Disaster Planning Manual - Part 2

DISASTER PLANNING MANUAL - PART 2

The first step to developing a catastrophe contingency plan is to outline the steps that must be accomplished in the event of a disaster. Once you know what needs to be done, the next step is to establish detailed procedures.

The entire contingency plan should be put in writing, and several copies of the document should be prepared and kept in a variety of locations to avoid the possibility that the plan itself could be destroyed or lost during a catastrophe.

Each employee should be given, in advance, a written explanation of his or her responsibilities in the event of a catastrophe. Have additional copies of different job specifications available for distribution to any temporary help you may hire to help you through the period following a catastrophe.

Review your catastrophe plan annually. Make any necessary adjustments, and explain the changes to all agency personnel.

Prepare Your Office and Staff

• Develop a plan to protect the agency during a severe wind or rain storm. Determine the safest storage area in the office, and decide the best way to secure and protect equipment and records in that location. Purchase the necessary materials to cover and protect equipment from potential water damage in advance, not the day a serious storm is predicted. Unplug all electrical equipment, and contact your phone vendor about protecting the phone system.
• Consider ways to protect your office and employees during an earthquake. Develop a game plan and review it periodically with all employees, to protect agency personnel and visiting clients in event of an earthquake. Conduct 'earthquake preparedness drills,' so that everyone will be familiar with what they should do during an earthquake.
• Determine how to operate without electricity. Identify everything that operates on electrical power, and try to find an alternative. Make sure you have access to at least one manual typewriter, a supply of carbon paper, postage stamps, flashlights, candles, a Coleman-type stove (for coffee), portable radio, cellular telephone, etc.

• Maintain adequate supplies to meet your needs following a catastrophe. Be sure to have sufficient ACORD forms, claim forms, coffee, bottled water, non-perishable food, toilet paper and other materials you will need to operate.

• Develop a system for handling disaster claims. Familiarize your entire agency staff with emergency claims-handling procedures. Everyone will have to lend a hand with claims after a major catastrophe, and temporary outside help may also be needed. Develop a streamlined and efficient system for maintaining special claims files and notifying your insureds of the progress of their claims. Be sure to contact each of your carriers and obtain, in writing, information on their catastrophe claims procedures.
• Determine the agency's policy regarding holiday/weekend hours following a catastrophe. If a catastrophe hits on a Friday night, your clients will need assistance over the weekend. You and your staff should be clear about if/when you will open the agency on an emergency basis.
• Establish a plan for operating from an alternative location. If your agency is damaged or inaccessible following a catastrophe, you'll need to set up an alternative operation site. Determine in advance where you could move (perhaps to an agency principal's home), and talk to your phone vendor about the possibility of automatic call forwarding under disaster conditions. Also consider the ramifications of such a move on your contingency plan; make note of the supplies you'll need, etc.

Organize Company Loss Data

• Document the information needed to handle a catastrophe claim for each of your carriers. Every company has different claims procedures and catastrophe requirements. And after a catastrophe, your agency will probably have additional personnel handling claims and dealing with various carriers. Therefore, it's important that you have, in writing, all of the loss data needed for each carrier.

Prepare Non-Claims Staff

• Develop a list of individuals available for temporary work. If a large-scale disaster strikes in your community, changes are that your existing staff won't be able to handles all of the claims that will come in immediately following the catastrophe. Therefore, it's important that you develop, in advance, a list of people who would be available on a temporary basis to help out. It's a good idea to have more people on that list than you might really need, recognizing that some of them will be unavailable in the event of a catastrophe that affects them personally.

• Prepare non-claims staff and temporary employees to handle frequently asked questions following a catastrophe. Discuss expected questions with your existing claims personnel, and prepare a written list of questions and answers.

Some general questions to be prepared for:

• How to handle temporary repairs;
• What to do about debris removal;
• What mortgage holders are likely to require in the way of estimates; and
• Information on additional living expense.

Since many disasters may result in flood damage, be sure to prepare a checklist that relates specifically to floods insurance coverage.

• Develop telephone/address list for local repair work. Your customers will look to your agency for guidance in where to go for repairs to their property following a loss. It will be a service to your clients to provide information on businesses in your community which might be able to handle their needs.

Determine, in advance, the requirements and operating guidelines for each of your carriers. How do they want to handle claims? Should they be batched or called/sent in on an individual basis? Put this information in writing, and verify it immediately before (in the case of a predicted catastrophe) or after the disaster.

Obtain similar information from each of your vendors, as well. And be sure to check with your telephone system vendor to determine if/how you could operate from an alternate site in the event that your agency suffers physical damage.

A separate file which includes information on all catastrophe claims could be very useful to your agency. It may be needed to follow up on loss reports or to tabulate loss experience.

Establish a catastrophe claims file, and have all employees place one copy of the ACORD Notice of Loss form in the file. Additional copies of the form should be placed in each insured's file and in a suspense file for future follow-up. The original of each form should be sent to the carrier.

Information on catastrophe claims may be critical in the establishment of future contingency payments. (Bear in mind that some contingency agreements have a top loss for a single occurrence in determining agency profitability.)

Even though you have taken the time to develop a comprehensive contingency operating plan, it is a good idea to develop a checklist of items to be reviewed just prior to any predicted catastrophe. For example, you'll know several days in advance if a hurricane is predicted for your area. Even if it never hits, it's sound business practice to be prepared.

Among the items you may want to include in your checklist:

• Are all permissible binders and/or policies typed and mailed to the company?
• Are all files in place and in alphabetical order?
• Do you have a list of the files you were working on to pull after the catastrophe crunch is over?
• Are all desks, tables, etc. cleared (in the case of a predicted windstorm)?
• Do you have an adequate supply of kitchen and sanitary products? An adequate supply of loss forms?
• Have you established procedures to get personnel to the office? Do they know alternative routes if main roads are blocked?
• Have you contacted your telephone system vendor to determine system operations following a catastrophe? How should calls be routed once the office reopens? Inform all appropriate personnel.
• Are all necessary claims forms in order and easily accessible?
• Has every measure been taken to protect the agency against damage?
• Are all personnel familiar with their post-catastrophe responsibilities?

Personal service is a critical function of any agency. However, after a major disaster, common sense dictates that you shouldn't attempt to personally inspect every loss. Certainly, your carrier will determine whether or not it wants to send an adjuster. And with certain clients and/or in the case of an unusual loss, you may feel that it's appropriate to inspect the loss site yourself.

As a general rule, however, your first priority after a catastrophe should be taking reports of losses, counseling your clients ('Is it covered?' 'How soon will I be paid?'), working with adjusters and managing the agency operations to keep procedures on track and ensure that all clients are serviced in an efficient, professional manner.

Depending on the severity and frequency of claims to be handles by your agency, you have want to consider sending a temporary employee to take photographs of your clients' losses, as an agency service.

Give one employee the responsibility of checking all notice of loss forms- before they're mailed-for completeness, legibility, and accuracy. Make it clear to all personnel that the assigned staff person has the authority to request changes where necessary.

Train all employees to pay careful attention to detail when filling out forms. Make sure they realize the importance of including all coverages and form numbers, as well as edition dates and endorsement numbers. This will help in the adjustment of the claim.

To ensure proper treatment and eliminate possible delays, losses never should be reported by telephone.

If emergency handling by an adjuster is needed, be sure that the form includes an accurate explanation of why such action is necessary. Use your discretion and request special handling only when truly necessary.

During the first post-catastrophe contact with each insured, take the time to explain any deductible clauses and/or exclusions. Ask the insured to arrange for any repairs necessary to protect their property from further damage and to keep all receipts, since most temporary repairs will be covered under their policy. You may also want to remind them to proceed with caution in dealing with unknown contractors and/or repair shops to avoid potential fraudulent activities.

Explain how losses will be adjusted, and warn each client that there may be delays because of the volume of expected claims and the need to give top priority to the most seriously damaged property.

In cases that involve damage to a mortgaged property, explain that the loss payment will be made out in the name of the policyholder and the mortgagee. In some cases, the mortgagee may demand to inspect the property in question and/or ask for a second opinion to back up the adjuster's estimate. If damage to personal property is involved in this type of a situation, your insured should be reminded to ask for a separate loss payment on the loss to their belongings, to avoid any potential delays by the mortgagee.

No matter how busy the agency is, it's important to take enough time with each initial phone call to get all of the information you will need to process the claim and to address the questions and concerns of your client. You may want to develop a checklist of what insureds should and shouldn't do while waiting for loss settlement, to ensure that all issues are covered in each phone call.

In the confusion which follows a major catastrophe, insureds will want to be reassured that their claim has indeed been set to the carrier and that it has not been lost in the shuffle. Despite your verbal assurances during your initial contact, it will do much for your clients' peace of mind (and their commitment to your agency) if you send them a follow-up letter reiterating the items discussed during the phone call and noting that the claim has been forwarded to the carrier.