Infamy Insurance

The Tiger Woods scandal captivated millions, but it also sent shivers down the spines of advertisers. After all, the superstar’s image was the mainstay of multimillion-dollar ad campaigns that have gone up in smoke.

Now, DeWitt Stern, a New York brokerage that handles Hollywood TV and movie projects, is seizing the moment to sell “reputation risk insurance” – policies that protect brands and advertisers if a spokesperson becomes an embarrassment.

“We’ve been working on this product for months, but the episodes of the last few weeks have blown the lid off and turned a bright light on the need for protection,” said Scott Brady, managing partner of the company’s Glendale office, which developed the product.

The policies, which are going on sale this year, would allow advertisers to file claims for up to $10 million in crisis management costs, $25 million to recoup celebrity sponsorship fees and $50 million in lost sales. The policies would be underwritten by either Lloyd’s of London or entertainment industry insurers.

Until now, sponsors have been able to purchase “death, disgrace and disablement” policies for celebrity or athlete endorsements. However, the policies generally only allowed recovery of the fees paid to celebrities.

Brady estimated that the expanded coverage would have allowed Accenture, the consulting firm that ended its ubiquitous endorsement deal with Woods because of the scandal, to recover not only its $6 million upfront fee to Woods but also the $30 million it spent on TV, print and online ads.