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Effective Claims Management: The role of the crisis communication strategy

November 2011

First presented at an MB Seminar - Effective Claims Management

Crisis communication is a strategic component of an organization's overall operational response to a crisis. The significance of the communication plan, in the over all crisis management model, is many times under estimated. During a crisis, effective messaging to shareholders, stakeholders and the public, can be determinative as to how an organization's reputation, ie. it's brand and image, will be maintained. In addition, any crisis represents the potential for findings of liability down the road. As such, it is crucial to ensure that the messages of today never become the evidence of tomorrow, which will be used against the insured at a trial in the future.

Effective communication is most important in the first few days that a crisis has hit. Let us take an example. An explosion fire occurs in a strip mall. Three people die and numerous others are injured. The first news reports suggest that a maintenance worker may have triggered a gas leak, which led to the explosion. At that time its crucial for the insured to get in front with a very focused message:

"Our main concern at this moment in time is for the families of the victims of this tragedy. We are doing everything we can now for those family members. A full investigation has begun in order for us to be able to find out how and why this occurred, and we are cooperating with all involved."

It is easy to see what would happen if the particular spokesperson responded to questions about an alleged error made by a maintenance worker by stating,

"It's obvious that this worker was doing something that he/she should not have been doing at that time. We are going to have to wait to see what the investigation shows."

The insured, by putting out that particular message, would be making a fatal mistake, ie. it would arguably be accepting blame and NOT just accepting responsibility. There is a very fine line in law which distinguishes the two but it is extremely crucial in the early stages of claims management that no one cross that line. Taking responsibility is messaging to all the insured is doing at that particular point in time. Accepting blame, however, will of course, have enormous legal and public relations ramifications.

Thus, determining the correct message is always the most important and most difficult aspect of crisis communication. Those messages should be developed in advance of any potential crisis or catastrophe. It is for that reason, insurance companies should be looking very carefully on providing coverage for a proactive crisis management strategy, which will include a full communication plan. An insured would catalogue all the potential crisis it could be facing and develop specific and concise messages with respect to those particular situations.

Once it is determined what the proper message is, it is imperative to ensure that particular message gets out.

To begin with, the organization must be accessible. The words and perception of “no comment” should never appear to be attached to the company at any time.

As part of the crisis communication plan, a spokesperson(s), will be in place and fully trained and ready to go. The first component is fully understanding the audience to whom the company will be messaging to, ie. shareholders, stakeholders, clients, employees, or the public through the media, and then utilizing some well established messaging techniques. For example, understanding how to bridge back to the essential message, is a technique that can be learned very quickly. It involves taking a question you are being asked and then bridging it back to the message you want to ensure gets out. Going back to our hypothetical news conference with the disaster at the strip mall, when the spokesperson is asked a specific question about specific allegation of how the explosion was caused, the only answer can be:

"Right now everything is under investigation and we, of course, are co-operating with all levels of investigation, but as I stated, our prime concern right now is with respect to the families of the victims of this tragedy and that is where our focus is at this point in time."

The particular spokesperson responded to the reporter’s questions, but in essence said “no comment”, without of course, ever using those words and then bridged back to the important message, i.e. the concern for the families. Most importantly, the answer given in that hypothetical interview, will never come back to haunt the insured in the litigation down the road. Most certainly, by “staying on message”, the insured is ensuring that it appears to be taking responsibility without ever admitting liability. There can be no better effect claims management at that point in time.

The importance of having a crisis communication strategy in place, as part of a effective claims management plan, is best illustrated by Maple Leaf foods and its President and CEO, Michael McCain.

Shortly after more than 20 cases of listeriosis were linked to cold cuts produced at Maple Leaf’s Toronto Plant on August 23rd, 2008, McCain appeared at news conference. He did not mince his words. He was candid and apologized for the outbreak. He said:

"We have an unwavering commitment to keeping your food safe with standards well beyond regulatory requirements, but this week our best efforts failed and we are deeply sorry."

He ensured that he messaged that he was acting as the face of the entire company, referring to the 23,000 employees, as those who live in a culture of food safety.

Five months after the tragedy, near Christmas when the story had left the front pages, McCain took a full page ad out in five newspapers and recorded a spot on YouTube. He apologized to the families once again and said that the company will never forget what they did, and offered his support again.

While the claims against Maple Leaf were eventually settled, McCain, through his own communications, was able to rehabilitate the Maple Leaf Food brand to the extent that its market share was above where it was one year after the crisis.

The message from all the above is that effective crisis communication is the equivalent to effective reputation management. The organizations that are successful at this, invariably are those that have been proactive and have taken the time to plan for it accordingly. Insurers should begin to look very carefully on why it makes good business sense to begin to include this type of planning and training in its policies.


 

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