Canadian Underwriter

How to talk to your clients about death & disgrace insurance

November 19, 2021   by Brooke Smith

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The worlds of sports and entertainment have their share of behaviourally challenged people.

And it’s not just actors, singers and athletes who get into trouble. Bad behaviour can also lurk in the C-suite.

So, hopefully, their teams, record labels, companies and brand sponsors have had the presence of mind to acquire death & disgrace insurance to cover any unbecoming comments and behaviours.

Brokers catering to the corporate world should likewise bring death & disgrace insurance up with clients.

You must look at all potential exposures of a business, said Gary Hirst, president and CEO of CHES Special Risk Inc. That means not just fire, cyber exposure or liability angles.

“There are exposures outside of that, and outside the control of the insured,” he said.

Next, consider the client. Would they benefit from this coverage? “Is your client an investment company trying to buy other companies?” asked Hirst. “Is it a company that has, maybe, two or three critical employees who are of a certain age?”

And who possibly have health issues?

“You could have one singularly successful owner and CEO who may have had heart troubles over the years, a couple of operations,” said Hirst. “He’s now sold the business to some other investors and they’re worried he might pass away after the transaction has been completed; and that then has a material effect on the income coming into the company.”

Finally, assess how much your client is in the public eye. And, Hirst stresses, the individual doesn’t have to be in show business. “[He or she] could be at the top of their industry, where any adverse comments could directly affect income or shareholder price,” he said.

Indeed, a 2016 Harvard Business School study noted CEOs’ bad behaviour (between 2000 and 2015) resulted in an average 3.1% decline in a company’s stock price.

Case in point an April 1991 comment by Gerald Ratner, CEO of a leading U.K. jewellery chain. Ratner spoke at the Institute of Directors; an event attended by more than 6,000 businesspeople and journalists.

Just a few minutes into his speech, Ratner said, “We do cut-glass sherry decanters, complete with six glasses on a silver-plated tray … all for £4.95. People say, ‘How can you sell this for such a low price?’ I say, because it’s total crap.”

The next day’s headlines were not kind, and by the end of 1991, the company’s stock had dropped 80%.

While an in-person faux pas such as Ratner’s was bad enough in the ’90s, it’s much worse today with social media – an insensitive or abusive Tweet is retweeted in seconds.

“Making a comment on Twitter can really influence your followers — or whether or not your backers continue to back you,” said Hirst. “It’s far too easy to say something off the cuff.”


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