Insurer Offers Coverage for Reputational Harm on Social Media

Marketers and PR types are keenly aware of the damage that can be inflicted on a brand by negative buzz on social media, but now actuaries are getting into the social reputation business as well. This week insurance broker Lockton unveiled a new product, the Lockton Intangible Risk Policy, which offers coverage for “reputational harm” where “the cause of loss is adverse traditional or social media coverage that drives down revenue or sales.”




According to Lockton, the Intangible Risk Policy, which is being offered in partnership with Kiln Group, an insurer underwriter at Lloyd’s of London, can cover reputational damage resulting from a number of events, including “data breaches, breach of fair labor laws and environmental damage, key person disgrace, loss of certification/accreditation, product safety or quality failure, or other perils agreed with the underwriter.”


It’s pretty easy to think of examples of corporate transgressions, spanning all these categories, which did indeed result in reputational damage on social media. In data breaches alone there have been credit card data fiascos involving Global Payments in April 2012, Wyndham Worldwide in June 2012, Barnes & Noble’s in October 2012, Midwestern grocery chain Schnucks in April 2012, and the list goes on. Moving to the “key person disgrace” heading we have Lance Armstrong, whose doping scandal affected Livestrong and Nike, among others; Tiger Woods (Nike, Accenture); Joe Paterno (Penn State); Paula Deen (Food Network, QVC) -- and the list goes on, and on, and on.


The Lockton policy covers a number of other intangible risks, including intellectual property disputes which prevent a company from selling products, computer network failure resulting from cyberattacks and errors, in both proprietary and outsourced or cloud services; and outsourcing or supply chain interruption, including disruptions resulting from nationalization or political events.

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