Assessing the Risks of Insuring Reputation Risk

39 Pages Posted: 9 Aug 2016

See all articles by Nadine Gatzert

Nadine Gatzert

Friedrich-Alexander University Erlangen-Nürnberg

Joan T. Schmit

University of Wisconsin - Madison - Department of Actuarial Science, Risk Management and Insurance

Andreas Kolb

Friedrich-Alexander-University of Erlangen-Nuremberg

Multiple version iconThere are 2 versions of this paper

Date Written: September 2016

Abstract

Reputation risk is becoming increasingly important, especially with the rapidly growing influence of social media, heightened scrutiny on reputation risk by banking and insurance regulators, and reputation's impact on organizational value. Insurers have responded to this development only recently by offering new reputation risk insurance solutions. The aim of this article is to present the first detailed academic analysis of these new insurance policies, including examination of the risks insurers face in offering such coverage. We also offer a conceptualization of reputation risk in an insurance and risk management context with focus on exposures, perils, and hazards. Our analysis indicates that loss identification and measurement generate the greatest challenges to insurers in providing reputation risk coverage. Lack of experience as well as the complexity of the chain of reputation risk events related to reputation insurance coverage present insurers with significant challenges in making this a viable line of business.

Suggested Citation

Gatzert, Nadine and Schmit, Joan T. and Kolb, Andreas, Assessing the Risks of Insuring Reputation Risk (September 2016). Journal of Risk and Insurance, Vol. 83, Issue 3, pp. 641-679, 2016. Available at SSRN: https://ssrn.com/abstract=2820370 or http://dx.doi.org/10.1111/jori.12065

Nadine Gatzert (Contact Author)

Friedrich-Alexander University Erlangen-Nürnberg ( email )

Lange Gasse 20
Nuremberg, 90403
Germany
+499115302884 (Phone)
+499115302888 (Fax)

HOME PAGE: http://www.vwrm.rw.fau.de

Joan T. Schmit

University of Wisconsin - Madison - Department of Actuarial Science, Risk Management and Insurance ( email )

Madison, WI
United States
608-262-4240 (Phone)

Andreas Kolb

Friedrich-Alexander-University of Erlangen-Nuremberg ( email )

Lange Gasse 20
Nuremberg, 90403
Germany

HOME PAGE: http://www.vwrm.rw.fau.de

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