Market opening up for insurance against negative publicity online

Market opening up for insurance against negative publicity online

Market opening up for insurance against negative publicity online Several general insurance companies in Japan are now offering various products to cover companies’ potential losses due to the spread of negative publicity on the internet.

In recent years, a number of companies have been hit by widespread criticism from internet commentators due to contaminated products or unsavoury employee behaviour. Data analytics firm Eltes Co., which offers digital risk oversight, said that the number of incidents generating negative responses online for companies increased from 483 in 2013 to 667 in 2014. It further increased to 1,002 in 2015 – almost tenfold compared to 2010’s figure at 102.

When such content spreads on the internet, also known as going viral, companies need to respond by letting the public know that they are investigating the incident. They also need to stop the problematic posts from spreading further and to issue an apology.

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According to Eltes, it takes an average of three months for an issue to be put to rest, with a corresponding cost of around ¥3 million (US$27,000) per month.

Last month, Sompo Japan Nipponkoa Insurance Inc. launched an insurance product that covers the costs of dealing with negative viral publicity. The policy will provide up to ¥10 million (US$90,000) to compensate for losses.

The policy’s premium costs from ¥500,000 to ¥1 million (US$4,500 to US$9,000) per year, depending on the company’s size. The insurer will monitor online activity regarding the policyholder and judge whether an incident has gone viral based on past examples.

Another major Japanese insurer, Mitsui Sumitomo Insurance Co. began offering risk management training sessions for companies in April 2014, which includes what to do when viral content generates negative responses. Senior executives and employees are given tips on how to use social media.

Tokyo Marine & Nichido Fire Insurance Co. also provides insurance against harmful online rumours for financial companies serving clients in the farming and fisheries sectors. Once the insurance company detects a predetermined number of keywords about a client online, it pays out ¥100,000 (US$900).

As many companies do not have adequate knowledge and systems in place to deal with negative viral attention, insurers are stepping in to fill the gap, given their already-extensive experience in risk management.

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