Is brand restoration insurance a good investment?

An interesting article was posted by FT.com last week where it discussed the advantages and disadvantages of brand restoration insurance offered by AON. The full article can be found here.

We will have read recently of a number of companies who may have benefitted from such insurance: BP and Toyota for example and the insurance is all very well for larger companies who can afford the premiums but what about smaller companies? The crux of the article lies in the following paragraph:

“Brand and reputation are the sum of the investment of management time and energy in the invention, manufacture, marketing and distribution of successful products and services. Reputation management may sustain and promote your brand in good times and crisis management may help salvage some of it when they turn bad. But bosses who neglect the building blocks of their company’s success will find in a crisis that they have no reputation to defend, no matter how much insurance or advice they have bought.”

Before companies invest large sums of money in insuring their brand and reputation, they must first have brand and reputation worth protecting. This occurs through a long term commitment and through consistency in approach and if properly managed as the company’s “most valuable asset”, the need for insurance may not be needed.

Is this insurance really needed, or has it been created as a consequence of a cut-throat, win-by- any-means marketplace? Is good housekeeping the better option? Perhaps the “insurance premium” might be better spent building the brand value inside the business with employees, partners and suppliers to secure the equity? Do you agree?

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