Having seen the recent PR disaster when a well-known South African life insurance company declined the claim of the widow of a man who was killed when he tried to protect his wife in an armed robbery, it begs the question of what could have gone through the minds of their executive leadership when they were faced with this crisis.
Firstly, it has to be asked how this claim was handled. Was this decision taken by the Claims department and communicated to all as – as if it was not unusual claim? One would however ideally assume that the matter was referred for a decision by the Executive Committee.
What would then typically happen is an impact analysis (the cost to the company and its reputation) in the case of the various scenarios/options:
- denial of the claim and motivation offered for this,
- confidential settlement of the claim with the claimant to ensure no media coverage,
- paying the claim.
PR team should have played a key role:
This is where the PR experts should have played a key role in considering and advising on the reputational impact should the claim be denied. Considerations should have been given to:
- an obvious public outcry, seeing that the client was insured, paid his premiums and was killed trying to protect his wife (and, importantly, did not die of the medical matter that was not disclosed) – and the impact on the business and its reputation, and what would be done when the public outcry happened as is foreseen;
- the context where the company has performed poorly over the last few years and many could see this as a cost-cutting exercise;
- more similar claims would come out of the wood-work, thus doing more damage – violent crime is a major cause of death in South Africa;
- the fact that the company had just launched a multi-million multi-media advertising campaign and the media would have been booked and had to be paid.
Were these scenarios considered? One can only assume from the way that it was handled that it was not.
The company issued a media release stating that they would not be paying the claim because of the serious non-disclosures.
They were represented on all television programmes by white, Afrikaans people. It was unclear why they used one white Afrikaans lady speaker (who worked on the investment side) was used – this could have been a disaster should the interviewer or a guest had gone to deeply into the impact of medical conditions on mortality and morbidity.
Clearly in choosing your spokespersons are critical and the PR company should have advised them to let the Group CEO or the life company CEO speak to Afrikaans media, and preferably a black person (at executive committee level – who is in place) to other media.
Change of mind?
As the pressure built up (which as stated above should have been envisaged), the company then announced that they had changed their minds on the denial of the claim. This in itself is a PR disaster and highlighted the fact that they were unprepared and had not given key business decisions the required consideration
They then also announced that, henceforth, they would settle claims of victims of violent crimes up to a maximum amount, regardless of whether there was non-disclosure. And encouraged the rest of the life insurance industry to follow suit.
And now – further similar claims?
This will of course lead to further complaints of people where violent crimes were involved, and the claims denied for similar reasons. And the PR nightmare would continue, with heart-breaking stories on television.
Advertising campaign – on hold?
Furthermore, they should seriously have considered putting their current extensive advertising campaign on hold immediately. Late November and December is in any event not a time when people buy massive amounts of life insurance, and the same campaign could continue in January 2019.
If the media had been bought already, this could have been replaced by messaging that said something about the need for life insurance in South Africa in light of the levels of violent crimes – and their new position to pay all claims up to a maximum, regardless of possible non-disclosure.
This is the biggest PR disaster in the life insurance industry for years and has caused the company concerned massive reputational loss. Many people have taken to Social Media where they encourage others to take their business elsewhere. Others are concerned that the company’s latest decision will impact on their retirement investments. And so on.
This process shows the lack of importance given to public relations – or poor advice given by public relations experts.
Let’s learn from it?