When disaster strikes—Will your agency be ready?
New ACT report offers preparation ideas, lists of resources
By Phil Zinkewicz
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“Disaster planning and management are imperatives for every independent agency … The plans developed will help assure the agency’s ability to continue to serve its customers following the disaster.” —Ed Higgins |
One of the greatest Humphrey Bogart films ever was Key Largo, which also starred Edward G. Robinson. In the film, Robinson plays (what else?) a tough gangster holding people hostage in a Florida hotel during a tropical storm. If Robinson’s portrayal of a sadistic killer was not enough to instill fear into the hearts of moviegoers, the storm itself was there to do the job. The howling winds and pounding rains were ever present as Bogart and Robinson circled each other, hunter and prey, the audience not quite sure which was which.
Last hurricane season, the howling winds and pounding rains that Floridians and residents of neighboring states heard were not movie special effects, nor were they the result of tropical storms. In 2004, this area suffered not one but four direct hits—from Hurricanes Charley, Frances, Ivan and Jeanne. Hurricane Charley made landfall on the southwest coast of Florida, cutting a path from the southwest to the northeast that eventually tracked through the entire state. Frances made landfall on the east coast, north of Palm Beach, tracking through Orlando up to northern Florida. Ivan made landfall in Alabama, but it left significant destruction in its wake in the Florida Panhandle. Hurricane Jeanne arrived from the east and was remarkable in that its track was almost identical to that of Frances. The death toll from the hurricanes was more than 30, with damages estimated at more than $30 billion.
Now, we’re into hurricane season again. William Gray and his team of forecasters at Colorado State University have said that the Atlantic basin will see significantly above average hurricane activity this season. The forecasters estimate that 13 named storms will form between June 1 and November 30, 2005. Of those, seven are expected to develop into hurricanes, including three major storms with sustained winds of at least 111 mph. The long-term average for the Atlantic-Caribbean region is 9.6 named storms, 5.9 hurricanes, and 2.3 intense hurricanes each year. “All of the information we have collected and analyzed indicates that the 2005 Atlantic hurricane season will be an active one,” says Gray, who has forecast Atlantic hurricanes for 22 years.
Are insurance agents prepared for this expected hurricane activity? More important, are insurance agents prepared for disasters in general, either natural or man-made?
The Agents Council for Technology (ACT) has addressed those questions in one of its newest reports titled “Key Considerations in Disaster Planning & Management for Independent Agencies & Brokerage Firms.” The 2004 hurricane season was the catalyst for ACT to assemble a work group of affected independent agents and other industry participants to “improve the disaster planning process,” says Jeff Yates, ACT executive director. “The ACT guide provides a detailed checklist for agents to use to prepare for disasters,” he says. “The ACT guide is divided into three major sections: ‘Steps to Take Well Before a Disaster; Steps to Take When a Disaster is Imminent; and Steps to Take After a Disaster Strikes.’ The ACT guide focuses heavily on advance planning and preparation, protecting agency data and systems, planning for alternative communications, making sure all employees know their specific roles to perform should a disaster strike, and being sensitive to the emotional toll a disaster can take on employees and customers. The guide also includes references to additional resources for agencies to consider as they build their disaster plans.”
Ed Higgins, principal at the Clayton, New York-based Thousand Islands Agency and chairman of the ACT Disaster Planning Work Group, says that the report draws on the experiences of independent agents and brokers living through disasters of all sorts, whether they are natural or man-made. “Our discussions drove home the point that disaster planning and management are imperatives for every independent agency and that the plans developed will help assure the agency’s ability to continue to serve its customers following the disaster, whether the disaster is a fire, an ice storm, a virus attack on the agency’s systems, or the result of the release of hazardous material in the area surrounding the agency,” says Higgins. “One of the key lessons that emerged from the work group’s discussions,” he continues, “is it is critical for the agency to be flexible and ready to adjust its plan to the situation it finds itself in following a disaster.”
Adds Yates: “What struck me from our discussions was the opportunity for agencies today to make arrangements in advance with third-party vendors to continue vital agency and customer services during and following a disaster. These arrangements include remote backups of the agency’s data and storing this data out of the region; providing remote access to the agency management system and the agency’s data through the Internet; and switching agency calls to an off-site provider with access to the agency’s database to provide continuing service to customers when the agency’s phones are down.”
Tim Woodcock of Courtesy Computers, Inc., based in Fort Lauderdale, Florida, says his firm is one of those third-party vendors to which Yates refers. Courtesy Computers is an IT consulting and solutions provider for agents around the country. The firm makes recommendations for agency systems and provides implementation of those systems as well. In addition, Courtesy Computers can provide remote management for agencies and does network and security audits. “When we think of disasters, we usually think of natural occurrences, such as last year’s hurricanes, earthquakes, floods, fires, etc.,” says Woodcock. “But we’ve found that those occurrences represent about 30% of ‘disasters’ threatening agencies. About 70% of disasters for agencies come from human error—someone pressing a wrong key and shutting down a system—or internal failure. What we do is provide a backup system, so that, when a system is shut down or there is a loss of power, we can go to a remote site and assist the agency in continuing operations.”
Afni Insurance Services is yet another third-party source for agents who want to design a complete disaster plan. Amy Batson of Afni says the firm offers a call center for agencies when a disaster has wiped out all of an agency’s means of communications with policyholders. Insurance policyholders can be informed of the call center’s number at the time policies are written or during a disaster via radio ads. Says Batson: “Many agencies have good recovery plans for disasters, but what about doing business during a disaster? Last year, there was one agency that thought they had a good disaster plan because they had a sister office a few towns away from their base. But, when the hurricane hit, both offices were shut down.”
Paul Peeples, vice president of information systems and an executive officer of the Florida Association of Insurance Agents, says that one problem in terms of disaster planning is that “we have all become complacent.” Says Peeples: “When Hurricane Andrew hit in 1992, afterwards everybody thought it was a fluke. When last year’s hurricanes hit, people who lived inland in Florida thought they were insulated. What we learned last year is that all agencies need to be prepared. Those who were prepared last year were up and running in a short time. Those who weren’t prepared suffered.”
Peeples said that one agency, T.R. Jones of South Florida, was not only prepared, but prepared to help other agencies. “Tom Jones drove through the devastation of the hurricanes with his now-famous generator, which has become a battle hero, offering assistance to agencies that needed to get up and running. Selflessly, he dedicated his agency’s staff members to those agencies that needed extra hands. But, you see, Tom Jones and his agency people lived through Hurricane Andrew and they never forgot it.”
The ACT report goes into great detail on how to put together a complete disaster program. For example, under the heading of “Steps to Take Well Before a Disaster,” ACT recommends: “Have a staff team develop a disaster plan which assigns roles to each staff member. This plan should contain the specific triggers which, when met, will begin the plan’s implementation. Each staff team handling an aspect of the disaster plan can have a coordinator who reports to the agency’s president/CEO. The plan can be reinforced regularly in staff meetings, and the staff can brainstorm regarding possible disasters and the steps that should be taken in each situation. The plan should be reviewed and updated at least annually. When a staff member leaves the agency’s employ, his or her duties under the disaster plan need to be reassigned.”
The report provides steps to take when a disaster is imminent and goes into great detail on issues such as protecting an agency’s data and systems and preparing to access them after the disaster, protecting equipment and providing for continued electrical power, as well as alternative communications systems.
Says Higgins: “This report is intended to create a thought process, not related to any particular type of disaster. A disaster can result from fire, wind, ice, flood, hurricane, earth movement, terrorism, hazardous material, spyware, viruses, worms, and other causes. To the affected business, the net result is the same because it may not have access to its systems, its phones (land lines or cell), the Internet, or its fax lines at the very time when hundreds of its policy-holders need assistance.” n
Author’s note: Interested readers may download a free copy of the recent ACT report, “Key Considerations in Disaster Planning & Management For Independent Agencies & Brokerage Firms.” It is available at www.independentagent.com/act.