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May 26, 2002 at 08:00 PM
A few years back, Savings and Loan institutions all across the country collapsed, creating one of the largest financial disasters in our history. The taxpayer-funded bailout ultimately cost tens of billions of dollars. The remarkable thing about this crisis is that it came almost without warning–the media was caught napping.
As the details of the S&L crisis were unveiled, questions started to be raised about the entire financial services business, and speculation about “who will be next” was rampant. The media, like a pack of sharks on a feeding frenzy, began focusing on the insurance industry.
The perception at that time was the media had missed the warning signs in the S&L debacle, and they were determined not to miss the next crisis. The result was a lot of overzealous reporting that generated a lot more concern over our business than was justified by the facts.
The liquidity problems of a handful of companies and the demutualization of a major company to deal with the problem were seen by the sharks as evidence that we were a business that was in trouble. Their reporting magnified the extent of any real problems existing, thereby exacerbating the issue.
Thanks to great leadership at what was then the American Council of Life Insurance, measures were taken to offset the negative press reports, and a safety net was put in place to prevent any of the dire predictions coming out of the shark pack from becoming reality. It was a tense period in our history, but in time it became obvious that the industry was solid and the sharks, with no apology for the hysteria they created, moved on to other targets.
But now the sharks are back, led by Wall Street Journal reporters Theo Francis and Ellen E. Schulz. In a series of articles in the Journal, which have been picked up by local papers and TV around the country, Francis and Schultz have used the “tyranny of words” to demonize certain insurance products and the corporate clients who use them.
Specifically, they have targeted the use of corporate-owned life insurance by decrying practices that have not been in use since 1996. Had these articles been written 15 years ago, there might have been some justification for them, although even then, sales were not in violation of any laws in effect.
