“Can You Indemnify Against Dick Pics? The Rise of Scandal Insurance in Hollywood”, 2019-08-05 ():
[Disgrace insurance.] A standard Lloyd’s contract defined ‘disgrace’ in vague terms—as “any criminal act, or any offence against public taste or decency…which degrades or brings that person into disrepute or provokes insult or shock to the community.” Most effective policies rely on precise terms and evidence that both sides can agree on—the Richter scale, a hospital bill. Subjective wording leads to disputes. Insurance “has to involve no litigation”, says Bill Hubbard, CEO of the entertainment insurer HCC Specialty Group. “You know the Supreme Court justice who said, ‘I know pornography when I see it’? You can’t settle claims that way.”
The contracts were much clearer on the definition of what didn’t merit a payout: Many of them exempted non-felonious offenses and acts committed prior to the policy’s start date. Even if the All the Money producers had bought a policy, Kevin Spacey’s past transgressions might have been excluded, treated as preexisting conditions.
While these limitations kept the industry small, the foibles of the rich and famous only increased demand for a better product. Tiger Woods’s 2009 car crash, followed by revelations of his infidelities, cost him $30.97$222009 million in contracts with brands like AT&T and Gatorade—which was nothing compared to what they cost the companies. A UC Davis study put the brands’ shareholder losses somewhere between $7.04$52009 billion and $16.89$122009 billion.
But it wasn’t Woods who made disgrace insurance look viable; it was reality television. A few months before the golfer’s car crash came what one underwriter refers to only as “that Viacom loss”. Ryan Jenkins, then a contestant on the VH1 reality show Megan Wants a Millionaire and the star of an upcoming season of I Love Money, became the lead suspect in his wife’s murder and killed himself a few days later. Megan was canceled after 3 episodes and the Money season shelved entirely, costing Viacom 7 figures in losses. That’s when the company started buying disgrace insurance.
Thousands of reality shows have been insured in the ensuing decade, many of them via two insurance brokers, Gallagher Entertainment and HUB International. HUB’s managing director, Bob Jellen, can recall about half a dozen claims paying out since the Jenkins murder. He wouldn’t offer specifics, but others have given two examples: P.I. Moms, which was canceled in 2011 following fraud and drug charges, and Spike TV’s Bar Rescue, after an owner killed a country singer in his own rescued bar.
“It’s something we don’t advertise”, says Jellen of disgrace insurance. “You don’t have to sell people on disgrace.”