Question

First, read the article “Copyright Lawsuit Boom."

The amount that an insurance company charges for a policy is known as the “premium” of the policy. When an insurance company sells a policy to a certain type of customer, it sets the premium so that the expected future payments to the policy holder as a result of his or her insured losses are not more than the amount of premium collected from the policy holders over the period. For example, if a company is selling fire insurance to homeowners, to stay in business it must be the case that, on average, the amount collected from all the policy holders in premiums each year is greater than the amount paid out to the few policy holders that experience house fires that year.

The same principle governs the premiums for the insurance that protects singers and songwriters from losses due to copyright infringements suits. The premium charged for these policies must be high enough to cover the expected payouts to the policy holders who lose or pay to settle copyright infringement lawsuits.  The future expected payouts to an artist will depend on the probability that the artist is sued (call that P_s), the probability that the artist loses the suit (call that P_L) and the expected award to the plaintiff (call that EA), which depends on the amount of money that the artist being sued has made from the song.

Given this information,

a. Give one reason why the “Blurred Lines” decision has caused the premiums for E&O insurance to rise in general.

b. Give two reasons why more successful singers and songwriters are charged higher premiums for E&O insurance.

Answer 1

Answer:

Blurred Lines” Song by Robin Thicke featuring T.I. (Clifford Harris Jr.) and Pharrell Williams was the famous song released in 2013 .Drumming was said to be the inspired by the Marvin Gaye song "Got to Give It Up" gave rise to the legal dispute as to the copyright infringement and made  liable for copyright infringement by a federal jury in March 2015, and Gaye was awarded credit based on the royalties pledged to his estate nearly $5 million judgment

E & O (Error and ommission or professional Liability Insurance)

Blurred lines Judgement has caused to the insurance expenses of E & O insurance rise in general .As the Blurred lines song case had awarded the $ 5 Million Compensation to the singers for copyright infringement which was historic amount .This made Insurance companies to rise their premium to cover future uncertainties of this nature to arise .

Answer:2

More successful singers and songwriters are charged higher premiums for E&O insurance:-

1. The reasons being the more successful the singer is the more copyright infringement award will be announced by the judge to him as he must have spreaded that infringed work in wider society so to cover high uncertain cost the premium from such successful singer is charged higher

2. The certainty also increases of error and ommission of copyright infringement by such successful singers as these singers perform at wider level .This could also be the reason of high charge premium from such singers.

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