Insurers Prepare For Pandemic Drill

WASHINGTON–Insurers and other financial firms across the nation have been asked to gear up for a form of disaster drill assessing their ability to respond to a pandemic crisis, such as a bird flu outbreak.

The exercise sponsored by the Treasury Department is due to begin Sept. 24. According to a Web site set up for the simulation, participants in the exercise will be sent a scenario update each Monday during the exercise, and will be able to download their absentee distribution information.

Designed to simulate a real world scenario in which specific people are unable to work, the absentee distribution will include a series of letters, and those employees whose last names begin with those letters will be considered absent.

An absent employee is considered to be either sick or caring for someone who is sick, and will be considered unable to work even if they typically work from home or telecommute.

Based on that information, participants in the exercise will be able to examine their business plans and will respond to questions sent to them.

The test will occur entirely online for a three-week period using the secure Web site hosted by the Securities Industry and Financial Markets Association, the agency and the SIFMA said.

The program is in response to a directive issued in May 2006 to the Treasury Department by President Bush to coordinate with the banking and finance sector to better prepare its response to a pandemic crisis.

The voluntary exercise will bring together the public and private sector through the Financial and Banking Information Infrastructure Committee and the Financial Services Sector Coordinating Council, the Treasury Department said in a statement.

The “exercise,” as term by the Treasury, will focus on the continuity of financial services for Americans in the event of a pandemic crisis.

Treasury officials said the test drill will examine the industry's and government's responses to a number of issues including human resources, continuity of operations, and dependencies on other sectors such as transportation, energy and telecommunications.

“A lack of preparedness could turn a biological problem into one that seriously affects the availability of financial services to Americans and the global economy,” according to D. Scott Parsons, Treasury deputy assistant secretary for Critical Infrastructure Protection and Compliance Policy.

“While the industry has taken up its responsibility and improved its response plans, there is still much work to be done. Treasury is encouraging financial institutions of all sizes from across the country–including banks, credit unions, securities firms and insurance companies–to participate,” he said.

The exercise is unprecedented, Treasury officials said. It is designed to “enhance the understanding of systemic risks to the financial services sector during a possible pandemic flu outbreak in the United States by providing the opportunity for organizations of all sizes within the sector to test their plans.

It is also designed to examine the potential “ripple effects” that may occur in other infrastructures upon which the financial services sector relies, Treasury said.

Among the state agencies playing a role in the effort is the New York Insurance Department, which today reminded insurers that Friday is the deadline to register for the pandemic flu business survivability exercise.

“All insurance companies in the state are expected to participate in the three-week exercise. The simulation, which begins Sept. 24, will test the ability of financial services to survive a pandemic. Companies may register by accessing the exercise Web site at www.fspanfluexercise.com.” the department said.