Miller has placed its first parametric reputational risk coverage for a US intermediary. We secured the appointment as a result of our dedicated focus on non-standard business and emerging risk areas.
The insured is a Fortune 500 marketing and corporate communications company that provides advertising, PR and media services to leading global clients.
The coverage utilizes the proprietary data tool of the intermediary, which has been constructed using decades worth of publicly available data from an independent commercial data aggregator. Data inputs reflect the economic expectations of key stakeholders such as customers, equity investors, creditors, suppliers and market analysts, each of which are reflections of reputation value.
Following a consultation process with the insured, the coverage was structured to trigger at a chosen index value in order to meet budget expectations. If an adverse reputation event occurs, resulting in media coverage in specific pre-agreed outlets, the reputation value metric is measured against the index. The extent to which the metric has been impaired (thereafter remaining suppressed) below one or more index trigger values guides the magnitude of the parametric pay-out.
This is a significant placement and highlights the ever increasing demand for insurance solutions for underinsured intangible assets. In the mid-1970s, under 20% of the Fortune 500's value was made up of intangible assets like brand and reputation, but today they account for around 85% of a corporation’s value. Recognizing this, the Lloyd’s market continues to innovate and the recent launch of the Product Innovation Facility is a good example of the market seeking to address new and emerging risks.
Reputational risks product card