People Just Do Nothing, Big in Japan (£2.3m), completed the independent Top 5 lineup.

How long is the film covered for? 

Typically, film bond liability begins when the due diligence has been completed, the insurance is in place, and filming begins. Bond liability ends when the film is delivered, funds are unlocked from distribution deals, and lenders are repaid.   

How does a bond partner help during filming?  

A film completion bond company will monitor production closely to ensure it is on schedule, within budget, and key crew members are operating effectively. They can also resolve unforeseen issues and work with producers to get back on track. Having a bond is particularly helpful when the production runs into any issues or if an accident occurs. 

What type of productions can get a completion bond? 

All kinds of audio-visual Productions can benefit from a Film Bond: 

  • Feature Films 
  • TV Films 
  • TV Series 
  • Mini-Series 
  • Animation Features 
  • Animation Series 
  • Documentaries 

Short films, commercials, music videos, and video games are excluded.

The combined total spend on film and high-end television (HETV) production in the UK for Q1 2022 was £1.85 billion (from 104 productions). This is the highest spend on record reported for the Q1 official statistics period and the second-highest combined spend of any quarter on record (behind Q2 2021).

BFI’s Research and Statistics Unit

Kerry London offers film completion bonds to cover film projects and investments ranging from the smallest budget to high-level, high stakes productions. Visit our site, or get in touch with our Film, Media and TV experts for further advice.

Kerry London is authorised and regulated by the Financial Conduct Authority. The company is a leading UK independent and Lloyd’s accredited broker, which means that we work with a wide range of niche and major insurers.

This note is not intended to give legal or financial advice, and, accordingly, it should not be relied upon for such or regarded as a comprehensive statement of the law and/or market practice in this area. In preparing this note, we have relied on information sourced from third parties, and we make no claims as to the completeness or accuracy of the information contained herein. You should not act upon information in this bulletin nor determine not to act without first seeking specific legal and/or specialist advice. We and our officers, employees or agents shall not be responsible for any loss whatsoever arising from the recipient’s reliance upon any information we provide herein and exclude liability for the content to the fullest extent permitted by law.

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