Anniversaries are the traditional time to look back on major events and reflect how they have changed things. Residents of New Orleans and the entire Gulf Coast last month observed the one-year anniversary of Hurricane Katrina, and Pan-American Life Insurance executive vice president G. Patrick McGunagle notes there still are difficulties facing residents and businesses in New Orleans, where Pan-American is based. However, he proudly points out Pan-American and its employees survived a difficult year and things slowly are getting better.
Housing is the core issue the city faces in its recovery, maintains McGunagle. Large areas remain in shambles, particularly working-class neighborhoods in the suburbs. About one-third of Pan-American's employees were seriously affected by the storm, he estimates. Some employees decided to relocate away from New Orleans for personal or financial reasons following the evacuation. Other employees who came back still are living in trailers one year later.
One major business change for Pan-American since Katrina was the decision to outsource its data center and network operations to CSC. McGunagle believes this move has provided the carrier with an additional layer of protection against future disasters. "Having your data center below sea level in New Orleans and the backup tape area also under sea level a few miles away just didn't seem to be a prudent thing to continue," he says.
Pan-American already had a relationship with CSC prior to the hurricane, with the carrier using the vendor's life application. "When [CSC] asked whether it could help us [after the storm], we said, 'Sure, give us 200 fully wired cubicles and some bilingual customer service people.' We didn't expect it would step up that quickly to help us out," remarks McGunagle. After some analysis, Pan-American determined CSC was the place to turn to handle the carrier's needs with regard to the data center and servers. "That seemed to make a lot of sense to us, not so much on cost savings, which there were, but more in terms of virtualization for the future," he says.
Prior to Katrina, McGunagle viewed disaster recovery plans as somewhat of a bureaucratic corporate activity, never expecting a plan would be called on to save the company. A near miss from Hurricane Dennis one month prior to Katrina convinced him to take a closer look at the company's plans. The first change Pan-American made was to start what McGunagle calls a countdown approach. "We figured how long it would take to get the tapes backed up and out of the city," he explains. Pan-American determined to get an 18-wheeler into the city and out again would take about three days. The company assessed it would take two days to make sure its first responders were ready and hotels were lined up and one day to get cash dispersed. "We enhanced the plan and also did this countdown approach," he says. "That actually served us well because by Saturday–two days before the storm–we already had evacuated the personnel and the tapes. We were sort of ready."
The major lesson learned from the disaster was communication isvital. "We all are dependent on technology, but that was one of the first things that went with Katrina," McGunagle says. The Pan-American plan called for the use of satellite phones, but by the time someone from the company called the vendor on a Friday to acquire the phones, it was after 5 p.m. and the vendor was closed for the weekend. Today, Pan-American owns a dozen satellite phones.
The carrier didn't give enough priority in its pre-Katrina recovery plan to restoring its Microsoft Exchange e-mail servers, McGunagle contends. "E-mail was a critical tool we needed to reestablish connections with employees," he says. Today, in addition to getting redundancy on its exchange servers, Pan-American has its employees provide the company with personal e-mail accounts and the names of relatives in other states as contacts.
Pan-American since Katrina also has set up self-service applications on the Web, McGunagle adds, so customers and producers can inquire about their policies for information they would have had to call in for in the past.
All in all, McGunagle believes the Pan-American plan held up well. Today, the company is exploring business interruption problems such as the Avian flu and smaller issues such as what to do when the water pressure drops in the home office and the building needs to be evacuated for the day, which is becoming a frequent problem in New Orleans.
Some companies have to deal with the double-barreled problem of reestablishing their foundation and hoping their customers are able to follow suit. Pan-American was more fortunate than others because the carrier does much of its business in Latin America, although McGunagle points out the carrier has a sizeable work-site benefits division that operates across the U.S. "We were able to pinpoint policyholders in the region, get to them, and make sure we were waiving payments on premiums for a period of time so they didn't have to worry about that," he says. McGunagle claims revenues are up for the first half of 2006. "We're rebuilding and better than ever," he says.
The lesson others should learn from Pan-American's situation is disasters can occur in any city, whether it is a suicide bomber, a dirty bomb, or a breached levy, McGunagle asserts. "You really have to think about what you would do to preserve your employees and their jobs as well as the company," he says. "You have to be prepared not just to hunker down and wait for things to pass. Some of the disasters we face today–such as Katrina–could last for months. You have to dust off the plans, test them, and plan for the worst. The likelihood of more of these situations occurring across the country is increasing every day."
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