When faced with a public relations crisis, a life insurance company is sometimes better off lying low than pursuing an aggressive counter-attack strategy.
So asserted top executives of Newark, N.J.-based Prudential Financial on Thursday during a general session of the 23rd Annual Executive Conference, held the Crowne Plaza Times Square hotel in midtown Manhattan. The Prudential executives–Deborah Bell, vice president and chief regulatory officer; and Bob DeFillippo, vice president and chief communications officer–discussed at the event Prudential’s successful responses to media coverage of the company’s handling of retained asset accounts for military service members and unclaimed death benefits.
Also participating in the morning gathering was Mark McCall, Americas head of strategic communications at FTI Consulting; and session moderator Bill Coffin, NUL’s editor-in-chief.
“In respect to the retained asset accounts, we hadn’t done anything wrong–we were acting in accordance with the law,” said Bello. “What we didn’t expect was where the public relations crisis was come from.”
The P.R. crisis, she added, stemmed from media reports in 2010–among them articles appearing in Bloomberg Markets Magazine–alleging that Prudential Financial unit Prudential Life Insurance Company manipulated the payout of life insurance benefits due to the families of American soldiers to boost profits.
The company provided life insurance to people in the armed forces under a government contract. In lieu of paying a death benefit to policy beneficiaries, the company deposited insurance proceeds into a retained asset accounts: Prudential corporate accounts that functioned like IOUs–beneficiaries received checkbooks they could use to draw down proceeds–and that paid interest to the beneficiaries.
The problem, critics charged, was that Prudential earned more in interest on the deposits than it was crediting to the families. And so the company was, to all appearances, profiting from the deaths of soldiers.
After bereaved families sued the company in August 2010, Prudential responded in part through an open letter to the military community in which it characterized media reporting on the accounts as “misinformation.” And, indeed, the corporate accounts were perfectly legal: Federal courts had previously dismissed lawsuits against other life insurers that had set up similar accounts.
Prudential’s legal standing was not sufficient, however, to overcome the negative publicity. Hence the need for an effective PR strategy.
Would Prudential be better served, corporate executives asked, by an aggressive public relations campaign to discredit the charges or by a more subtle course of action? The company decided on the latter–but only after a robust internal debate. To reach consensus, said Bell and DeFillippo, Prudential’s communications team had to persuade an initially skeptical top brass.
“Our argument, which prevailed, was that if we didn’t make a bigger deal–that if we didn’t argue publicly against what Bloomberg was writing–then we would keep the story from becoming a bigger one,” said DeFillippo. “Today, few people remember [the Bloomberg] series; they barely registered as a blip anywhere.”
Rather than defend the company through the news outlets, he added, the P.R. team communicated with veterans’ groups through social media, posts on its web site newsroom, and in face-to-face meetings at group gatherings. The team also spent much time communicating with Prudential’s own employees to secure their backing. The company additionally cultivated contacts with journalists who had a more nuanced understanding of the issue.
Result: the views expressed in the Bloomberg articles failed to gain traction in other media. The lynchpin of the communications effort, the social media campaign, was especially effective because Prudential’s team was able to convey its message directly to military families, which have established group pages on social networks like Facebook.
“This was a textbook case of when social media can really work,” said DeFillippo. “Here we had a defined group of people who spoke to each other through social media. We were able to effectively tap into those social media communities while also being respectful of their privacy.”
FTI Consulting’s McCall added that other companies have achieved similarly positive results using Prudential’s approach. Among them: Bain Capital, which had received negative publicity during the presidential campaign due to media reports about GOP contender Mitt Romney’s leadership role while at the helm of firm.
Bain, McCall said, stayed out of the political debate, believing that a public defense of the firm’s conduct during Romney’s tenure would have been disastrous.
“This would have made front page news,” said McCall. “Their stance in not responding to the political discussion really worked for them.”
A low-key media strategy during a political firestorm storm, McCall added, also proved effective for Transocean, a client of FTI Consulting and owner of Deepwater Horizon, the offshore drilling rig that in April of 2010 exploded in the Gulf of Mexico, killing 11 crew members and resulting in the second largest oil spill in U.S. history. Transocean’s strategy, said McCall, contrasted with the very public response to the environmental disaster employed by oil giant BP, which ultimately got saddled with the lion’s share of the blame in the media.
Should companies enlist the support of industry organizations when responding to a public relations crisis? Prudential executives said such groups can play a productive role, particularly when there is unanimity of opinion among the member companies. But in the retained asset accounts case, they noted that Prudential had to take the lead in mitigating the damage.
“Organizations like the ACLI did a bang up job helping to set the record straight,” said Bello. “But in the middle of a PR crisis, it’s ultimately the companies and their CEOs that people want to hear from.”
Turning to another blow-up in which Prudential was (among other carriers) the focus on negative publicity–insurers failure to use a Social Security Administration Death Master File to expedite the processing of unclaimed policy death benefits–the Prudential speakers said the company minimized the PR fallout by opting for a “business solution.”
To that end, Prudential collaborated with state insurance departments and contract auditor Verus Financial to help track down beneficiaries of unclaimed policy benefits.
“By adopting a cooperative stance from the beginning, we were able avoid becoming a focus of the bad publicity,” said DeFillippo. “We were among the first companies to settle, not only with Verus, and therefore with the state treasurers. We also secured settlements with 49 state insurance departments.
“In this case, the business solution was a great PR solution,” he added. “We didn’t want to become the poster-child for opposing getting money to the people it belonged to–it didn’t make sense. So everything we did publicly was a demonstration of our wanting to be cooperative.”