august 5–18, 2019 | new york 75about wanting to kill a “black bastard” as
evidence. “The severity wasn’t nearly as
high as you’d predict,” he said. The public
was well informed of mitigating factors
(his friend had been raped; this was far in
his past). It turns out that the vox populi is
capable of nuance.
The only celebrity anyone at Spotted
declared essentially uninsurable was Kelly.
As for Donald Trump, Dearborn said, “he
would probably trigger a claim every
week,” simply by existing. “Some people
are basically human triggers.”true to its roots in paparazzi sight-
ings, Spotted plans to capitalize on the pop
appeal of its insurance when it writes its
first policy later this summer. There will be
an ad in The Hollywood Reporter, reading,
“have you been disgraced?” Comenos
also showed me a dark presentation video
set to the tune of Lou Reed’s “Walk on the
Wild Side.” It starts with scrolling phrases
(“we track where they go,” “we track
what they do,” “we track everything
they do”), followed by photos of Caitlyn
Jenner’s transition, a long Britney Spears
breakdown montage, some Full House
deep cuts, and a triptych of snapshots of
Amy Winehouse at her worst.
Before getting its underwriting license,
Spotted had spent a few months looking
to partner with existing insurers. Its more
established peers are deeply curious
about what it will produce, but skeptical
that it will be quickly or broadly adopted.
Hubbard, whose HCC Specialty was an
early potential partner with Spotted, said
he’s working on a different model, one
that uses a sliding scale of disgrace,
whereby a claim would be triggered by a
set change from the policy’s start date.
But he has no immediate plans and sees
little urgency in competing over a product
with no track record. “I’m not sure going
second or third isn’t the best thing to do
in product development,” he said. “It’s
unlikely that someone is going to get it
right the first time.”
Other experts were not convinced
SpottedRisk could attract enough regular
clients to create a stable risk pool. What
makes their product fascinating—the
novelty of the algorithm—might even put
off potential customers, making disgrace
insurance look like a luxury add-on with-
out a proven track record rather than a
necessity. It’s one thing to demonstrate
demand, another to persuade an entire
industry to create a new budget line item.
Another lingering problem is that $10
million still wouldn’t cover even a rela-
tively modest indie film. Comenos hopes
to push some limits up to $15 million on
rare occasions, but unlocking signifi-cantly more will require a year of profit-
ability, keeping payouts below 60 percent
of the premiums she takes in. Even to
secure $10 million, she has had to com-
promise on several features. She has
scrapped plans for crisis-counseling ser-
vices, which some believe might have
been a more profitable use of the data.
And her entertainment coverage will now
require Hollywood to prove its losses—
muddying her system of clear payouts
and raising the risk of disputes.
Spotted plans to sell its insurance
through traditional Hollywood brokers,
including Gallagher Entertainment.
When I asked its managing director, Brian
Kingman, about whether he could sell
Spotted to his clients, he seemed a little
ambivalent. He didn’t think the lower tiers
would cover enough of the losses. “We
need more limit, but I think it’s a start.” He
was still a little shaky on the specifics, sug-
gesting that, a month before the planned
rollout, Comenos’s drive to “educate the
brokers” was still an ongoing process.
Kingman is reasonably confident that,
with hard data and Lloyd’s backing, the
policies will work. What he’s not so sure
about is that they’ll sell.
Comenos isn’t the type to wait to find
out. The company has so far raised more
than $11 million, roughly half of it from
Boston private-equity firm Schooner Capi-
tal and most of the rest from Comenos’s
friends and family. At an all-hands meet-
ing the morning of my visit, she went over
seven goals that needed to be met by the
fall in order to lure Series B funding for the
company’s next phase. Most of these, to
my surprise, involved the launch of an
entirely new class of products: “reputa-
tional insurance.” Like disgrace insurance,
but for companies instead of people.
This new policy line—which has since
been pushed back to early 2020—would
cover all risks to a company’s image, from
cyberterrorism to product recalls to a
CEO’s dismissal over expensing visits to
brothels. It makes sense; one recent report
found that reputational damage is the
No. 1 risk that companies fear. Brands are
less stable than they once were, with fewer
in it for the long haul and more, like Spot-
ted, eyeing what Comenos calls “a very siz-
able exit.” Companies now spend less than
20 years on the S&P 500, down from 60
in the postwar era. In a world where peo-
ple are treated as brands and brands are
increasingly treated as people, reputation
is the most valuable commodity of all. So,
Spotted hopes, is the information that can
be gleaned and monetized in the service of
protecting it. It could be a great new busi-
ness opportunity—or, at the very least, a
really cool data set. ■been subjective; that’s why past policies
have been constructed so vaguely.
And that is why the Outcry Index is
arguably more important than the risk
score. (It’s also the one Spotted was more
willing to share; the company felt that
releasing celebrities’ risk scores could be
libelous.) After a disgrace event, the Bos-
ton data team writes about 25 questions
testing the public’s recall of and reaction to
the scandal and sends them to Kantar, a
research firm that conducts online polls on
days one, four, seven, and so on. Data is
collected for 30 days, though the claim is
triggered after a week. The results fall into
one of five tiers, each of which pays out at
20 percent: A Tier 1 event pays $2 million
on a $10 million policy, while a Tier 4 pays
$8 million. This set of what the industry
calls “parametric triggers” is common for
measurable events like earthquakes and
hurricanes but is new to disgrace.
All those numbers don’t necessarily
add up to a real policy; data may make a
big impression among venture capitalists,
but the proof will be in the payouts. In
order to demonstrate the viability of the
product to the investors at Lloyd’s, Spot-
ted has run giant simulations on disgrace
events over the past year, creating a sort
of alternate universe in which the entire
entertainment industry carried its insur-
ance. In its models, Felicity Huffman’s
disgrace was only a Tier 1, meriting $2
million, while Lori Loughlin’s was a Tier
2 (not as likable/popular; she didn’t apol-
ogize). The documentary Surviving R.
Kelly triggered a Tier 3, but then Kelly’s
February arrest promoted him to Tier 4.
Jussie Smollett was only a Tier 1 because
the allegations were murky in the public’s
mind. Louis C.K. was a 2; Roseanne Barr
and Matt Lauer were 3’s, Spacey a 4. The
$10 million jackpots, the Tier 5’s, were
paid out by the fictional insurers of Bill
Cosby and Harvey Weinstein.
You learn things about people from data
like this. Certain celebrities are Teflon.
Chris Brown, despite 40 prior disgrace
events, remains insurable—at least for
Spotted. The data also found that social-
media outrage doesn’t always reflect
broader attitudes. “One of the reasons that
we rely on the survey data is that we’ve
done tons of testing of social media,” said
Dearborn. “Almost every single event
looked like it was a world-ending event.
The internet just does not react to things
in the way that humans do.” Barr is the rare
exception, having spawned equivalent out-
rage on Twitter and IRL.
The survey results have left Spotted’s
Doctors of Disgrace with a view of the pub-
lic as fairly forgiving. Hutchinson presents
Liam Neeson’s controversial anecdoteY ___ DD ___ AD ___ PD ___ EICTRANSMITTEDREVISED
________ COPY ___ DD ___ AD ___ PD ___ EIC1619CR_disgrace_insurance_lay [Print]_35557129.indd 75 8/1/19 4:30 PMaugust 5–18, 2019 | new york 75about wanting to kill a “black bastard” as
evidence. “The severity wasn’t nearly as
high as you’d predict,” he said. The public
was well informed of mitigating factors
(his friend had been raped; this was far in
his past). It turns out that the vox populi is
capable of nuance.
The only celebrity anyone at Spotted
declared essentially uninsurable was Kelly.
As for Donald Trump, Dearborn said, “he
would probably trigger a claim every
week,” simply by existing. “Some people
are basically human triggers.”true to its roots in paparazzi sight-
ings, Spotted plans to capitalize on the pop
appeal of its insurance when it writes its
first policy later this summer. There will be
an ad in The Hollywood Reporter, reading,
“have you been disgraced?” Comenos
also showed me a dark presentation video
set to the tune of Lou Reed’s “Walk on the
Wild Side.” It starts with scrollingphrases
(“we track where they go,” “we track
what they do,” “we track everything
they do”), followed by photos ofCaitlyn
Jenner’s transition, a long Britney Spears
breakdown montage, some Full House
deep cuts, and a triptych of snapshots of
Amy Winehouse at her worst.
Before getting its underwritinglicense,
Spotted had spent a few monthslooking
to partner with existing insurers. Its more
established peers are deeply curious
about what it will produce, but skeptical
that it will be quickly or broadly adopted.
Hubbard, whose HCC Specialtywas an
early potential partner with Spotted, said
he’s working on a different model, one
that uses a sliding scale of disgrace,
whereby a claim would be triggered by a
set change from the policy’s start date.
But he has no immediate plans and sees
little urgency in competing over aproduct
with no track record. “I’m not sure going
second or third isn’t the best thing to do
in product development,” he said. “It’s
unlikely that someone is going to get it
right the first time.”
Other experts were not convinced
SpottedRisk could attract enough regular
clients to create a stable risk pool. What
makes their product fascinating—the
novelty of the algorithm—might even put
off potential customers, making disgrace
insurance look like a luxury add-on with-
out a proven track record rather than a
necessity. It’s one thing to demonstrate
demand, another to persuade an entire
industry to create a new budget line item.
Another lingering problem is that $10
million still wouldn’t cover even a rela-
tively modest indie film. Comenos hopes
to push some limits up to $15 million on
rare occasions, but unlockingsignifi-cantly more will require a year of profit-
ability, keeping payouts below 60 percent
of the premiums she takes in. Even to
secure $10 million, she has had to com-
promise on several features. She has
scrapped plans for crisis-counseling ser-
vices, which some believe might have
been a more profitable use of the data.
And her entertainment coverage will now
require Hollywood to prove its losses—
muddying her system of clear payouts
and raising the risk of disputes.
Spotted plans to sell its insurance
throughtraditionalHollywood brokers,
including Gallagher Entertainment.
When I asked its managing director, Brian
Kingman, about whether he could sell
Spotted to his clients, he seemed a little
ambivalent. He didn’t think the lower tiers
would cover enough of the losses. “We
need more limit, but I think it’s a start.” He
was still a little shaky on the specifics, sug-
gesting that, a month before the planned
rollout, Comenos’s drive to “educate the
brokers” was still an ongoing process.
Kingman is reasonably confident that,
with hard data and Lloyd’s backing, the
policies will work. What he’s notso sure
about is that they’ll sell.
Comenos isn’t the type to waitto find
out. The company has so far raised more
than $11 million, roughly half ofit from
Boston private-equity firm Schooner Capi-
tal and most of the rest from Comenos’s
friends and family. At an all-hands meet-
ing the morning of my visit, she went over
seven goals that needed to be met by the
fall in order to lure Series B funding for the
company’s next phase. Most of these, to
my surprise, involved the launch of an
entirely new class of products: “reputa-
tional insurance.” Like disgrace insurance,
but for companies instead of people.
This new policy line—which has since
been pushed back to early 2020—would
cover all risks to a company’s image, from
cyberterrorism to product recalls to a
CEO’s dismissal over expensing visits to
brothels. It makes sense; one recent report
found that reputational damage is the
No. 1 risk that companies fear. Brands are
less stable than they once were, with fewer
in it for the long haul and more, like Spot-
ted, eyeing what Comenos calls “a very siz-
able exit.” Companies now spend less than
20 years on the S&P 500, down from 60
in the postwar era. In a world where peo-
ple are treated as brands and brands are
increasingly treated as people, reputation
is the most valuable commodity of all. So,
Spotted hopes, is the information that can
be gleaned and monetized in the service of
protecting it. It could be a great new busi-
ness opportunity—or, at the veryleast, a
really cool data set. ■been subjective; that’s why past policies
have been constructed so vaguely.
And that is why the Outcry Index is
arguably more important than the risk
score. (It’s also the one Spotted was more
willing to share; the company felt that
releasing celebrities’ risk scores could be
libelous.) After a disgrace event, the Bos-
ton data team writes about 25 questions
testing the public’s recall of and reaction to
the scandal and sends them to Kantar, a
research firm that conducts online polls on
days one, four, seven, and so on. Data is
collectedfor 30 days,thoughtheclaimis
triggered after a week. The resultsfall into
one of five tiers, each of which pays out at
20 percent: A Tier 1 event pays $2 million
on a $10 million policy, while a Tier 4 pays
$8 million. This set of what the industry
calls “parametric triggers” is common for
measurable events like earthquakes and
hurricanes but is new to disgrace.
All those numbers don’t necessarily
add up to a real policy; data maymake a
big impression among venture capitalists,
but the proof will be in the payouts. In
order to demonstrate the viability of the
product to the investors at Lloyd’s, Spot-
ted has run giant simulations on disgrace
events over the past year, creating a sort
of alternate universe in which the entire
entertainment industry carried its insur-
ance. In its models, Felicity Huffman’s
disgrace was only a Tier 1, meriting $2
million, while Lori Loughlin’s was a Tier
2 (not as likable/popular; she didn’t apol-
ogize). The documentary Surviving R.
Kelly triggered a Tier 3, but then Kelly’s
February arrest promoted him to Tier 4.
Jussie Smollett was only a Tier 1because
the allegations were murky in thepublic’s
mind. Louis C.K. was a 2; Roseanne Barr
and Matt Lauer were 3’s, Spacey a 4. The
$10 million jackpots, the Tier 5’s, were
paid out by the fictional insurers of Bill
Cosby and Harvey Weinstein.
You learn things about people from data
like this. Certain celebrities areTeflon.
Chris Brown, despite 40 prior disgrace
events, remains insurable—at least for
Spotted. The data also found that social-
media outrage doesn’t always reflect
broader attitudes. “One of the reasons that
we rely on the survey data is that we’ve
done tons of testing of social media,” said
Dearborn. “Almost every single event
looked like it was a world-ending event.
The internet just does not react to things
in the way that humans do.” Barr isthe rare
exception, having spawned equivalent out-
rage on Twitter and IRL.
The survey results have left Spotted’s
Doctors of Disgrace with a view of the pub-
lic as fairly forgiving. Hutchinson presents
Liam Neeson’s controversial anecdote