Companies opting for disgrace insurance against celebrities

Big brands which hire celebrity ambassadors are increasingly taking out insurance against possible disgrace.

Big brands that use celebrities as ambassadors are taking out insurance to protect themselves in the wake of sex scandals surrounding iconic individuals, such as Tiger Woods and Wayne Rooney.

The change comes as companies experience a backlash in sales when the sex secrets of stars promoting their brands, are aired in public, causing brand owners to lose millions of pounds if forced to terminate partnership deals.

Mark Symons, underwriter at insurance provider Beazley, says sales of insurance policies, dubbed 'disgrace insurance', have increased by almost a third.

'There have been some very high-profile cases in the past few years,' he said. 'Either you lose the money or you get a policy that will pay the cost of you re-starting a campaign.’

The insurance cover rests on whether an ambassador’s actions can be said to be unforeseen or out of character, and thus detrimental to a brand.

Robert Barron, from insurance broker Lockton, said the fear of being caught up in sleaze was enough to turn some companies away from using celebrities as ambassadors.

He said: ‘If you start buying disgrace insurance, at the end of the day there’s a cost, so people are starting to look again at regular types of promotion that are not to do with a certain individual.’

Brands endorsed by golfing champion Tiger Woods have lost millions of pounds worth in value since his extra-marital affairs were exposed, and Coke has abandoned plans to put Manchester United footballer Wayne Rooney’s face on Coke Zero products following the recent allegations about his flings with a prostitute.

Barron added: ‘If you pick the right celebrity you can add millions to sales, but choose carefully.’

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