Sponsors seeking a Jess effect take out 'disgrace' insurance
Shaming of Woods and Rooney prompts rush for cover against scandal
Sunday 14 November 2010
A series of celebrity scandals has produced a boom in insurance policies bought by multinational companies fearful that disgraced stars could tarnish their sponsors' reputations.
Recent high-profile embarrassments suffered by the likes of Tiger Woods and Wayne Rooney – who both cheated on their wives – have left sponsors worried that other multimillion-pound deals signed with stars could backfire.
Woods is said to have lost an estimated £20m in sponsorship money when he admitted cheating on his wife, with AT&T dropping its sponsorship. While he held on to contracts with Gillette – worth £7m – the company distanced itself from the star.
Rooney also suffered damage after allegations about his private life. Coca-Cola, which pays him £600,000 a year for endorsements, plans to remove him from its campaign in America next year.
Mark Symons, an underwriter at the insurance provider Beazley, said: "Because there have been some very high-profile cases in the past few years there has been an uptake in interest in this type of insurance. We have probably seen an increase of about 30 per cent in the last couple of years. Either you lose the money [spent on the campaign] or you get a policy that will pay the cost of you restarting a campaign."
A spokesman for Lloyds said the cost of the policy depends on the worth of the deal and the image of the celebrity. Premiums generally vary between half and one per cent of the sum insured, up to £10,000 per £1m. "If someone is squeaky clean and seems unlikely to cause a scandal – such as [tennis player] Roger Federer, then the premium would be quite low," he said.
This extra cost has prompted companies to question whether they should be doing sponsorship deals at all, said Robert Barron of the insurance broker Lockton. "If you start buying disgrace insurance there's a cost, so people are starting to look at types of promotion that are not to do with a certain individual."
But branding experts argue that it is very hard to prove if a star's transgression damages a brand. According to insurance industry insiders, many policies depend on whether a scandal can be said to be out of character. Most agree that companies are better off vetting celebrities so they ended up with safe bets like Jessica Ennis, Britain's heptathlete champion.
Stephen Cheliotis, chief executive of the Centre for Brand Analysis, added: "It's difficult to quantify how much damage a scandal has caused. It would require a robust tracking method of the brand performance before and after the scandal, and proof of a direct causal link."
elephant appealThe first 23 lots in our charity auction have now gone. But there are 22 more still up for grabs
musicPolice chief rejects rappers' claims that his work is as dangerous as law enforcement or military service
comedy'Fresh Meat' star sees off stiff competition from Alan Carr, David Mitchell, Graham Norton, Lee Mack and Sarah Millican to win top prize
French café starts charging extra to rude customers
Mystery of Epping Forest 'big cat' is solved
North Korea executes Kim Jong Un's powerful uncle Jang Song Thaek for 'attempting to overthrow the state'
Australia incest case: Deformed children found in remote farming community after generations of inbreeding
Fox News presenter tells viewers it is a 'fact' that both Jesus and Santa Claus are white
- 1 French café starts charging extra to rude customers
- 2 Italian court annuls prison sentence for elderly paedophile after 11-year-old victim tells investigators in Catanzaro that she loves him
- 3 Australia incest case: Deformed children found in remote farming community after generations of inbreeding
- 4 Physicists discover 'clearest evidence yet' that the Universe is a hologram
- 5 Fox News presenter tells viewers it is a 'fact' that both Jesus and Santa Claus are white
- < Previous
- Next >
£18000 - £20000 per annum: Inspiring Interns: This company delivers display ad...
£21000 - £27000 per annum + Benefits: Corporate Traveller: We're looking for t...
£40000 - £45000 per annum + excellent benefits : PCR Recruitment Limited: CRM ...
£23000 - £27000 per annum + £18K & Uncapped Commission & Benefits: Flight Cent...