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My knowledge of popular culture is at best limited – and quickly declining. I know who Kanye West is. That’s it. But despite my less than literate knowledge of popular culture, this story from the Washington Post perfectly illustrates why he should have had a captive:
Lloyd’s, the London-based insurance underwriter, is proud of its reputation as the company that “specializes in unusual risks.” They include: the legs of Betty Grable, Rudolf Nureyev, Michael Flatley and David Beckham; the breasts of Dolly Parton; the hands of Keith Richards and, moving away from body parts, the 69.42 carat diamond Richard Burton bought for Elizabeth Taylor.
The company’s vintage (founded in 1688) and its ye olde nickname (Lloyd’s used to be called “Lloyd’s of London”) gives it a special aura. Some call Lloyd’s “venerable.”
But Kanye West does not venerate Lloyd’s. He and his company, Very Good Touring, are engaged in a battle with the insurance underwriting giant over a multimillion dollar policy purchased for West’s 2016 Saint Pablo Tour to cover the possibility it might get canceled, which some part of it did.
And now West’s lawsuit against Lloyd’s, filed in a federal court in California earlier this week, is shaping up to be one of the ugliest superstar insurance disputes since Michael Jackson’s estate took on Lloyd’s for concert losses due to his death in 2009.
A quick summary: West paid his premiums, hundreds of thousands of dollars of them. Lloyd’s hasn’t paid the millions West is seeking to cover the losses from the cancellation. West believes the company is trying to use “unfounded” allegations about marijuana use as a reason for not paying, the lawsuit says.
And he accuses Lloyd’s of trying to smear him with news leaks in an effort to get him to back off.
This is an all-too-common situation. The insured purchases coverage for a specific risk. After filing a claim, the insurer argues that it doesn’t have to pay for one or more specific reasons. A lawsuit ensues, enriching litigators and creating aggravation for everybody else.
These facts are tailor made for a captive. West went to Lloyd’s of London -- a tacit admission that his risk is unique. By involving Lloyd’s, he’s already 75% of the way to forming a captive. Had he done so, West’s lawyers could have written the insurance policy, thereby preventing this situation altogether. But instead, he’s learned the hard way that insurers don’t like paying large claims.