Large corporations could save themselves, and their insurance companies, millions of dollars in losses if they learned how to handle the media.

Poor public relations has proved disastrous for manufacturers suddenly confronted with a crisis over one of their products, said Ms Corbette Doyle, senior vice-president of Advanced Risk Management Services for Willis Coroon.

But good public relations -- and quick action -- can save a business market share and millions of dollars in product liability claims.

A textbook way of how to handle a product crisis was provided by drug company Johnson & Johnson, whose captive insurance company is based in Bermuda, where it is managed by Johnson & Higgins.

When someone started lacing Tylenol pain-relieving pills with arsenic in 1983, causing some users to die, the company handled the fall-out so well that it lost virtually none of its market share and saved itself millions in potential losses.

Its prudent action in damage limitation could also have saved excess liability companies like Bermuda-based XL and ACE, which are believed to provide coverage for Johnson & Johnson, from having to pay out as much as they might have in insurance claims, said Ms Doyle.

"Johnson & Johnson did everything right over the Tylenol incident,'' said Ms Doyle, who is co-ordinating a RIMS seminar on pre-and post-loss media control entitled When You're the News on Prime-Time News.. "They did a marvellous job of keeping everyone informed and making the right decision.

"They immediately took Tylenol off the shelf and set about finding out what the source of the problem was, which proved very difficult because no-one knew at what point the arsenic was being put into the product. Was it at the manufacturing plant or at the shop?'' After an investigation it was discovered someone was going into drugstores and administering the poison into Tylenol bottles and an arrest was made.

At no time did the company try to hide its problems or mislead the public, said Ms Doyle. As a result the firm, unlike Perrier, kept its market share.

Johnson & Johnson further enhanced its reputation by then adopting unprecedented safety measures for their products, which include an external seal on the cap of Tylenol bottles and an internal foil seal to prevent anyone tampering with the product.

Improvements in safety measures such as these will lead to fewer losses for many of Bermuda's captives, which have been set up on the Island by a significant number of Fortune 500 companies.

One of the best known examples of how not to handle a product crisis is the much-criticised way that French firm Perrier coped with the contamination of their bottled water.

"Perrier basically did everything which you should not do and it cost them huge amounts of money in lost revenue and a market share which they will never regain,'' Ms Doyle said.

"After the contamination was discovered, three different Perrier operations in the US, France and Britain gave three different versions of what was causing the problem.

"Perrier violated one of the most important aspects of limited damage by appearing not to be in control of the situation and by attempting to give answers when they did not have any.

"One of the most important things you should do in a product crisis is to be open and honest. If you don't have any answers then that's what you should tell the public.

"When Perrier gave three different answers everyone knew that they didn't have a clue what the problem was. Their sales dropped to virtually zero overnight. It opened the door to all their competition and the company lost out big time.'' Mr. John Heyliger, vice-president of Willis Coroon Management Bermuda, said often the first line of insurance relating to product liability is handled in Bermuda.

He said it is in everyone's interest for companies to handle the media side of product crisis as effectively as possible.

"If insurance settlements go up because of the bad handling of a claim then premiums will also go up,'' he said. "Handling a crisis well is important to the insurance industry.'' Ms Doyle said corporations must spend more time establishing better relations with the media so they can more accurately get their point of view across whenever a product crisis arises.

"Companies are often afraid when a crisis breaks and will simply tell the Press `no comment', which is the worst thing they can do because people read it and automatically assume the company is guilty.

"Companies should take the time and trouble to get to know journalists covering their business before things go wrong, and build up a relationship based on trust.'' However, relationship-building will not prevent the kind of biased reporting which in her experience pervades the American media, she said.

"A lot of people don't trust the media and in the US there's a lot of slanted journalism,'' she said. "Any topic that `20-20' or `60 Minutes' have covered that I've been familiar with I know have not been reported in a fair and unbiased manner.

"They often cut short interviews with company officials and, for example, will show clips of them losing their temper and cut out shots of them offering legitimate explanations.

"It's no wonder people are less inclined to give the media information if they think it's going to be twisted.''