Case Study 1-2 Great v. Estate of G. Witherspoon (A)

C. Zucaro, Chairman and CEO of old Republic International Corporation, arrived at work on January 15, 1999, and picked up that morning’s edition of The Wall Street Journal, as usual. As he worked deliberately through his first cup of coffe, his well- honed business instincts told him this would be a good day: Interest rates were down, the market was up, and the many subsidiaries of Old Republic were performing well. For the moment, Mr. Zucaro was happy man.
As he moved to section two the Journal, his optimism sank. There, on the front page of the marketplace section, was an article discussing lawsuit involving a subsidiary of Old Republic. Great West Casualty Company. Nothing new for a company with $ 2 billion in revenues and nine operating subsidiaries. But Zucaro knew from the headline that this Friday morning would be less pleasant than most:”An old Woman Crossed the Road, and Litigiousness Sank to New Low”
The events of July 1, 1998
On her way to work at 4:30 am on July 1, 1998, 81 years-old Gertrude Witherspoon blew out a tire and careened into a roadside ditch. With her automobile disabled. Mrs. Witherspoon left her car and began walking along U.S Route 71 near Adrian, Missouri. Still dazed from the accident, she attempted to cross the highway to reach help. At just a moment, two semitrailers traveling almost side by side spotted the small figure in the road as they passed under the bridge. Travelling nearly 70 miles per hour, the truckers were unable to avoid hitting her. According to the police report, the driver of the rig slammed on his brakes and skidded more than 100 feet. Mrs. Witherspoon was pronounced dead at the scene.
Friends and relatives were stunned and saddened particularly at Dave’s Wagon Wheel Restaurant, where Mrs. Witherspoon worked 50 hours a week as a waitress. No one took the news harder than Joyce Lang. Mrs. Witherspoon’s only daughter. “The family was crushed” she said, “and I was determined to find out more about what happened that morning”
A relative Contacts the Insurance Company
In the days weeks following the accidents, Ms. Lang sought more information about the accident. She received only indifferent statements from Missouri Highway Patrol and the truck owner. Rex Williams, of Vernon County Grain & Supply. Frustrated in her attempts to learn more about her mother’s death, Ms. Lang telephoned a claims adjuster at Great West Casualty Company to ask few questions.
The adjuster at Great West Casualty explained that the police report and witness’ statements showed no fault on the part of truck driver. “Is that all you can tell me” she asked.
“The case is closed”, the adjuster responded. ”Well, said Ms. Lang. “I can open it.”
Believing the family was preparing legal action against Great West Casualty Company, the claims representative moved to file suit on behalf of his company against Mrs. Witherspoon’s estate. “It was never my intention to sue the company.” Ms. Lang said later. “I did contact an attorney, but it was only to find out what our rights were. We filed no claims or lawsuit.”
About five months later- just a few days before Christmas- on December 18, 1998, Joyce Lang received notice of a legal claim filed against the Witherspoon estate for damages to the truck that struck her mother. Specifically, the claim sought$ 2.886 “on account of property caused to a vehicle due to the negligent actions of Gertie Witherspoon on July 1, 1998.”
The local news media first reported this incident on September 4, 1998, when Barbara Shelly, a reporter for Kansas City Star and acquaintance of Ms. Lang wrote a brief article elaborating on the life of Mrs. Witherspoon. By coincidence, Ms. Shelly happened to be speaking with Ms. Lang on the day the claims notice arrived. “Seeing my mother’s name in print like she was a criminal,” said Ms. Lang, “I was devastated.”
Ms. Lang received the notice because she was serving as executor of her mother’s estate. “ I’m not paying them for killing my mom, “she said. “I’ll sit in jail first.”
Amazed by insurance company’s actions, Ms. Shelly wrote a second article discussing the accident and the insurance company’s response. Details in the second article appeared in the January 8, 1999, edition of Kansas City Star. The story was then picked up The Wall street Journal and reported on January 15, 1999. It was at that moment that A.C Zucaro sensed trouble. Covering the claim filed by Rex Williams was a fairly small matter. The more immediate problem for him would be the company’s response to the storm of media criticism.
Old Republic International Corporation
In January 1999, Old Republic International Corporation was financially strong and efficient insurance enterprise with substantial interests in each segment of the insurance and reinsurance industry. Old Republic International was primarily a commercial line underwriter, serving many of America’s leading industrial and financial services companies as valued customer. For the year ended 1997, the company’s net income was $ 298 million on revenues of 1.962 billion.
Old Republic International has grown steadily as a specialty insurance business since 1923. The company was regarded as independent and innovative, which was reflected in its growth. Most Wall street insurance analysts thought the company’s performance reflected an entrepreneurial spirit, sound forward planning, and effective corporate structure that promoted and encouraged the assumption of prudent business risks. At the time, Old Republic International had nine subsidiaries across four general business lines, including General Insurance Group, Mortgage Guaranty Group, Title Insurance Group and Life Insurance Group.
Old Republic International’s corporate communication department consists of one individual who handled investor relations. All others forms of communication were outsourced to a large public relations firm was financially oriented and included such tasks as preparing annual reports and earnings announcements.
Great West Casualty Company
Great West Casualty Company was an independent subsidiary of Old Republic. Found in 1956, the company served the special needs of the trucking industry. By 1999, it served 29 states and had regional offices in Boise , Idaho ( Western Region) , Bloomington, Indiana (Eastern Region), Arlington, Texas ( Southern Region) and Knoxville, Tennessee ( Southeastern Region). The corporate headquarters in South Sioux Great West Casualty employed more than professionals companywide. Their policies included automobile liability, cargo coverage, general liability, inland marine floaters, physical damage, property coverage, umbrellas, and workers’ compensation.
The Great West Casualty communication department also had just one employee, Ms. Leslie Bartholomew. As corporate information director, she handled all communications for the firm. Aside from an operation manual provided by Old Republic International, consisting mostly of general guidelines for handling corporate communication decisions independently.
For Zucaro and his senior team at Old Republic International, the questions were direct and fairly simple; What should they do, How soon should they do it, and how should their actions be communicated? Would they need professional help from a public relations firm? And, more to the point, what did this series of events say to the company about its corporate communication strategy?