20th Century (Public Relation)
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20th Century (Public Relation)
MAJOR CASE PRESENTATION
20TH CENTURY INSURANCE COMPANY
Branson C. Nicholson
Instructor: Paula Becker
UNIVERSITY OF PHOENIX
Long Beach Campus
Table of Contents
History, Position, Targeted Market, Goals Page 3
Northridge Earthquake, Crisis Page 4
Comeback Kid, Results of PR Campaign Page 6
Developing a Crisis Plan, Page 7
Crisis Team, Milestones for Communication Page 8
Issues Page 9
Plan Approval, Anticipated competitive responses Page 11
Recommended press release Page 14
References Page 15
Appendix A Page 16
20th Century Insurance was established in 1958 and was the first company of its kind to sell automobile insurance without a middleman, known in the industry as a broker or agent. This direct sales approach allowed 20th to offer insurance at a much lower premium than its competitors. To date, 20th Century Insurance is still recognized as one of the most economical full service automobile insurers in the California market.
In terms of market share, 20th Century is the fifth-largest car insurer in the state. The company\'s credit rating was recently upgraded from a B- to BBB+ and its stock is being traded around $21.50.
20th Century is also among the Valley\'s (headquarters office location) largest firms in both market capitalization and employees. The company currently employs in over 2,000 people.
For the first 30 years of the company\'s existence it enjoyed huge profits from selling only automobile insurance. These large profits were achieved, due in part, to its targeted market which are generally people in the age range of 30-60 who are classified as a low risk "good drivers". The company\'s structure of selling insurance directly to the customer while providing excellent customer service is also a driving force to its success.
In 1982 the company began offering homeowner\'s insurance and this venture also proved to be financially successful for the company. The vast majority of the homes insured by 20th Century are located in the Valley cites and at one time the homeowner\'s insurance made up about 10% of the company\'s business, however, to date it only constitutes about 2%.
In 1994, 20th Century Insurance was a company on the rise. It was a financially healthy company, reporting a total net of $734.8 million in the preceding 35 years of operation. They were exploring plans to expand their business by selling insurance in other states such as, Arizona, Nevada and Oregon. The company was also looking at the idea of possibly changing the company\'s name, in light of the newly approaching 21st Century. However, all its plans for growth were immediately put on hold due to the January 17, 1994, magnitude-6.7, Northridge Earthquake that cost the company over $1,065 billion.
The Northridge Earthquake
The Northridge Earthquake was recently characterized as one of this nations\' most costly disasters ever, as it has been 20th Century\'s most costly and devastating in terms of its finances, reputation and survival.
In the past five years since this catastrophic occurrence, 20th has encountered near financial ruin, class action lawsuits filed by homeowners, name smearing and accusations of illegal business dealings made to the press by their disgruntled claim\'s manager and a near take-over of the company by their financial savior Automobile Insurance Group (AIG).
This series of events could have been described by many as a Public Relations nightmare for the company, instead, 20th chose to look at it as their biggest opportunity to do PR.
Physically violent acts of God, such as an earthquake are often times both hard to predict and prepare for. 20th\'s, Corporate Relations, Senior Vice President, Ric Hill, stated "The only way to see if your crisis plan works is to have a crisis."
The mere concept of insurance is in some ways a form of personal crisis management for the individual insured. One must set things/plans in place to be prepared for all types of crisis. Therefore, it stands to reason that an insurance company would have had a crisis plan for this type of occurrence.
Though 20th did have a crisis management plan, there were many things that they had either overlooked or underestimated, such as the possibility that in a catastrophe their computer system might be in-operable thus rendering them incapable of verifying whether or not a claimant was actual covered for the loss, or that the previous estimation of the cost of an earthquake might be underestimated, causing the company to be underinsured.
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Emergency management, Crisis, Management, Crisis management, Incident management, Risk management, Insurance, Crisis communication, Public relations, American International Group, The Crisis
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