Meet The Press

I led a trio of daily newspaper reporters covering insurance as their fulltime beat into the lion's den in Boston yesterday, moderating a panel discussion about the industry's poor reputation during the annual conference of the Property Casualty Insurers Association of America. Read on for the insights and keen advice they and many others at the meeting offered this reputationally challenged industry.

The panel felt like a focus group, only instead of the sponsors being comfortably separated from their critics by a one-way mirror, or watching the critique later on a video, the two groups were literally face to face.

I give a lot of credit to the journalists for flying up to deliver in person their frank assessments of the industry's communication shortcomings. But I also credit PCI for having the guts to convene the panel, since we all know the first step in solving a problem is admitting you have one.

Unfortunately, the room was only about half-full for our panel, when it was packed the day before when Rep. Barney Frank and Steve Forbes spoke. Perhaps that was because many snuck out to join the Boston Red Sox championship party as the team's victory parade passed right up the block from our Copley Square hotel.

More likely, however, the thinner turnout only goes to show that many in this industry are still in denial, unable to appreciate the impact of their poor public image on operations, the political climate and their bottom line. PCI and other groups still have a lot of educating to do to convince all of their members to make reputational risk management a priority, or suffer the consequences.

And consequences there are, as the three reporters who joined me on the podium were quick to point out.

Both Tom Zucco of the St. Petersburg Times and Becky Mowbray of the New Orleans Times-Picayune cited a “bunker mentality” on the part of insurers, noting how difficult it is to get anyone in authority to speak to them when catastrophes strike.

Ms. Mowbray noted “a big difference between the response of trade groups and individual companies,” citing how the Insurance Information Institute was “a huge help in explaining the big picture,” while top insurance company officials were too often nowhere to be found.

“Maybe that's by design,” she speculated. “The insurers want the trade groups to take the hits, while it's really hard to reach the key people on claims, with everything they say vetted first by their attorneys.”

Beatrice Garcia of the Miami Herald said it was “hit and miss” in getting insurers to comment, with the top dogs at smaller, local carriers far more accessible than CEOs and claims managers at the national giants. However, she also complained about “information from the insurers getting filtered through media relations,” calling PR intervention “counterproductive. I want to speak with the actual people responsible.”

She noted that during the Northridge earthquake in California, she interviewed the president of Fireman's Fund on his mobile phone as he drove through the devastated area, describing the damage he was encountering. “That kind of access and response is all too rare,” she said.

All three noted that they are inundated with calls and e-mails from disgruntled and often desperate policyholders, who are either confused about their coverage or angry about a claim that's only partially paid or rejected outright.

“Readers ask us what to do, but we're not their insurers and we're not their attorneys,” said Mr. Zucco. “But it shows how desperate people are for reliable information, which they are not getting from their carrier, their agent or their government much of the time.”

The flight of carriers from a market devastated by a disaster doesn't do much to improve the industry's image, the reporters agreed.

“Those who get paid are grateful to their insurers, but many believe the insurance industry is making it very difficult for their communities to come back, as claims are not fully paid, carriers disappear from the market and rates soar,” said Ms. Mowbray.

“What people feel about the industry is reflected by what they see on their bills,” she added. “They see higher deductibles, higher premiums and less coverage, if they are offered a policy at all.”

Mr. Zucco added that reader complaints about the industry spike after his newspaper published insurance company earning reports showing profits soaring while their coverage shrinks and premiums skyrocket.

The two Florida dailies represented on the panel tried to bridge the information gap by holding public forums and roundtables to bring together people from the community and the industry with regulators and political leaders. Both published edited versions of the discussion in their publications, with full versions appearing on their Web sites. They urged insurers to initiate more such public forums with local media after catastrophes strike to clear up confusion, give out information and explain the market impact.

“This provides an opportunity for the industry to get the word out, present its point of view and suggest possible solutions,” said Ms. Garcia. “It's a chance for them to get their message out uncensored, instead of complaining about only getting a few sentences into a news story from a much longer interview.”

The reporters also urged insurers to speak English, rather than confusing journalists and readers with technical jargon. “Most people hear the words 'actuarially sound' and they think you're talking about a body of water,” said Mr. Zucco.

According to Ms. Garcia, “where the industry gets its biggest black eye is when mishandling claims. Word of mouth spreads fast on bad claims experiences.”

One suggestion to enlighten the public was imbedding reporters with adjusters assessing claims in disaster areas, but the results of actually doing so were mixed–at least from the industry's viewpoint.

Ms. Garcia related some very positive experiences riding around with adjusters following the Northridge earthquake. But Ms. Mowbray noted that a colleague accompanying an adjuster on a Hurricane Katrina claim witnessed a policyholder break down in tears when told their loss was flood-related and therefore not covered by the carrier, and it turned out the insured did not have federal flood insurance, either.

However, the two agreed that going out on a number of adjusting calls would show the media and the public what the industry is up against working in a veritable war zone following a natural disaster.

The day before my panel, David A. Sampson, PCIs president and CEO, meant to state his commitment to improving the industry's image during his first public address, but due to time constraints, the former deputy commerce secretary was forced to cut that section out.

That's really unfortunate, because Mr. Sampson seems to recognize the depth of the problem, and it would have been a powerful message to deliver to his membership. But at least PCI authorized the release of his full written remarks following the speech.

In his text, he called insurance a “misunderstood industry,” adding that too many consumers perceive the industry to be their enemyan unresponsive monolith of corporate greed that is more concerned about profits than people.

In his speech text, he said this public perception is symptomatic of a growing wave of economic populism nationally and consumer opinion about the industry in many parts of the country, especially in coastal areas prone to natural disasters. He cited the industrys poor image in the aftermath of Hurricane Katrina as one major cause undermining insurer credibility with both the public and policymakers, and pledged to work to turn public perception around.

I am not nave enough to think the industry can wave a magic wand and convince the vast majority of the public to love us, he wrote in his speech text. But I do believe that by focusing on the fundamentals of our industry and through more effective communications with consumers and public policymakers, we can restore their trust in the industry and their respect for our contributions to personal safety and economic security.

He conceded that enhancing our public image and reputation will not be easy, nor will it occur overnight. But it is possible, and we must make this a priority for PCI and the industry.

To be fair, besides convening this tough love panel of journalists, PCI has been fairly active in addressing the industry's image problem.

The day following my panel, their presiding chairman, Tom Tierney, the president and CEO of Vermont Mutual Insurance Group, noted in his report to the membership that the PCI board had “hired one of the nation's premiere pollsters, Frank Luntz, to conduct extensive public opinion research so that we could better understand why consumers felt they way they did and what action insurers could take to change public opinion and set the stage for an open and honest public policy debate over realistic long-term solutions to Florida's property insurance problems.”

The research “identified several strategic initiatives in the areas of storm-proofing homes, encouraging market-based reforms to the state's regulatory system, and developing a limited federal role in financing catastrophe risks, all of which appealed to consumers,” while “helping us learn how to explain the benefits of those initiatives to consumers that were free of industry jargon.”

Following up with another study to show the dangers of the reforms the state had imposed, “the report served as the basis for a series of editorial boards that PCI staff conducted with major daily newspapers throughout the state, and helped restore the credibility of the industry in discussing how to rebalance Florida public policy.”

Mr. Tierney added that “our industry's ability to be 'for' something was also noted as helping significantly. Such efforts have restored the industry's ability to challenge the governor and other political figures when their pronouncements are imprudent and do not protect consumers.”

Mr. Luntz, chairman and CEO of Luntz, Maslansky Strategic Research, engaged PCI members on the industry's image for an hour the day before our panel, and didn't pull any punches.

“Insurance is about security and protection,” he said. “But people perceive that the insurance industry is not only ignoring them, but is openly hostile to their needs.”

He said that “if I had been running your message, I would have been running ads and having your top officials making personal appearances right after Katrina, to say you are there to help people recover and rebuild. Instead, most people felt you were abandoning them, avoiding them and running away from them.” He added that “I would have had your top people all over Southern California” in the wake of the recent wildfires.

He noted that insurers “are so good at numbers, it's a shame you are not so good with words,” advising carriers to “speak aspirationally. You are dealing with people when they are at their worst. You need to give them hope that whether it's their home or car or business that's been lost, you're going to help them make it better.”

Emphasizing that “words matter,” he asked: “Do you sound like a person or a corporation when you communicate with your policyholders?” Later, he lamented, “don't read me your mission statement, because that's corporate. I want to see your missionary zeal to help your customers.”

Observing that “insurers are quiet about what they do, while lawyers are loud,” he suggested that “this industry is too quiet. You need to get louder, to show you care about what you do and that you're passionate about doing it right.”

So what lessons were the industry taught during the PCI conference–at least for those who were paying attention? Among the highlights:

–Managing reputational risk must be a part of the standard job description of every insurance company CEO, who–along with other key officials–must be accessible to the press and very visible at the scene of every major disaster.

–Public relations officials should serve more as booking agents to hook up reporters with company leaders to assure accountability and credibility, rather than merely be a conduit for pat statements that few pay attention to or believe.

–Insurers should more actively engage the press–and through them, the general public–by meeting with editorial boards and convening community forums to respond to questions and clear up confusion following a disaster.

–Insurers must do more than “just say no” to public policies they do not like or markets that are hit by disasters, proactively offering alternative solutions that involve more than merely hiking rates or abandoning troubled areas.

On the other hand, Mr. Luntz noted, insurers might be doomed to forever be unappreciated because of the nature of their business. “You sell a product to protect people against bad things happening to them, and only deal with them in a substantial way when something bad actually happens,” he said. “That's a perfect storm. It's a wonder you aren't worse off when it comes to public perception.”