What if a celebrity endorser falls from grace?

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LFC Risk and Insurance launches death and disgrace insurance – because ‘you’re worth it’

LFC Risk and Insurance announced today that it has launched a specialist insurance policy (‘Death and Disgrace’) to provide cover to companies using celebrity endorsements – on the occasion that the celebrity suffers a fall from grace.

Following yet more bad press recently concerning charities, Peter Collins of LFC Risk and Insurance recommends that charities, which use celebrity for endorsements, should consider Death and Disgrace insurance. This insurance is designed to protect the charities income in the event of the death of the celebrity or the celebrity suffering a fall from grace. The failure to consider this insurance, and the event of a claim that causes the charity to lose income, could expose the charity trustees to personal liability for any loss. LFC Risk and Insurance has arranged a facility to provide this cover with certain underwriters at Lloyd’s.

In the current market, with the frequency of high profile cases on the increase, as new misdemeanours become known on a regular basis. Death and Disgrace insurance is difficult to get, but it is still available.

Since advertising began in the 1950s, celebrities have been used to endorse products from cigarettes to hair transplants. There is no doubt that celebrity sells. In 2014 Harvard Business School published a study entitled The Economic Value of Celebrity Endorsements (covered by the Daily Mail http://www.dailymail.co.uk/femail/article-2641476/Susceptible-women-buy-twice-celebrity-endorsed-products-men.html#ixzz3n46vgvub) the headline claimed that women buy twice as many celebrity-endorsed products than men.

LFC Risk and Insurance Director Peter Collins (pictured) has been closely watching the celebrity endorsement trends. He considered the financial impact on any organisation if the celebrity gets caught committing acts, which are in some cases illegal, in most cases immoral, but always poor PR for the charity or organisation involved.

In 2010 the Grocer magazine published an article about the brands endorsed by Tiger Woods which saw up to $12bn wiped off their value after his marital misdemeanours became known to the public (**http://www.thegrocer.co.uk/home/topics/brands-take-out-celebrity-disgrace-insurance-cover/213897.article).

“With widespread use of social media, scandal can reach the masses in seconds and it’s virtually impossible to shut the stable door…. “said Peter Collins, Director of LFC Risk and Insurance. The recent press coverage on the Kids Company charity being a good example.

“Obviously with the death of a celebrity, albeit very sad, there is no ambiguity, however when celebrities are used to endorse products it seems the more Snow White-like they are, the more the media wants to see them fall from grace. Entrapment by the media is not uncommon so it’s really important if a charity or company is investing in an ad campaign with a celebrity, that they shield themselves financially in case the proverbial hits the fan.”

If an organisation has financed a major ad campaign and before it is completed the celebrity falls from grace, it could be that the costs that they have incurred or contracted to pay are lost.

Celebrity endorsement deals are a very lucrative source of income for the celebrity as well as the charity. Even if the celebrity offers his or her endorsement free of charge, the ‘deal’ can be worth fortunes for the charity or corporation.

Unfortunately, with some celebrities literally living a life of sex, drugs and rock and roll it all too often goes terribly wrong.

Death and Disgrace insurance policies will normally pay out in the case of the death of the celebrity or if the celebrity commits a criminal act or any offence against public taste or decency. In addition, there could be cover if the celebrity degrades or brings another person into disrepute or provokes insult or shock to the community and this reflects unfavourably upon the campaign or brand.

Peter Collins added, “There are now almost 165,000 registered charities in the UK (according to Gov.UK) and the total combined income is just over £68bn. Whether or not they use a celebrity figurehead, charity trustees have a duty of care to protect the income of their charity. Trustees of unincorporated charities can face personal liability claims in the event of there being a shortfall in the charity’s income.



Website: http://www.lfcriskandinsurance.com

Legacy Funding Corporation Limited is an Appointed Representative of Kinetic Insurance Brokers Limited; its registration number 568326. Wilmington Publishing & Information Limited is an Introducer Appointed Representative of Kinetic Insurance Brokers Limited; its registration number is 599350. Kinetic Insurance Brokers Limited is Authorised by, and Regulated by the Financial Conduct Authority, registration number 309540. This can be verified by visiting the FCA’s website http://www.fca.org.uk or by contacting the FCA on 0845 606 1234

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Sarah Brockwell

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