Tuesday, December 29, 2009

"Reputational risk" insurance follow-up: Researchers put a price tag on the Tiger Woods scandal

Two weeks ago, we mentioned that idea of "reputational risk" insurance being floated in the wake of the Tiger Woods scandal.

But how to measure the damage? This is not like, say, a fire, where an insurer can simply tally up structural damage and replacement cost of contents.

Well, yesterday two professors from the University of California, Davis attempted to put a price tag on the damage, and the number's pretty astounding.

Professors Christopher Knittel and Victor Stango estimate that shareholders in the companies that Woods endorsed lost a total of $5 billion to $12 billion in value in the time between his much-publicized SUV crash and his announcement that he was leaving golf indefinitely. And those calculations don't include losses to Wood's current- or future endorsement income.

Interestingly, the researchers concluded that Woods' sports-related endorsees suffered substantially more economic damage than non-sports companies, like business consultant Accenture.

Insurance news: Green River levees, a deeper look at health-reform bills, and a good 2009 for catastrophes...

In local news, the Seattle Times writes about the potential flood risk of decades-old, poorly-maintained levees in the Green River Valley.

Time details some of the high-visibility things that would kick in immediately under health reform, versus the 2013 start date for much of the legislation.

The Seattle Times covers Congress' moves to close Medicare's infamous "doughnut hole."

A good year: Reinsurer Munich Re AG says that catastrophe costs were down in '09.

The AP reports on a provision in health-reform legislation that would "nudge" people into getting long-term care insurance, at a projected cost of $160-$240 per month deducted from their paychecks.