Sorrow is defined as a feeling of deep distress caused by loss or disappointment. This is how I feel about FTSE100 company Hiscox Insurance. Sorrow because they had such a powerful corporate story that it was a joy to media train their spokespeople for six years until 2013. And now the company has blown it all up.
Our media training helped their spokespeople to frame and contextualise their communications with their powerful story – “we believe that relationships are based on trust”. We were so in love with them that we featured them in our series of two minute animated videos about companies with the best corporate stories (you can watch it here).
In the words of former Chairman, Robert Hiscox, “if you have made a promise, you must keep it. We have sold you a promise to pay and we will make you good. When what you have insured against happens, we will make you whole”. The marketing expression of their story – As Good as Our Word – was built on this.
Today its CEO, Bronek Masojada, conceded that Hiscox had “undoubtedly suffered some brand damage”. He regretted “the uncertainty and anguish” that its dispute with small business customers over its refusal to pay their ‘business interruption’ claims in a dispute over policy wording. The High Court and then the Supreme Court ruled against Hiscox and other insurance companies.
Many insurers took the same view about the intent and wording of their business interruption policies. But the media hasn’t focused on them. Because they didn’t claim to be a different sort of insurance company.
Whatever the letter of the policy, you would have thought that given the way the company talks about itself – its story and its values of integrity, courage and “doing the right thing, however hard” – the company would see the opportunity to look at this exceptional circumstance and pay out something to its 34,000 small business policyholders. What a moment to show how different you are and how true is your story – we paid out when the rest wouldn’t. Hiscox – as good as our word.
One of the benefits of having a strong corporate story is that Communication teams can act as the ‘story police’ in their organisation. When executives are tempted to say or do something that runs counter to what the organisation has said about ‘who’ it is, the Communications people can identify and advise them not to. During a crisis, leaders under pressure can make mistakes. But it’s how they respond when they are called out on them that reveals their true colours.
If share price is one indicator of reputation, Hiscox had lost almost half its value at one point last year, considerably more than peer listed companies. Instead of investors cheering the company for preserving cash by not paying out, they voted with their feet at the reputation damage the company was inflicting on itself. And all for a maximum possible liability of £35m (at one point the company said a potential £10m loss would have no material impact on its earnings) in a year when Covid has required it to pay out £340m. And the future looks good. As the Financial Times noted today, prices are rising across many lines of commercial insurance on the back of high Covid-19 claims which will improve returns in the future.
Maybe it is instructive that this family firm, although a publicly listed company, lost the last of its family directors in 2013 and recently changed its slogan to ‘Cover You Can Trust’.
Except you can’t.