Companies Deliver Public Relations Pitch

So just how does an industry respond to negative publicity?

A number of companies involved in the insurance world have had to answer that question regarding the broker contingent commissions crisis, which has grabbed headlines and put companies on the defensive.

The nation’s largest insurance brokers-Marsh, Aon and Willis-have faced a steady stream of questions, not only from regulators and attorneys general, but also from journalists, analysts and their clientele about their brokerage compensation practices.

For the most part, the three appear to be weathering the storm and doing so by acting substantively to address the core concerns and by being out in front.

The three firms have sworn off contingent commissions, which were at the heart of the scandal. They have adopted new disclosure and transparency policies and they quickly agreed to monetary settlements to end the litigation.

Marsh & McLennan replaced Jeffrey Greenberg with Michael Cherkasky as president and CEO and restructured its board of directors.

While not all three brokerages were available to comment for this story, the companies and their chief executives have generally made themselves available to the press during the crisis. The brokers have made themselves available for interviews with journalists and grilling by investment analysts. They have also sought out opportunities to speak with insurance buyers.

Marsh CEO Cherkasky, Willis CEO Joseph Plumeri and Aon Chairman Patrick Ryan all appeared as headliners and in private gatherings at the biggest meeting of their customers-the recent annual convention of the Risk and Insurance Management Society in Philadelphia.

“Marsh has been communicating directly and frequently with its clients,” said a company spokesperson when asked about its public relations efforts during crisis. “Marsh people have made this their single highest priority. We’ve let clients know that we have a new business model that is transparent and simple, and directly responsive to their needs.”

The brokerage scandal has invited healthy competition among the brokers to prove which is the more committed to disclosure and transparency. In addition to dropping contingent commissions, they have offered full disclosure of their sources of revenue. Willis even adopted a Clients’ Bill of Rights setting forth promises over best practices and client advocacy.

With a settlement behind it, Marsh used the RIMS convention to further boost its message with an advertising blitz of billboards in and outside the convention hall. That image campaign has continued in major news, business and insurance publications with ads that feature Marsh executives declaring that they are proud to be associated with the firm.

Early in the crisis, Aon’s public relations offensive hit a snag when Ryan had to clarify comments he made in a front-page Dec. 5 Chicago Tribune story about the No. 2 broker’s ethical practices surrounding contingent commissions and bid rigging. “I’m very comfortable with our past behavior,” Ryan, told the newspaper. The story was headlined, “Aon chief not fazed by insurance probes.”

A day later Ryan admitted that some employees had broken the company’s ethics policy and complained that the Tribune’s characterization of the company being untroubled by the legal action was inaccurate because he in fact took the matter very seriously.

But since then there has been little to criticize in the way Aon and its rivals have handled the crisis from a public relations standpoint. In fact the way they are handling it seems to agree with some of the industry’s public relations pros.

According to Gary Kimball, co-chair of the public relations committee of the Insurance Marketing Communications Association and president of Kimball Communications, the companies named in the Spitzer probes all faced a very difficult public relations situation.

“They had legal constraints that certainly affected what they could say and how they could say it,” Kimball said. “But they all seemed to be willing to communicate quickly and then take another crucial step-correcting long-standing practices that were perceived to be wrong.”

The brokers have handled challenges from several directions, according to Peter van Aartrijk, managing director of Virginia-based The van Aartrijk Group, a communications firm.

“First of all, this is a really embarrassing and scary issue for these organizations to deal with,” van Aartrijk said. “They’re reeling. As a public relations professional, you don’t want to become part of the problem by shooting off your mouth. Under the circumstances I think they’ve generally been forthcoming. ‘No comment’ sounds weak, but sometimes ‘no comment’ at a particular point in time is literally your only option as a public relations professional. If you don’t have all the information, it’s a mistake to talk.”

Van Aartrijk noted that teamwork is crucial. “These major brokers probably have ‘war rooms’ that include senior executives, legal and corporate communications, all working as a team,” van Aartrijk said. “These groups should provide a single voice in the media, to the media, as well as other constituents.”

He said that in situations like this there is always tension between lawyers and communications staff. “Lawyers typically have their feet on the brake, and PR people on the gas. When faced with a crisis, PR people have been taught to talk-yes, be very judicious about what you say, but say something. Lawyers don’t like that.”

Van Aartrijk maintains that the Tylenol scare two decades ago taught firms the importance of decisive public action from the very top of the organization. “But you need to have a plan on what you can say, and if there is a cancer inside the organization, you have to root it out before you tell everyone how great you are,” he added.

“Good brands are about trust,” van Aartrijk continued. “When companies are in a crisis of this magnitude, smart brand managers know their first job is to keep employees and current customers in the fold-to reassure them, to overcome objection, to keep them from bolting. For example, that’s exactly why Marsh now has a major advertising campaign underway aimed, I suspect, first at its 30,000 employees and secondly at risk managers. The tagline reads, ‘That’s why I’m proud to be with Marsh.’ They’re in the process of rebuilding morale.

“I figure the other brokers are doing the same thing. They’re all saying, ‘transparency is here’ and ‘trust us.’ Somehow it all rings a bit hollow to me-the problem is that you can’t ask for trust. You have to earn it. That takes time.”

According to Kimball. companies must put a positive face on the situation. “You need to communicate with all your audiences, including the media, customers, shareholders, employees and business partners, with an eye toward restoring any confidence in your company, brand and products,” he said. “You’re seeing some of these efforts now by companies that were involved in the mess. Their advertising is not just directed to selling products, but to restoring confidence in their corporate reputation and brand.”

Kimball thinks that the industry should study this situation. “I think we, as an industry, need to look at how this situation has affected the overall credibility in the industry. Then we need to take steps to restore any lost confidence.”

Van Aartrijk is also concerned about the long-term effects. “Even though a few greedy, lazy or misguided company executives and brokers might be responsible, there’s a suspicion in some quarters that this is de rigueur activity around the insurance business. This simply feeds the regulatory, legislative and consumer perception that insurance is a distant, faceless industry that’s concerned only about numbers and profits and not with people.”

Van Aartrijk, who serves on the board of the Insurance Media Association, said the entire program of the association’s annual meeting would be devoted to how the industry has responded to the crisis.

Topics Auto Agencies Aon