Insurers would be wise to revamp their disaster plans to reflectthe lessons learned during the devastation of Hurricane Katrina,surplus lines officials were warned during last week's NAPSLOmid-year meeting.

|

Industry officials shared war stories and lessons learned incoping with Hurricane Katrina, while suggesting ways for carriersto plan better for the next catastrophe, at the winter meeting hereof the National Association of Professional Surplus Lines Offices,Ltd.

|

"The scope [of Katrina] caught a lot of us off guard," said ToddEvans, a principal specializing in third-party administration atEngle Martin & Associates in Atlanta.

|

Indeed, "Katrina was so widespread, there's a whole new spin todisaster planning," according to David Losson, director ofinformation technology with Crump Group Inc. in Dallas.

|

As a result of his experience, Mr. Losson said his firm willrevamp its business continuity programs to create one for alocalized catastrophe and another for an event impacting a broaderarea.

|

In a smaller disaster, when a facility is made inoperable a planmight involve securing office space four blocks away--not the casewith Katrina, he noted. He added that a small but effective plan isassigning "calling trees" to contact employees and retail agents toreassure the client base after a disaster.

|

His firm also was prepared with a cache of servers for computersthat it trucked from Dallas to Houston, where it had relocated itsNew Orleans office. He said it was frustrating to have a databackup provider which had the backup tapes, but at an inaccessiblelocation.

|

He said one Katrina "wild card" was the impact on employees, asmany had personal difficulties to deal with--such as thedislocation of elderly parents. These situations made it "tough tokeep morale up," he said.

|

Another wild card cited by Mr. Evans was the response of publicagencies. Companies that had disaster plans depending on the Cityof New Orleans or the Federal Emergency Management Agency "ran intoserious shortfalls," he said, noting that some adjusters "werepushed out of hotels by the Red Cross and FEMA guys and wound upsleeping in their cars."

|

Mr. Evans noted that with good planning, the claims process goesmuch smoother--relating that "within the first 48 hours,contractors and salvagers get sucked up pretty quickly." Thosefirms that do not make arrangements in advance get pushed to theend of a long line, he warned.

|

He said that effective disaster plans involve pre-selection ofvendors who can help in a catastrophe, urging everyone to make surethose vendors have their own disaster recovery plans in place.

|

In Mr. Evans' view, the industry could probably do a better jobinforming the "Mom and Pop risk" about the need for disasterplanning. This could involve something as simple as "tak[ing] thecomputers off the floor and put[ting] them on a table," heremarked. Discussing what can go awry, he mentioned one companywith generators on hand but no gas, and an auto dealership thatmoved its cars to high ground--but not its records.

|

As an example of disaster planning success, he noted that of thenine hurricane-damaged casinos, the three that were quickly backup-and-running were taking in revenue that amounted to 65 percentof the take of all nine before the hurricane.

|

A third panelist--Patricia H. Roberts, president and chiefexecutive officer for General Star excess and surplus lines inStamford, Conn.--said General Star makes a point of analyzing andrevising its disaster plans after every major event. She cataloguedchanges made after Sept. 11, 2001 and the four hurricanes of2004.

|

The points she mentioned included improved communication plans,providing adjusters with longitude and latitude so they couldlocate properties without street signs, advertising, and a 24-hourtelephone number on a Web site so clients could make contact.

|

In 2004, a surprise for her firm came in the area of regulatorydemands for information, which it had difficulty providing in atimely fashion because of a cranky legacy system.

|

After Katrina, she said, the company found it lacked personale-mail addresses and cell phone numbers to contact staff.

|

Ms. Roberts said it is critical to know where totalaccumulations of risk are, and to have enough adjusters onhand--noting that her firm trained casualty adjusters to handleproperty claims to relieve the load in a crisis. She also noted theimportance of having electronic records-imaging. Since Katrina, shesaid, "we tend to plan now for worst-case scenario."

Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader

  • All PropertyCasualty360.com news coverage, best practices, and in-depth analysis.
  • Educational webcasts, resources from industry leaders, and informative newsletters.
  • Other award-winning websites including BenefitsPRO.com and ThinkAdvisor.com.
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.