The CEO of Farmers Insurance has a new incentive for his sales force: if they beat the goals laid out for policies in force (PIF), he will show up at internal and agent-facing events wearing “…some of the most unconventional suits you have ever seen. The farther we go above the line, the bolder it gets.”
The CEO of Allianz has been spotted in a ‘Wanted’ poster from the set of the latest “Spider-Man” movie, shot in Glasgow. While some fans speculated he was Bruce Banner, in reality the poster was created by an activist group protesting the CEO’s alleged ties to an Israeli arms firm. Searches for the CEO himself spiked after fans realized he was not, in fact, Professor Hulk.
Finally, the CEO of data firm Astronomer was met with scandal when caught in an apparent affair on the jumbotron at a Coldplay concert. Beyond the ensuing viral firestorm, an official company investigation followed, leading to his resignation.
While only the last of these examples has led to apparent repercussions, all three demonstrate the visibility of the CEO and the perception that the CEO is the embodiment of their company. In our world today, we are all increasingly at risk of being captured on camera. Because of the unique position of CEOs, there is an increased risk of damage to their reputation, which can lead directly to litigation. Further, shareholders can (and do) interpret some CEOs’ decision-making to be creating a fiduciary risk, putting their stock prices at risk. Their poor decision-making can challenge the duty of care required of C-suite executives.
What This Means for Actuaries:
Directors and officers (D&O) insurance is a product designed to protect the personal assets of the directors and officers of a company in the event they are sued for wrongful acts in their roles as executives. As the world becomes increasingly surveilled, CEOs’ decisions may increase the frequency of D&O losses. CEOs’ actions serve as an extension of and a reflection on their company. Severity of D&O loss could also increase given the speed and span of these viral moments, reaching a broader group of people than was previously possible.
While these examples span the spectrum of personal to professional, CEO conduct is a meaningful input when considering the insurability of a particular D&O risk. In the Astronomer example, the very public personal scandal can affect investor sentiment, thus calling into question whether the CEO was meeting his fiduciary duty. The Allianz and Farmers examples, meanwhile, seem less likely to draw the ire of potential litigants, though their personal profiles and decisions are very much under the microscope.
Sources:
P&C Specialist – A CEO in a Gold-Sequined Suit? Farmer’s New Gimmick to Drive Sales.
No Way Holmes: Allianz CEO mistaken for The Hulk – Insurance Post
Andy Byron’s net worth faces significant hit over Astronomer scandal
