Bitter with the Sweet
Some critics say Allstate should put more money in the bowl of the city, and less in the Sugar Bowl
By Rebecca Mowbray
Business writer
Every time Jeri Schneider-Kneale sees those Allstate Sugar Bowl advertisements in the newspaper about the company helping to rebuild Louisiana, she thinks of her 78-year-old mother and gets angry.
Hurricane Katrina blew the shingles off of her mother's Slidell home and cracked the seals on her double-insulated windows so the panes are now permanently cloudy. But her mother didn't get a dime from Allstate Insurance Co. because of a deductible that doesn't cover damage up to the first 5 percent of the value of her house.
Now Schneider-Kneale wants to know how Allstate can fork over millions to sponsor the Sugar Bowl while weaseling out of paying for Katrina damage.
"She got paid absolutely nothing. Zero, " said Schneider-Kneale, a Louisiana State University fan who stood on the steps of the Capitol during the special legislative session calling for a boycott of the school's Jan. 3 game against Notre Dame. "I think it's sad that they have enough money to sponsor the Sugar Bowl, but they don't have enough money to pay their claims."
Allstate's new four-year deal for an undisclosed sum to be title sponsor of one of New Orleans' signature events comes at a time when the company is one of the more controversial businesses operating in Louisiana.
Allstate has clashed so much with state insurance regulators throughout the year over its rising insurance rates that the Louisiana Insurance Rating Commission held a special hearing earlier this month on Allstate's business practices. Meanwhile, Allstate is one of only three insurers along with Lousiana Citizens Property Insurance Corp. and the St. Paul Travelers Cos. Inc. whose ratios of complaints to the amount of business it does in the state were high enough to trigger an investigation by the Louisiana Department of Insurance.
Indeed, while Sugar Bowl organizers are thrilled to have a company as major as Allstate picking up sponsorship of the event after Nokia's contract expired, they acknowledge that those who suffered hurricane damage may not share their enthusiasm.
"They came in selling the concept that they were helping the community at a time when the community desperately needed support and help, " Sugar Bowl Chief Executive Paul Hoolahan said. "Then you have the policyholders that aren't satisfied with their settlements. There are public relations issues. I think this is certainly an attempt to soften some of those edges."
For the Northbrook, Ill., company, the Sugar Bowl sponsorship represents the fulfillment of a long-standing marketing goal to deepen its relationship with college football by sponsoring a Bowl Championship Series game. While the Rose Bowl, the Fiesta Bowl or the Orange Bowl could have worked just as easily, the fact that the sponsorship opportunity occurred in New Orleans, the site of the nation's most costly insurance disaster, was a plus.
"I wouldn't say it was because of Hurricane Katrina that we sponsored the Sugar Bowl, " said Mike Trevino, national spokesman for Allstate. "The opportunity presented itself, we were interested in expanding our relationship with college football, and it was in keeping with our marketing strategy to carry forward the brand."
But, Trevino added, "The opportunity to sponsor the Sugar Bowl and ensure that it continues to remain in New Orleans and our ability to contribute to the economic development that the Sugar Bowl creates for the city of New Orleans and the region was certainly an attractive benefit as well to our sponsorship."
And the fact that some locals, like Schneider-Kneale, are frustrated about their claims comes with the territory, Trevino said.
"The nature of the business is that some people think that their cars are worth more than when they're in an accident. What we have to do is to be fair to everyone. You have people who aren't pleased with their settlement, but our obligation is to pay them the right amount and not to overpay them, " Trevino said. "Our own surveys, our own analyses of customer satisfaction, show that the vast majority of our policyholders are quite happy with the service that they have received and with their settlements. To the extent that someone is not happy, we work hard with that customer to make sure that they are happy."
Many sponsorships here
Allstate is not the first insurance company to sponsor the Sugar Bowl. Insurer United States Fidelity & Guaranty Co. sponsored the event from 1986 to 1994. USF&G is now a property of St. Paul Travelers, the company that wants to pull out of the commercial property insurance market in the area next year.
Allstate is also far from the only insurer sponsoring special events in New Orleans. Insurers have long been major underwriters of the city's most well-known celebrations, and the signs are that those relationships are only continuing to grow as insurers look for ways to reinvest their growing profits and as they need to bolster their brands after Hurricane Katrina.
State Farm Insurance, for example, has long sponsored the annual Bayou Classic football match between Grambling and Southern universities, but this year the Bloomington, Ill., company added the State Farm Prep Classic high school football championship.
Zurich North America, a major commercial insurer and parent company of the homeowners company Farmers Insurance, took over sponsorship of the local Professional Golfers Association of America tournament in April 2005. Like the Sugar Bowl, the PGA tournament at one time had also been sponsored by USF&G.
Meanwhile, MediaBuys LLC, the Los Angeles company hired by the city to look for sponsors for Mardi Gras, says it has spoken with insurance companies as part of its search. Essence Communications Inc., owner of the Essence Music Festival, says it is also talking with insurers, though not for the presenting sponsor slot.
And American International Group Inc., or AIG, which stepped in to sponsor the Gospel tent at the New Orleans Jazz and Heritage Festival last spring when Rhodes Funeral Home Inc. pulled out, is back stronger than ever this year. The company is the exclusive insurance sponsor at Jazzfest and will entertain participants in an overlapping insurance convention put on by the Risk and Insurance Management Society at its hospitality tent.
"They are back, " said Louis Edwards, associate producer of the festival. "They'll be able to showcase themselves at Jazzfest. It was a good partnership that had good legs."
Amy Bach, executive director of the California advocacy group United Policyholders, says insurance companies sponsor events and advertise heavily when they need to shore up their reputations and distract the public from how they handled claims. She said the Sugar Bowl is no exception.
"The way they have historically countered bad publicity on claims is advertising during sporting events, " Bach said. "I would hope that the citizens of your state would be smart enough to see it for what it is: a naked bribe to get people to forget how they've been treated. I hope people don't fall for it.
"If they want to throw their money around, they should throw it around so that someone could get a roof back on their house. Someone else could sponsor it, " Bach added.
When the Allstate Sugar Bowl sponsorship was announced earlier this year, Insurance Commissioner Jim Donelon said he hoped it meant that Allstate would have a special relationship with Louisiana, and would treat the state with greater care when figuring out how to proceed with business.
Donelon now says he believes that Allstate's sponsorship is purely a branding effort that has little bearing on the company's business decisions in Louisiana.
"I really don't think it affects our dealings with them on regulatory matters. I originally thought it would be an anchor that would deter them from negative steps in our marketplace, but I now feel that the Allstate Sugar Bowl sponsorship is a national matter that they look at as a 50-state-and-beyond effort. Their decisions in Louisiana are minimally, if not at all, affected by the fact that they are the sponsor of our Sugar Bowl, " Donelon said. "I just do not get the impression that we're any higher priority because of that sponsorship than we otherwise would be."
Allstate doesn't dispute that characterization, saying that the sponsorship is a national branding platform that's distinct from its business decisions about policies and coverage.
"The decisions that we need to make in Louisiana and most all other coastal areas about how we manage our business and work to ensure that we have the ability to protect all 17 million households that are our customers, we make those decisions and do those analyses based on what's occurring locally, " Trevino said. "We hope that people realize that we're trying to make sure we run our business prudently in a way that allows us to continue to fulfill the promise but also to let people know that participating in sponsorships, whether it's the Sugar Bowl or NASCAR, are opportunities for us to talk about the brand and talk about who we are."
But in other instances, a sponsorship relationship has been a useful tool in stabilizing otherwise troubled times.
When Hurricane Katrina hit just a few months after Zurich sponsored its first PGA golf tournament in New Orleans, the Illinois company had a difficult choice to make.
"We were faced with the question of do we pull out or do we go forward?" said Jim Engel, chief claims officer and executive vice president of customer services at the commercial insurance company, on a recent visit to New Orleans
Fortunately for New Orleans, with Zurich's credibility and a cornerstone marketing effort on the line, the company's chief executive, Jim Schiro, thought it was essential that the company stick with the Zurich Classic. The event helped keep the company working more closely with the community, and Zurich moved a business meeting with about 200 managers to New Orleans and held a global board meeting in the city after the storm. "We've taken a real interest in helping the community, " Engel said.
A rare chance
Rob Yowell, vice president of sponsorship sales at the Colorado sports marketing firm The Bonham Group, said that Allstate had been looking for a college bowl game sponsorship for a long time and would view the added dimensions of Hurricane Katrina as an even better branding deal.
"It's an opportunity for them to roll their sleeves and support one of the major events in the community. They're in for the long haul. They're not trying to come in for one year and get some goodwill, " Yowell said. "It's obviously a high-profile rebuilding process. For Allstate to take the position that 'You're in good hands, we're there for you, ' it's an opportunity for them to create an entire advertising strategy across their platform."
"Mother Nature gave them something even more unique to leverage their deal, " Yowell said.
Indeed, Trevino, the Allstate spokesman, said his company's foundation is actively looking for non-profits to support in the New Orleans area. It has already taken on the New Orleans Jazz Orchestra because it represents New Orleans' unique cultural contribution to the nation, and is looking for others.
Allstate will also sponsor the Sugar Bowl Fan Fest at the Riverwalk on Monday and Tuesday, a benefit concert for the New Orleans Jazz Orchestra on Tuesday, and the Fan Jam on Wednesday outside the Superdome. A number of Allstate executives and local agents will be the company's guests during the game.
Donelon said he probably will visit the Allstate chief executive in Allstate's suites during halftime, but as a 34-year season ticket holder at Tiger Stadium, he put in his own order for Sugar Bowl tickets to watch LSU play.
"I am first a fan, " Donelon said. "If you sit in one of those suites, you do a lot of politicking, but don't see much football. I am really there to see the Tigers beat Notre Dame."
Although Yowell predicted Sugar Bowl fans watching the game on television would see lots of advertisements featuring emotional testimonials by local Allstate customers who were helped after Hurricane Katrina, Trevino said Allstate's commercials will be a mix of action spots emphasizing an important business area for the company -- car insurance -- and spots on college football and New Orleans.
Allstate will debut a commercial featuring a car chase scene in Chicago where a car gets launched out the window of the Marina Towers parking garage. In another commercial, the company's national spokesman, television star Dennis Haysbert, will talk about the Sugar Bowl coming back to the Superdome where it belongs. In yet another spot, Allstate's chairman and a local Allstate agent affected by Hurricane Katrina will welcome everyone back to New Orleans.
"Aside from the Marina Towers piece, it's more about our role and the pride that we have in bringing the game back to New Orleans and to the Superdome, " Trevino said.
But if Allstate's brand is damaged in Louisiana, Yowell said the company would be wise to settle those public relations issues so they don't come back to haunt it during its big night.
"I would think they have a serious P.R. challenge that they have to address immediately, but they have a wonderful opportunity and event to do so, " Yowell said. "All the negative stories need to be away from the front page and resolved."
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Rebecca Mowbray can be reached at rmowbray@timespicayune.com or at (504) 826-3417.
STAFF FILE PHOTO BY SEAN GARDNER
In addition to sponsoring the Sugar Bowl, Allstate will host a benefit concert for the New Orleans Jazz Orchestra on Tuesday.
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