Speaking at an event in London, Phil Ellis said that 95% of major corporations had suffered at least one major reputational crisis in the last 20 years, but less than 10% of these events were insurable.

Research carried out by Willis, based on 600 publicly-held companies, had found that major firms suffer a ‘significant reversal of fortune’ once every seven years.

Mr Ellis said that the reasons behind these reversals were ‘widespread and impossible to predict’. They included the aftermath of 9/11, technology suddenly becoming obsolete, rumours of product contamination and fraud activity.

‘About 50% of the events we researched had to do with problems with the company’s business strategy or model; 15% were from lawsuits; 10% were due to M&A problems; notably, until 2011 natural catastrophes were not a factor in these reputation crises,’ he said.

Referring to the challenge facing the insurance industry, he added: ‘Our industry deals with protection against named perils – a storm, a fire, an explosion, piracy, a war, etc – some of these or a combination may damage a company’s reputation, but usually they do not.

‘In fact, based on our own research, less than 10% of major reputation-damaging events are due to an insurable, peril-related event.”

‘As a result, our standard insurance products aren’t designed to help out when reputation is damaged, except when a policy against a peril, like product recall, coincides with a fall in reputation. But even then the sums paid are not enough to turn the heads of any reputation stakeholder.’

He explained that clients looking for reputation cover wanted immediate payment from policies, with no or few exclusions and very high limits. The cost should also be priced significantly below capital, he said.

‘Insurers have so far not shown any real interest in responding to these needs, and so we’re looking increasingly towards capital markets for answers,’ he said.

According to Mr Ellis, 80% of a company’s leading risks – including reputation – are uninsurable with existing insurance products. ‘The insurance industry itself is facing a fall in its own reputation for not keeping up with new and emerging risks, and we have a long way to go in order to improve our relevance and standing in corporate risk finance and management.’