Just hours after securing a new endorsement deal, embattled US Olympic insurer Ryan Lochte was formally charged by Brazilian police with filing a false robbery report during the Rio de Janerio Olympics this month.
It may be the fastest insurance payout ever, if Pine Bros Softish Throat Drops –which inked the deal with Locthe – had celebrity endorsement or reputational risk coverage.
Lochte is certainly persona non grata in the wake of the incident, in which he claimed to have been robbed at gunpoint with three other members of the US Olympic Team. In reality, Lochte and others vandalized a gas station, urinated on the premises and then paid for the damages when confronted by armed guards. Lochte then recounted the experience to reporters while drunk.
The 12-time Olympic medal winner quickly lost sponsorship deals with nearly all of his partners, including high profile names like Speedo and Ralph Lauren.
The incident was a striking example of the exposure that can occur when a company hires a well-known athlete or celebrity to endorse their product. While the association increases brand awareness and raises public opinion, it can also generate huge financial loss if the endorser misbehaves.
“In this age of social media and instant news, reports of indiscretions by celebrities or high-profile athletes can spread worldwide instantly with swift, adverse implications for products or brands associated with the individual,” said Jeremy Johnson, chief executive with
Lexington Insurance.
Lexington last year introduced Celebrity Product RecallResponse to deal with the fallout. The standalone policy is triggered by “significant media coverage” of the endorser’s actual or alleged criminal act, or other conduct deemed “distasteful.” With limits of up to $5 million, it covers the costs of removing promotion and marketing materials as well as the recall of products bearing the endorser’s name or image.
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