Crisis Management | January 2002 ViewPoint

ViewPoint: Crisis Management

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By Arthur D. Kraus, CLU, ChFC, NAIFA CEO

Although crisis management (CM) is not a new concept, it certainly has received much publicity since Sept.11. All of us recognize the numerous changes that have taken place in our lives since the bombing of the World Trade Center, the attack on the Pentagon, the crash in the Pennsylvania countryside and the anthrax scare.

Just months ago it seemed inconceivable that boarding an airplane would require personal identification, scans of both your luggage and yourself, and maybe even a closer look with a wand or a "frisk." Who thought that postal workers would wear gloves and that some mail might be subject to radioactive treatments?

Well, CM isn't new. It's just that it takes a crisis to make people aware of what they might have considered doing anyway if they had expected the crisis. A good example is the Tylenol scare 20 years ago. Cyanide-laced capsules were inserted in some Tylenol bottles and some people were killed. The company reacted quickly and saved itself from what could have been the beginning of the end. It admitted the problem, suffered the expense of a recall and re-engineered its tablet container to make it tamper proof. Tylenol, and its manufacturer Johnson & Johnson, thus maintained credibility and market share.

Things that might go wrong

In the work that you do, can you anticipate CM? What are the things that could happen to you that would be disastrous to your business? Although the list might be long -- and personal, depending upon your method of doing business -- here are a few of the crises I think about:

The cash-value increase in life insurance and annuities becomes taxable
Onerous regulation makes insurance products difficult to sell and creates greater producer liability
The possibility of government-sponsored health insurance
Disability income from individual policies becomes taxable
The price of gasoline increases to a high enough level to reduce travel
Technological breakdown or disaster in your office
Lack of adequate resources for prospecting and advising
You have a health issue that is long-term and disabling
Your death

Are there any crises that your clients face for which they need to prepare? Perhaps tax issues might change into supplier costs or regulatory issues that increase costs. Maybe there would be product-liability problems. But most of us can construct CM plans that deal with those issues.

The largest CM issue is "the goose that lays the golden eggs." What happens when the "brains" of the outfit -- the perpetual money machine -- is broken or destroyed? The oddest consideration of this CM issue is it is a certainty that it will happen! Yet, some people act as if it were the least likely of all the CM issues.

It is so easy to solve. All of you know that the most valuable asset any of us have is our ability to earn an income.

All of us know it is insurable, as long as the crisis hasn't begun. All of us know that the insuring of earning power gives us the freedom to do whatever we wish in our financial lives because we have met our financial responsibilities to ourselves, our families and others who have a financial stake in us.

Your association helps you with many of the legislative, regulatory and business issues you face. (Check out www.naifa.org.)

But only you can help your clients with their personal CM issues. Take a lesson from Tylenol. Be straight with your clients, explain the issues clearly and provide them with a lifetime solution that will make them feel proud of your brand.

A 40-year veteran of life insurance sales, financial services and field management, Art Kraus is CEO of the National Association of Insurance and Financial Advisors (NAIFA).

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