Case Detail

Case Summary

Conseco: Market Assumptions and Risk

Case Number: 5-311-509, Year Published: 2014

HBS Number: KEL796

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Key Concepts

Corporate Strategy, Crisis Management, Ethics, Health Care, Leadership, Product Management, Regulation, Reputations, Risk Management, Society and Business Relations

Abstract

In March 2007 C. James Prieur, CEO of insurance provider Conseco, was faced with a crisis. The front page of the New York Times featured a story on the grieving family of an elderly woman who had faithfully paid for her Conseco long-term care (LTC) policy, only to find that it would not pay her claims. Her family had to pay for her care (until her recent death), which unfortunately resulted in the loss of the family business. The family was now very publicly pursuing litigation. For a company that depended on thousands of employees, investors, and independent agents who sold the insurance plans, this reputational risk was a serious threat. On top of this immediate crisis, all signs in the industry were pointing to the fact that the LTC business itself was not viable, yet over the years Conseco had acquired a number of LTC insurance providers. Students are asked to analyze not only what Prieur's priorities should be in addressing the immediate crisis but also the risks inherent in the LTC industry and how this might affect Conseco's success as a business moving forward.

Learning Objectives

After reading and analyzing the case, students will be able to:

  • Analyze the risks in the long-term care insurance industry
  • Distinguish the various types of risk that caused a company's crisis and recognize the potential for contagion
  • Brainstorm how the risks faced by Conseco could have been avoided or better contained
  • Recommend the first steps C. James Prieur and the Conseco leadership team should take to rectify the New York Times article crisis

Number of Pages: 9

Extended Case Information

Teaching Areas: Strategy

Teaching Note Available: Yes

Geographic: United States

Industry: Insurance

Organization Name: Conseco

Organization Size: Large

Decision Maker Position: CEO

Decision Maker Gender: Male

Year of Case: 2007