Celebrity behavior could cause endorsement deals to collapse, but the insurance industry is prepared
Celebrities can be a costly investment. The behavior of celebrities is often headline-worthy news, as these people can often be very eccentric and unbridled. This can cause trouble for brands that endorse these celebrities, however, and the behavior of celebrities can cause unexpected damage to a company that supports them. Such was the case with Michael Phelps, the most decorated Olympian of all time, when his antics caused his endorsement deals with several companies to collapse. This also had an impact on the reputations of these companies.
AIG offers coverage for failed endorsement deals
Now, the American International Group is offering insurance coverage that can protect brands from celebrity mishaps. The company has launched what it calls Celebrity Product RecallResponse. The product is designed to help the insurer’s customers respond to certain risks that exist in the world of celebrity endorsements. The product offers coverage of up to $5 million, or $1 million for individual endorsement deals. Should an endorsement be recalled, or if a celebrity behaves in a manner that could possibly be considered inappropriate, the policy is meant to provide reimbursement to companies that have to cancel endorsement deals.
New kind of coverage could mitigate the financial impact of endorsement deals
This money can be used for a wide range of purposes, such as to cover public relations expenses. The policy could also help mitigate the financial impact of a failed endorsement deal. An endorsement deal involves a great deal of money being spent on marketing and promotional material. This material is meant to draw business to a certain company, and when an endorsement deal fails, companies could experience significant financial losses as a result.
Insurance industry continues to evolve and offer new products for emerging risks
The insurance industry is beginning to evolve in order to address risks that have begun to emerge in several markets. While celebrities sometimes behaving poorly is nothing new, there have been no solutions from the insurance industry regarding the risks such behaviors pose. As the insurance industry begins to better understand these risks, companies will be able to offer better products that can manage these risks.