Why Celebrity 'Disgrace Insurance' Has Risen 2,000%
*By Hope King*
Tiger Woods. Papa John's John Schnatter. Roseanne Barr. Just a few high-profile names that cost mega brands big.
To protect themselves against celebrity scandal risk, companies have been taking out "disgrace insurance policies" against their celebrity endorsers at an increasing clip.
In the U.S., the number of these policies has risen as much as 2,000 percent in the last few years, Janet Comenos, CEO of Spotted, a company that monitors celebrities and pairs them with brands, said in an exclusive interview with Cheddar.
"The reason it's become so immensely popular in the U.S. over the last 18 months is because of the Harvey Weinstein scandal, and the #MeToo and #TimesUp movements," Comenos said.
Another factor? The dominance of social media.
"We're living in such a social media-driven environment that everything a celebrity does is immediately there for public consumption," she said.
But it's not just celebrities that companies want to protect themselves against ー insurance companies that work with Spotted are also creating policies for top executives.
The "more conservative industries" have been the early adopters, according to Comenos. Sectors such as financial services, pharmaceuticals, consumer packaged goods industries are ones she calls "first movers." And there's good reason for the policies.
According to a 2016 study by the Harvard Business School, CEOs behaving badly between 2000 and 2015 resulted in a 3.1% decline in a company's stock price on average. Most recently, shares of [Wynn](https://www.marketwatch.com/story/wynn-resorts-shares-tank-after-report-of-sexual-misconduct-by-owner-steve-wynn-2018-01-26) and [Papa John's](https://www.courier-journal.com/story/news/2018/07/23/papa-johns-stock-dropped-nearly-10-percent/821719002/) suffered huge investor blowback when the companies' founders made headlines, respectively, for sexual assault allegations and racist comments.
Disgrace insurance covers how much the brand paid for the endorsement (not any advertising around the celebrity), and costs around 1 percent of that amount. For example, a policy to recoup a $5 million endorsement would cost $50,000.
When measuring which celebrities are most at risk for scandal, Spotted looks at 20 different risk factors, including stance on politics, race, and instances of infidelity. According to the company, the top five scandals that can damage a celebrity's professional career and appeal are, in order, sexual assault and harassment, physical attacks, drugs, infidelity, and offensive or lewd comments.
"All of these things can alienate consumers and create risk for a brand," Comenos said.
Spotted's latest report on the riskiest celebrities will be published later this month.
For more on this story, [click here](https://cheddar.com/videos/why-celebrity-disgrace-insurance-has-risen-2000).
Nvidia on Wednesday became the first public company to reach a market capitalization of $5 trillion. The ravenous appetite for the Silicon Valley company’s chips is the main reason that the company’s stock price has increased so rapidly since early 2023.
Chris Williamson, Chief Business Economist at S&P Global, breaks down September’s CPI print and inflation trends, explaining what it means for markets.
A big-screen adaptation of the anime “Chainsaw Man” has topped the North American box office, beating a Springsteen biopic and “Black Phone 2.” The movie earned $17.25 million in the U.S. and Canada this weekend. “Black Phone 2” fell to second place with $13 million. Two new releases, the rom-com “Regretting You” and “Springsteen — Deliver Me From Nowhere,” earned $12.85 million and $9.1 million, respectively. “Chainsaw Man – The Movie: Reze Arc” is based on the manga series about a demon hunter. It's another win for Sony-owned Crunchyroll, which also released a “Demon Slayer” film last month that debuted to a record $70 million.
The Federal Aviation Administration says flights departing for Los Angeles International Airport were halted briefly due to a staffing shortage at a Southern California air traffic facility. The FAA issued a temporary ground stop at one of the world’s busiest airports on Sunday morning soon after U.S. Transportation Secretary Sean Duffy predicted that travelers would see more flights delayed as the nation’s air traffic controllers work without pay during the federal government shutdown. The hold on planes taking off for LAX lasted an hour and 45 minutes and didn't appear to cause continued problems. The FAA said staffing shortages also delayed planes headed to Washington, Chicago and Newark, New Jersey on Sunday.
Boeing workers at three Midwest plants where military aircraft and weapons are developed have voted to reject the company’s latest contract offer and to continue a strike that started almost three months ago. The strike by about 3,200 machinists at the plants in the Missouri cities of St. Louis and St. Charles, and in Mascoutah, Illinois, is smaller in scale than a walkout last year by 33,000 Boeing workers who assemble commercial jetliners. The president of the International Association of Machinists says Sunday's outcome shows Boeing hasn't adequately addressed wages and retirement benefits. Boeing says Sunday's vote was close with 51% of union members opposing the revised offer.
