“In an era in which news travels faster through social media, risk to hard-earned reputations is greater than ever before.”
Those were the words of Rachel Turk, focus group leader of Beazley’s D&O (directors and officers) team in London, when the specialist Lloyd’s insurer announced the rollout of a reputational risk solution aimed at providing not only substantial loss of profits cover but also crisis management expertise to minimize damage.
Led by Beazley, the Custodian Consortium at Lloyd’s caters to US-domiciled organizations of all sizes including public and private companies as well as for-profit and not-for-profit enterprises. The consortium came to life with the goal of offering urgent and coordinated response to potentially crippling reputational crises.
“With underwriters’ consent, an event that threatens major reputational damage could entitle the client to crisis management advice worth up to $1 million,” noted Beazley. “The first $250,000 of this cover is available on a pre-loss basis, regardless of whether a loss of revenue is ultimately recorded.
“Business interruption cover is triggered by a drop in revenue that has been pre-agreed at policy inception. Because organizations can rarely predict what might trigger a reputational crisis, the policy works on an all-risks basis.”
Exclusions are cyber and product recall, systemic events or macro-economic impacts, failure of corporate strategy, as well as fraud or criminal acts.
“Our policy has been designed to ensure that crisis response expertise is available, backed by the necessary funds, as soon as an incident occurs,” said Turk, who believes speed of response is critical.
“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.”
The consortium will offer substantial limits with additional capacity initially provided by Tokio Marine Kiln and RenaissanceRe as well as Beazley’s Smart Tracker Syndicate 5623. Meanwhile clients will be supported by crisis management advisory firms APCO Worldwide and CrisisRisk.