From the March 2010 issue of Investment Advisor • Subscribe!

March 1, 2010

Branded

LeComte Moore, managing director at DeWitt Stern, says his company initiated work on its new reputation risk insurance coverage because, with "the advent and increased use of Twitter and Facebook, and social networking, a corporation's reputation...that took years to build can be tarnished in less than 24 hours." Kids doing unspeakable things to or with food, for instance, that would never have been known outside town 10 or 20 years ago, can now be "all over the world" in no time and "do damage to the brand."

He goes on to explain: "A brand's primary goals are to keep customers coming back, to bring in new customers, and to have customers pay a premium price for your product. If your brand is attacked, all three of those go wrong." And in such cases, the new reputation risk coverage from DeWitt Stern will kick in to protect an insured brand.

An individual can't buy this coverage, emphasizes Moore. The situation has to be out of the insured's control. He concludes by saying, "This is not an easy policy and not cookie-cutter. It's clearly for corporations; the people who will buy it the most are those who can't take a drastic hit against the brand."

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