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.
