From Charlie Sheen’s recent, eccentric behavior to Lindsay Lohan’s run-ins with the law to Tiger Woods’ reputation damage, insuring the rich and famous (and sometimes out of control) has never been easy. PropertyCasualty360.com takes us on a wild ride to look at specific insurance issues that affect those with a lot of money and, sometimes, a lot of risky behavior.

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Launched by DeWitt Stern, the 110-year-old risk management and insurance brokerage firm, the coverage will work to protect brands, corporate entities and advertisers against losses spawned by reputational risk crises.  The company’s managing director had this to say in the Insurance Business Review:

“The Tiger Woods scandal shows how quickly reputations can become tarnished in today’s fast-paced media environment,” said LeConte Moore, managing director of DeWitt Stern’s New York City office. “All the planning in the world cannot protect a brand manager against the unforeseen. Reputation Risk Insurance will provide those forward-looking brand managers and advertisers with a smart and attractive way to protect their investments.”

And protection of investments they will need. If Woods sticks to his break from professional golf, it is reported that TV audiences could shrink by up to 50% — which could stick Nike with a $30 million loss in sales. So far, only Accenture, a Dublin-based consulting company, has ended its business relationship with Woods.

The following sponsors (courtesy of Bloomberg) remain supportive:

• AT&T
• Electronic Arts
• Pepsi
• Procter & Gamble
• Golf Digest
• Nike
• The Tiger Woods Dubai
• TLC Vision
• Upper Deck
• TAG Heuer
• NetJets

However, Bloomberg reports that AT&T is “evaluating its advertising relationship with Woods, according to a Dec. 12 e-mailed statement,” Gillette (a Procter & Gamble company) will stop running print and broadcast ads with Tiger, and Pepsi is “talking to his people regularly at this point.”

On the other hand, Nike, Golf Digest and Upper Deck will all rhetorically plan to continue their Tiger-related operations as if nothing happened.

Says Upper Deck:

“Upper Deck will maintain its exclusive agreement with Tiger in both our sports cards and memorabilia categories, and we look forward to his eventual return to the PGA Tour,” Richard McWilliam, chief executive officer, said in a statement Dec. 15. “Tiger and his family have our full support.”

Reputational risk coverage may be too little too late for these companies, as not just Nike, but every Tiger Woods sponsor stands to lose some amount of money from his foolish actions. And as his number of reported mistresses grows every day and talks of divorce swirl, it remains to be seen if Accenture will be the only company to cut their losses . . . and their reputation risk.

• The swine flu vaccination for children isn’t strong enough, so it’s being recalled.

• Despite yesterday’s passage of Wall Street Reform and Consumer Protection Act (HR 4173) in the House, regulators across the globe are still dragging their feet on financial sector reform. Paul Volcker continues to tell everyone who will listen — and even those who won’t — about the grave need to restructure the industry, but no one is doing anything tangible about it. “Two years after the start of the deepest recession since the 1930s, no U.S. or European authority has put in force a single measure that would transform the financial system, based on data compiled by Bloomberg. No rule- or law-making body is actively considering the automatic dismantling of banks that Volcker told Congress are sheltered by access to an implicit safety net.” Acclaimed economist and Nobel-winner Joseph Stiglitz says Volcker is “spot on” and Robert Creamer makes a similar “if it’s too big to fail, it’s too big to exist” plea over at The Huffington Post. Bankers, for their part, assured Obama today that they are willing to play ball during their visit to the White House. We’ll see.

• A Willis survey sees the hard market for financial institutions insurance softening. “While insurers are still concerned about their 2007 and 2008 loss ratios and are, at present, underwriting very conservatively, the expected influx of new markets for 2010 will help to generate more favorable trading conditions for clients.”

• The IRS has ruled that the captive reinsurance of fronted pools will be treated as insurance going forward. What exactly does that mean? “The ruling says two things … It says that the reinsurance to the (captive) is insurance, and then that the captive — because the only thing it does is insurance — is insurance as well.” Got it?

• The Corporate Executive Board offers its “Executive Guidance 2010: The Six Enemies of Post-Recession Performance,” which include “Larger and More Frequent Losses Due to Increasing Risk Velocity” and “Rising Losses and Steeper Penalties Due to High Levels of Employee Misconduct.”

• One analyst expects low P/C stock returns in 2010.

• The New Yorker‘s 12-page feature “The Most Failed State” profiles Somalia’s President Sheikh Sharif Sheikh Ahmed and details the desolate national landscape that has given rise to the pirates that dominate the country’s coastline. (Subscription required) Ahmedou Ould-Abdullah, the U.N.’s special representative to Somalia, offers this bleak analysis: “Somalia is just as bad as it has ever been, perhaps worse. I know that it is politically incorrect to say so, but there can be no humanitarian ‘emergency’ that should continue for twenty years — it’s a contradiction in terms.”

• The New Yorker also takes on the reputation risk that can occur for companies whose pitchmen (no pun intended) have a high-profile controversy like the ongoing Tiger Woods circus. Caroline McDonald broached the same topic the other day on her blog and Maureen Dowd had similar sentiments.

• Bank of America still can’t find a CEO.

• Some are concerned that China’s rush to embrace nuclear power in lieu of dirty coal plants could lead builders to cut corners in regards to safety. “China must maintain nuclear safeguards in a national business culture where quality and safety sometimes take a back seat to cost-cutting, profits and outright corruption — as shown by scandals in the food, pharmaceutical and toy industries and by the shoddy construction of schools that collapsed in the Sichuan Province earthquake last year.”

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While Lehrer’s BI interview is well-reasoned and even worded, not all of the CEI’s efforts in the arena have been. Earlier this year, the CEI launched NoBeachHouseBailouts.org, which appears to promote itself on the specious notion that a national catastrophe defense fund, such as the one outlined in the Homeowner’s Defense Act of 2008, would primarily benefit the likes of super-rich celebrities seeking government bailout funds for their beach-front mansions. It’s the kind of cynical sloganeering we’d expect in a nasty political campaign (Lehrer himself was a speechwriter for Bill Frist, R-TN), especially since it goes for a gut reaction instead of considering the facts.

When we study poverty rates along all coastal counties subject to Atlantic hurricanes (figures provided by the United States Department of Agriculture’s Economic Data Service, 2007) we find that 10 of the 19 states with coastal risk exposures to Atlantic hurricanes have higher poverty rates on the coast than the statewide average. And across all coastal states subject to hurricanes, the average county poverty rate in 2007 is 12.4%, only 0.6% below the national rate.

More to the point, if we look at regional data, an even more interesting picture emerges. Coastal poverty rates are lower than the national average almost across the board in states from Virginia through Maine — those northeastern states that have a much milder hurricane history than their more southern counterparts. Coastal poverty rates from North Carolina through Texas — the states where hurricanes make landfall most frequently — were almost entirely above state averages. And this, in states where the statewide averages themselves were universally several points higher than the national poverty average.

Bottom line: a national catastrophe defense fund is meant to provide for those who cannot afford to rebound from a hurricane strike with the means to do so. The states that would benefit from this the most are poorer southern states that already have higher-than-average rates of poverty compared to the rest of the nation, and whose coasts are even more poverty-stricken. To suggest that a national catastrophe defense fund would primarily bailout celebrities such as Donald Trump, Tiger Woods and John Travolta, as the CEI does, displays a certain ignorance of the wider economic reality of coastal risk.

It is tempting indeed to suggest that if people do not wish to deal with coastal risk, they should simply move away from the coast. However, such wishful thinking flies in the face of global human behavior, which is showing more movement toward coastal areas than at any other time in the history of our species. Coastal risk cannot be dismissed with a wave of the hand, nor is it primarily borne by those with more than enough personal resources to cope with the risks.

If the CEI is so bothered by the thought of millionaires benefiting from a catastrophe defense fund, then a more reasoned approach would be to lobby for a condition exempting homeowners with single property values over a certain amount, on the basis that such property owners already have enough to afford proper levels of insurance, or can finance their risk independently, rather than argue to deny our nation’s coastal poor the benefit of government relief when the next major hurricane strikes them.