Beazley is partnering with other Lloyd's insurers to offer an insurance product for reputational risk.
In a statement, Beazley explained that it has established the Custodian Consortium at Lloyd's to provide a reputational risk solution that protects clients throughout the lifespan of a crisis. Clients will benefit from crisis management expertise to minimize reputational damage, as well as substantial loss of profits cover to protect companies after a significant downturn in revenue, according to Beazley.
With underwriters' consent, an event that threatens major reputational damage could entitle the client to crisis management advice worth up to $1 million. The first $250,000 of this cover is available on a pre-loss basis, regardless of whether a loss of revenue is ultimately recorded.
Beazley said that business interruption cover would be triggered by a drop in revenue that was pre-agreed to at policy inception. Because organizations can rarely predict what might trigger a reputational crisis, the policy works on all-risks basis. It therefore covers many potential scenarios that could affect different sectors, from allegations of sexual harassment or bullying against a senior executive, or the mismanagement of such claims, to faulty or misused medical equipment.
The Custodian Consortium will offer limits with additional capacity initially provided by Tokio Marine Kiln and RenaissanceRe as well as Beazley's smart tracker syndicate 5623.
The cover is available to U.S.-domiciled organizations of all sizes, specifically targeting companies with up to $5 billion in revenue, including both public and private companies, and for-profit and not-for-profit enterprises.
Rachel Turk, focus group leader of Beazley's London-based directors and officers team, said, “In an era in which news travels faster through social media, risk to hard-earned reputations is greater than ever before. Preparedness and speed of response are critical. Our policy has been designed to ensure that crisis response expertise is available, backed by the necessary funds, as soon as an incident occurs.
“By pre-agreeing the level of revenue drop that will trigger a claim at the outset with our underwriters, clients can be sure that no time will be lost in providing cover that meets their requirements, and generally without the need for loss adjustment.”
In the event of a crisis, clients will be supported by crisis management advisory firms APCO Worldwide and CrisisRisk.
Exclusions are cyber and product recall, systemic events or macro-economic impacts, failure of corporate strategy, fraud, or criminal acts, Beazley said.
Victoria Spears
Victoria Prussen Spears is senior vice president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. A graduate of Sarah Lawrence College and Brooklyn Law School, Ms. Spears was an attorney at a leading New York City law firm before joining Meyerowitz Communications. She may be contacted at [email protected].