Reputational risk covers for commercial businesses
Insurance covers to individual scenarios for companies that seek financial resilience in the face of reputational risk.
Our reputational risk protection covers your greatest asset – your name
Reputational risks rank among the top 10 global business risks. A faulty component, a hacker attack, misconduct – the consequences of events that damages a company’s reputation can be devastating. And it can happen to any company, from car makers to a food manufacturer to airlines.
The good news: reputational damage is quantifiable, which in turn makes it insurable. An insurance covering reputational damage generally covers the company’s loss of profits and offers financial support for crisis management and efforts to restore its image. The policy provides indemnification for forgone forecast sales growth, giving a company more certainty for its planning. The insurer verifies the sales forecasts by comparing them with performance to date. Reputational damage resulting from cost savings leading to lower quality, fraud or other intentional acts is, of course, not covered.
Reputational risk protection can mitigate the impact of cyber attacks
Cyberattacks not only often lead to business interruption and the associated revenue losses – they also damage the enterprise’s reputation. The fall in sales resulting from a successful cyberattack, however, is not deemed to be a business interruption.
New cyber risks are no insurmountable obstacle but the reputational risks involved require defined loss triggers. The challenge in this coverage concept lies in defining appropriate loss triggers and giving prior thought to loss adjustment policy – a challenge Munich Re is happy to tackle with tailored solutions.
Components of our reputational risk cover
- First trigger: An incident affecting your company's reputation occurs
- Second trigger: The media pick up the issue and report negatively about your company
- Third trigger: Your turnover/revenue drops significantly
Either all operational triggers can be covered, or cover can be limited to defined incidents of particular relevance for the company. For example, a food manufacturer operating only in certain markets could take out a policy covering only product defects (Trigger 1) or a cover limited to certain media and markets (Triggers 2 and 3)
- Your turnover/revenue drops significantly
- A loss adjuster determines which part of the reduction in turnover/revenue is attributable to the reputational event (by excluding other factors that might have impacted your turnover/revenue at the same time, like an economic crisis)
- The drop in profit is determined by applying your gross profit margin to the reduction in turnover/revenue. We indemnify financial loss on the basis of your drop in profit and the loss adjuster result
- The scope of cover can be individually specified
- The timeline to measure the drop in profit can be agreed upon individually
- Further customisation is possible to best cover your specific situation
You benefits in a nutshell
Why you should talk to us
- You are active in a competitive (global) environment
- Your company is subject to 24/7 media and consumer attention
- Your success depends essentially on your brand name and reputation
- You want to protect your balance sheet in case of a reputational event