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Disaster Planning & Recovery for Insurance Agencies

Here are the components of a Disaster Recovery Program (DRP) that was unfortunately missing in New Orleans and was woefully inadequate in the State of Louisiana. As critical as the attack on New York was on 9/11, the comparison of Mayor Giuliani’s leadership and coordination and that of the lack of the same in New Orleans is simply stark.

We have been consulting for 25 years. During that period we have encountered hundreds of agencies who have requested assistance with Disaster Recovery Plans. Unfortunately, all but a handful have asked that AFTER fire, wind, water or earthquake have affected them. They all hope never to have another encounter with Mother Nature, but realized how ill-prepared they were when the worst happened.

The success stories occur when a second round of similar or different crises arise and a client agency is back in business and taking care of employees and customers within hours or a few days of the disaster while other businesses are affected permanently or for a long period before regaining normalcy.

Katrina multiplied the effects of both wind and water due to the extraordinary circumstances of the Northern Gulf Coast and cities that were built under sea level. But the result on our fellow insurance agents was not ameliorated just because the situation was unusual. Few had Disaster Plans. Even fewer had Disaster Recovery programs that could be implemented from their locations or remotely to help the agency, its employees and its clients cope with the crisis.

Command and Control
A DRP, whether for an insurance agency or for a city, begins with Command and Control. One person must be the decision-maker and coordinator(with a 2nd in Command and a 3rd in case the decision-maker is not available). This could be the agency owner or someone else, but the Plan defines that person as having full authority to carry out the actions needed to normalize the situation. Even in an insurance agency, we strongly urge the company to purchase and distribute two-way radios on a common frequency to all managers and/or key employees. Remember to diary a note to yourself for one day each year to test all radios to make sure the batteries are good and that all instruments work.

Communications
As we could easily tell from watching the news correspondents, communications was woefully lacking in New Orleans during Katrina. This meant that even with troops, medical equipment and food available, no one knew where the need was greatest.

Whether you enhance your Command and Control mechanism with radios, every agency should at least have a telephone “tree” like those used by school groups to inform a large number of people about weather conditions. Agencies, too, face regular weather emergencies. A telephone tree that connects the owner with managers (or key employees) who, in turn, contact several other employees each permits the agency to relay communications to dozens or hundreds of people in a matter of minutes. Each level of the Tree should have a 2nd and 3rd alternates in case the level above cannot contact an interim level. Remember to update the list at least twice a year and conduct tests of the “Tree” once each year.

Anticipation
Our definition of Luck is the meeting of preparation, anticipation and crisis. Anticipation requires you to assume a breakdown of critical services. You must write a Plan for each of the following potential crisis for the agency: Flood, Fire, Wind, Total Destruction of the Property, Electrical Surge (lightning) or Long-Term Failure, Earthquake, Telephone Failure, and (newly added) Long Term Internet Failure.

In each case you ask yourself, “What would we do if we were faced with _______ and had a week to prepare ourselves for it?” Your answers should fall into the categories of human safety of the employees, equipment needed, back-up vendors or third-party assistance, communications and response to customer needs.

Logistics
Once you have taken the Anticipation steps you will have a written Plan for each issue that you may face. Those Plans will require the acquisition of supplies, tools, back-up systems or, lacking full acquisition of those items, at least the knowledge of what will be needed immediately following the named crisis. These logistics could be as basic as water and emergency food or it could be fuel and generators or alternative internet or telephone connections or remotely located databases to be accessed from anywhere in the U.S.

Coordination
Back to Command and Control, the greatest lack in the management of Katrina in New Orleans was communications. Even when Plans are created and available, you must be in contact with each other, with employees and with clients as quickly and effectively as possible. Simple communications can help even if solutions are not available. How many of us have found ourselves sitting in an airport or in an airplane delayed for some reason with no idea of how long the delay will be nor of the cause of the delay. Our tension and apprehension increases simply from not knowing and being out of control. Coordination and Communications maintains that control. Giuliani certainly had little control over the situation for a while, but he maintained high levels of coordination and communication and eased the concern and pain of his constituents.

Whether you use professional help to create your Disaster Plans and Disaster Recovery Programs is unimportant. The importance is in the exercise. And, like anything else worthwhile, repetition increases competence. Practice permits us to avoid mistakes when the real thing happens. Create a Plan, practice it, include all staff in the process and repeat the process every year to maintain your edge.

For additional information, visit our Featured Resources, Disaster Resources page.