Written by Noemi Pollack on October 22, 2011.
Negative publicity is akin to touching a hot stove. Once you experience it, and sustain damaging “burns”, you will surely find the means to avoid the risk.
American International Group Inc. (AIG) should know, considering that their “burn” – a damaged company reputation, resulting from their role in the financial crisis of ’09 and compounded by their acceptance of $130 billion government bailout to survive, almost left them in ruins.
So how does one insure against getting “burned” again? That depends. If it’s the stove, just don’t touch again. If it’s your company reputation, insurance, of course, a new kind…
Based on AIG’s damaging experience, and under the mantra of wanting to help others manage a similar “storm” that the company had undergone, AIG launched a new type of insurance coverage called “ReputationGuard,” created after discussions with insurance clients and brokers indicated that a potential market for the product existed. AIG says it launched it to help companies offset the cost of bringing in outside experts when a public relations crisis hits. The new insurance will pay for policyholders to seek the counsel of two particular crisis-communications firms, Burson-Marsteller and Porter Novelli –even before a possible crisis becomes public.
This insurance is, of course, a new profit center for the property-casualty unit of AIG – Chartis. Not such an altruistic move after all. But its very presence in the marketplace speaks mounds for the recognition that company reputation risk is a top concern in the C-Suite.
And with that, PR counselors seem to have inched their way, finally, into that C-Suite, alongside with legal and financial counsel.
Still, the Chartis policy is not all encompassing. For one thing, it is primarily a crisis communication policy, to be tapped for just that. For another, the policy doesn’t specify what sort of crisis would trigger the coverage and it is rather loosely designed to cover a broad range of potential public-relations problems. And for another, as all public relations professionals know, it is far better for a public relations firm to be on board with a company to ward off a potential crisis, than to jump in after one happens.
Cost? Well that’s also not clear. According to Tracie Grella, president of Chartis’ Professional Liability unit, some small companies with a crisis-communication preparedness plan could see premiums of about $10,000 annually. Ouch. Just premiums, no counsel…
But I welcome its presence, anyway. PR folks are now closer to warming up their seat at the boardroom table and staying there.