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How Lloyd’s says your client could suffer reputational harm


August 25, 2021   by Greg Meckbach


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Up to a quarter of the value of some of your commercial clients’ firms could be their own brand and reputation. This reputational value could degrade quickly if your client is perceived to have behaved badly, a Future of Insurance Canada speaker suggests.

“Reputational damage can be caused by a single employee saying or doing the wrong thing at the wrong moment,” Lloyd’s Canada president Marc Lipman said.

Reputation and brand is one of three major categories of intangible assets, Lipman said Tuesday during a presentation at Future of Insurance Canada, produced by Reuters Events.

The other two categories of intangible assets are intellectual property and human capital.

An intangible asset is something of value to a company but is not a physical (or tangible) thing. Tangible assets are things like buildings, vehicles, computers, furniture, machines or inventory items for sale like food and clothing.

“In most cases, reputational damage occurs due to insufficient resiliency in other areas of the business. Think about the damage that occurs to reputation after a major fire, after a major supply chain disruption, or a cyber breach,” Lipman said during the presentation, titled Define Areas for Growth in P&C Insurance: Intangible Assets.

“Reputational damage often occurs when businesses fail to update their behaviours following changing social norms and beliefs or when they fail to spot a changing narrative among their stakeholders.”

One way to mitigate risk is to train people on real-life scenarios, Lipman advises.

“If one of the key intangible assets is reputation and brand, then the critical risk impacting that asset must be damage to a company’s reputation. On average more than 25% of a company’s market value is directly attributable to its reputation in the marketplace,” said Lipman.

Intellectual property – another major type of intangible asset – can include copyright, patents, trademarks, industrial designs and trade secrets.

One of Lipman’s slides named several global insurers who are offering coverage for intangible assets. Among them are Tokio Marine Kiln, which earlier launched its Cyber Ctrl product. Cyber Ctrl is intended to address the demand for more comprehensive coverage and prevention services. Cyber Ctrl includes reputational harm cover, which in turn encompasses public relations costs and loss of customers, following adverse media events as a result of a cyber incident.

Future of Insurance Canada wraps up Aug. 26.

Lloyd’s appointed Lipman as attorney in fact for Canada this past June. Before that he was chief operating officer of AIG Canada.


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