PR: The Best Insurance in a Crisis?

The tragic capsizing of the Costa Concordia in Italy has caused not only alarm among potential cruise customers, but also speculation as to how much the accident will cost Costa and parent company Carnival Cruise Lines—and their insurers.

And PR definitely has a link with both crises and insurance. On Jan. 18 Weber Shandwick announced a partnership with Liberty Mutual Insurance to provide crisis management services as part of Liberty’s “commercial lead umbrella” policy, which provides companies with an extra layer of insurance beyond their general coverage. According to the release, policy holders have up to 72 hours to identify a crisis and file a claim to receive up to $50,000 in crisis management support from Weber Shandwick. Up to $250,000 in additional crisis management coverage is also available.

This isn’t a first, though. In October 2011, Burson-Marsteller entered into a similar agreement with Chartis, and other insurance companies such as Chubb offer crisis service providers to their customers. And it's not just big PR agencies that team up with insurance companies. Jim Lukaszewski, president of Minneapolis-based Lukaszewski Group, says he has agreements with two insurance companies to provide crisis services, with another partnership pending.

“Insurance companies are paying more attention to corporate crises because the costs of a damaged reputation can be high,” says Lukaszewski. “If a business goes under because of a reputation issue, the insurance company is on the hook.”

Many times, says Lukaszewski, a long PR engagement for a company in crisis isn’t needed. “One phone call might solve the problem,” he says. More importantly, insurers have learned that quick apologies can help prevent expensive litigation. Hence, the practice of insurance companies teaming with PR is “a very subtle way to help their customers really mitigate the risks of insurance," Lukaszewski says. And he adds that it's a financial win-win: The policy holder doesn't have to pay high PR costs up front, and the PR agency knows that it will get paid.

 

January 18, 2012

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