Insurance markets in everything

by on November 16, 2010 at 3:12 pm in Economics | Permalink

This is why a growing number of companies are buying so-called "disgrace insurance" to cover themselves in case a brand ambassador turns into a persona non grata.

The full story is here and for the pointer I thank Jeremy Davis.

Norman Pfyster November 16, 2010 at 11:20 am

Are they calling it the "Tiger Woods" policy?

R.J. Lehmann November 16, 2010 at 12:02 pm

Woods definitely has a lot to do with it:
http://www.prnewswire.com/news-releases/reputatio

Jule November 16, 2010 at 1:56 pm

Isn't this market possible because of how the media over-saturates coverage of these "scandals"? The insurers need brands to think that a scandal is more likely than it actually is, so as to pay premiums on celebs who are will probably not fall from grace. The wall-to-wall coverage in the media conveys the impression that these scandals are more probable than they really are. Similar to coverage of Toyota "sudden acceleration" problems, which create a buying opportunity for Toyota stock. Aren't these insurers just implementing Warren Buffet's investing strategy, finding inefficiencies in the overblown media coverage of celebrities?

Bernard Yomtov November 16, 2010 at 5:23 pm

Sigivald,

And to think I'd rather spend the "brand ambassador" and "disgrace insurance" money on producing a superior product and customer experience.

Careful. I got into a lot of trouble in business school for making a similar suggestion during a marketing class discussion of strategies for selling hamburgers. Well, it wasn't a lot of trouble, really, but it was some funny looks, and I doubt it helped my grade.

Brainquicken November 24, 2010 at 10:19 pm

I would say its the stable stream of low risk clientele because they are the back bone behind most businesses like banks. Being classed in a low risk category you impose small percentages of risks, still pay your premiums and in large volumes of clients, you therefore are able to make profit, off setting the risks……

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