Posted on Oct 14, 2011 by Sergio Ulloa
Worldwide insurance broker Willis Group has partnered with Lloyd's of London underwriter Kiln to co-develop and launch a new product designed to protect hotels from any financial loss that results from negative publicity.
Bad news, poisonous reviews and fraudulent behavior can travel fast in our 21st century world of instantaneous international communication and social media. Such actions, often anonymous, irreversible and without provocation, can ruin a businesses' hard-worked reputation and affect their bottom line for years to come. The cut-throat hospitality industry is particularly vulnerable to consumer opinion and one negative event, justified or not, can lead to empty rooms.
For these reasons and more, the Hotel Reputation Protection 2.0 policy has been launched. The reputation protection product has been designed to anticipate and respond to incidents that could lead to financial losses from adverse publicity, be it through traditional media channels or through new online social networks. The events Willis and Kiln have agreed to cover include some of the most common causes of brand damage for hotels. Hotel Reputation Protection 2.0 covers reputation damages associated with the death or permanent physical disability of a guest, food poisoning caused by both deliberate or accidental contamination, and other food-borne illnesses. Also covered are fiscal damages resulting from outbreaks of Norovirus, responsible for around 90 percent of stomach illnesses, and outbreaks of Legionnaire's disease, a hazardous lung infection usually contracted through the consumption of contaminated water.
The Hotel Reputation Protection 2.0 policy will determine how to provide cover for lost revenue using Rev-PAR statistics, a performance metric commonly used by the hotel industry to measure revenue per available room. In addition to financial considerations, the Willis-Kiln policy will subsidize the cost of hiring a crisis management consultant to assist the policyholder in the immediate aftermath of an incident. Overall, The Hotel Reputation Protection 2.0 policy caps the payout associated with both Rev Par related reimbursement and crisis management costs at €25 million.
Commenting on the launch of the product, Laurie Fraser, Willis' global markets leisure practice leader, explained in a statement that hotels have needed reputation cover for some time. "In the extremely competitive hotel industry, reputation accounts for approximately 30-40 percent of a business's overall worth. Therefore, damage to reputation, which spreads virally through social and other media channels, can have a significant financial impact. Our product is designed to tackle both the actual loss of revenue and the costs of containment."
Paul Culham, a Kiln underwriter, added that innovative insurance policies such as this could become more commonplace if they can deliver results. "This development is yet another example of how Kiln's focus on innovation and our partnership approach can enable pioneering products like this to be brought to the market. Our cover will provide peace of mind for businesses worried about the impact of potential brand damage on their bottom lines."
Threats to a company's reputation and brand image are more common and wide reaching today than they ever have been before. The rise in inter-connectivity presents both challenges and new opportunities for insurance companies to engage new clients and expand their customer base as well as develop innovative products to help sniff out fraud, protect reputations and police the global marketplace more effectively.
Insurance Companies Mentioned
Willis Group Holdings plc is a leading global insurance broker. Through its subsidiaries, Willis develops and delivers professional insurance, reinsurance, risk management, financial and human resource consulting and actuarial services to corporations, public entities and institutions around the world. Willis has more than 400 offices in nearly 120 countries, with a global team of approximately 17,000 employees serving clients in virtually every part of the world.