• 01 February 2018

With the growth of 24-hour news services and the public’s seemingly insatiable appetite for headlines, combined with today’s hyper-connected world dominated by mobile devices and social media, the threat of damage to a company’s most valuable intangible asset – its reputation – has never been more tangible. 

In August 2017, Miller launched a reputational risk insurance offering, with the aim of making reputational risk transfer more accessible, understandable, relevant and cost effective.

Reputational risk can be defined as the risk of financial loss resulting from damages to a firm's reputation following an adverse media reaction. The loss can be in the form of reduced revenues, increased operating, capital or regulatory costs, or destruction of shareholder value. Some examples can be seen below.

Vehicle recalls cause severe reputational damage for automobile provider

A Japanese multi-national car manufacturer had to recall automobiles on three separate occasions between 2009-11. This was caused by sticking accelerator pedals due to interference from the floor mats, leading to unintentional acceleration and accidents. More than seven million vehicles were recalled in total, with significant financial and brand damage consequences.

Airline suffers multiple tragic events in same year

In March 2014, a major Asian airline’s passenger flight disappeared over the Indian Ocean whilst flying to its destination, and the bulk of the aircraft is yet to be found. Just months later, another passenger flight of the same company was shot down whilst flying over Ukraine, resulting in 298 casualties. The damage to the airline’s image and revenues was devastating, with the company acknowledging in its annual results ‘the impact of the two tragedies damaged our brand and the need to restructure the company was accelerated’.

Damage to brand reputation has consistently been voted the number one risk in global risk management surveys, so it is no surprise that demand for an insurance solution is growing.

With limits of up to USD65m available, Miller’s approach is one of collaboration between the client, broker and underwriter, making the potentially complex simple, quantifiable and insurable. We advocate a step-by-step approach to what has previously been considered an uninsurable intangible exposure.

Benefits of reputational risk insurance

  • Protection for your balance sheet, earnings and cash flow
  • Make intangible risks tangible
  • Transfer enterprise risk away from your balance sheet
  • Quick liquidity in a crisis scenario, at a more attractive rate than on offer from banks/investors
  • Protection for your company and its directors and officers
  • Tailored solutions for your core business drivers
  • Ability to access through your captive
Image of a modern residential block with a single orange sunscreen on one of the balconies

Non-standard solutions (including reputational risk)

Target industries

We will consider a wide range of clients in the business to consumer sector, however our target industries are:

  • Food & beverage, restaurant and fast-food chains
  • Tourism, hotels and airlines
  • Healthcare
  • Cosmetics
  • Retail including fashion, luxury goods and toys

Annual revenues are likely to be in the range USD100m to USD5bn at either the group level, or as a separate business unit of a larger organisation.