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. Position 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. Targeted market 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%. Goals 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 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. Crisis 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.
Despite these perils, the company was able to make an almost full recovery in two years, which was three years less than the anticipated 5-year recovery plan. Their speedy recovery can be partly attributed to Chief Executive Officer, Neal Ashley and his team work philosophy. Ashley states that “During a crisis is when you need people the most, because you need action (s) to be taken”. 20th’s focus throughout this ordeal was customer service.
During this period there were few customer complaints. Corporate Relations VP, Ric Hill stated that, “I’ve seen many companies survive all types of calamities, but very few companies survive poor service”. Comeback Kid-PR Campaign Five years later the company has made a full recovery and is now known as the Comeback Kid. Therefore their new PR strategy should be to focus on the future. That concept can begin with the re-visiting of the company’s name change.
It would be important to conduct some cross-section test marketing to assure that the name change will not be perceived by the company’s publics as an effort to hide from what has occurred. It is in the company’s best interest to legitimately put the past behind it and then move forward. Another PR tactic is to remain focused on the positive, by producing a continuum of information about the company’s profit margin, increased credit rating and stock dividends paid to stock holders.
This obviously will show the strength of the company, therefore enticing more people to invest. With more investments the company can push forward with its previous plans to expand its business in the states of Nevada, Arizona and Oregon. Regular marketing and advertisement can now be resume. Through a demographics study, it has been proven that many people from California have re-located to these targeted states and therefore 20th’s advertisement should be increased to provide name recognition for those individuals who are or will be re-locating.