DISASTER PLANNING MANUAL - PART 1
It's probable that you'll be swamped by calls from policyholders about what to do before and after a catastrophe. Keep a generous supply of the following four checklists to distribute. You might also print up the checklists in flier form and distribute at shopping malls, supermarkets, parking lots, and so on.
What to Do Before a Catastrophe
1. Alert police and fire departments to special conditions, such as an invalid who might require emergency evacuation.
2. Prepare an inventory list of personal valuables, household furnishings, and equipment so losses can be authoritatively itemized.
3. Keep your insurance coverage current with rising building replacement costs. Make sure you have enough coverage for the furnishings and other items you've purchased since you first bought insurance. And buy Flood and Earthquake insurance, if you're eligible and vulnerable.
4. Review your insurance policy. Are you sure everything important is covered or did your memory play tricks? Keep it in a safe place where it can be retrieved easily after a disaster. Keep a quick-reference list containing your agent's telephone number, all your policy numbers, and the respective insurance company names.
5. Know how to shut off your gas, electricity, and water, and how to board up vulnerable places around the house, such as doors and windows.
6. Plan a family evacuation and relocation strategy.
(The next three items usually are recommended at the time of a hurricane watch or during 'Earthquake Preparedness' week. However, waiting until then is not a good idea. First, consider the threat of tornadoes, aftershocks, and other sudden catastrophes. And, second, when a hurricane approaches or after a quake has hit, stores may run out of what you need as others make a beeline to stock up, too.)
7. Keep a supply of nonperishable foods and an emergency water supply; have essential drugs and first-aid kit available in your medicine chest. Keep these supplies fresh.
8. Keep fresh batteries available for transistor radios and flash lights, and an extra supply of fuel for portable grills and stoves.
9. Have available the hammer, nails, tape, and boards needed for protecting your residence from the elements or making necessary emergency repairs afterward.
10. If possible, keep a claims log-a file of copies of loss notices or a log of all losses-so that you can follow up later. You may find it necessary to substantiate claims for company loss and contingency purposes. A separate file or log will make it easy for you to figure out your loss experience, which can be helpful in determining the disaster's effect on your profitability, Also, this separate account may be useful for publicity purposes. Maintain a separate log for each carrier. (An example of a claims log follows.)
What to Do When a Storm Approaches
l. Do whatever you haven't done from checklist No. 1. (Be sure the flashlight batteries are still fresh.)
2. Remind authorities about special conditions for your home.
3. Get your car filled with gas. Supplies may be unavailable later, or rationed.
4. Board up storefronts, doors, windows, and other vulnerable places that can be damaged.
5. Pack durable clothing.
(The following is one of the most important loss prevention steps anyone can take.)
6. Secure or bring inside all tools, lawn furniture, etc. that can: (a) become projectiles in a windstorm; and/or (b) be destroyed by the storm.
What to Do After a Catastrophe
l. Get in contact with your agent as quickly as possible. Let him or her know about your losses. If you are relocated temporarily, let your agent know your temporary address.
2. Make only those repairs necessary to prevent further damage to your home or business. This must include covering breaks in a roof, wall, or windows with plywood, canvas, or other waterproof material. Do not have permanent repairs made without first consulting your agent. Unauthorized repairs may not be reimbursed.
3. Wait for an insurance adjuster to arrive to appraise your damage. Following a catastrophe, insurance companies schedule adjusters so that the most serious losses get priority treatment. Those policyholders are the most in need.
4. Keep all receipts for expenditures you've made to repair damage or to estimate the extent of your damage.
5. Prepare a detailed inventory of all damaged or destroyed personal property for the adjuster. Be sure to keep a copy. Your list should be as complete as you can make it and should include: a description of the item (and number, if more than one); date of purchase or approximate age; cost at time of purchase; and estimated replacement cost today. Include as much of this data as is available.
6. Collect canceled checks, invoices, or other papers that will assist the adjuster in obtaining the value of the destroyed property.
7. If you feel it is necessary, secure a detailed estimate for permanent repairs from a reliable contractor and give it to the adjuster when he or she arrives. The estimate should contain: detailed specifications of the proposed repairs, and detailed repair cost prices and replacement prices.
8. Take photos of the damaged areas. These will help you with the presentation of your claim and will assist the adjuster in the investigation of your claim.
9. Even if home or business furnishings and effects look like 'total losses,' do not get rid of them until after they have been examined by an adjuster.
10. If your car has been damaged or submerged in a flood, move it to high ground and let it dry out. Do not attempt to start or operate it until it is thoroughly dried.
11. Wooden furniture should be cleaned as quickly as possible. Avoid rubbing in abrasives such as ash, plaster, or wallboard particles that have fallen on furniture surfaces.
12. Your dry cleaning establishment can help you evaluate the cleaning or restoration costs for clothing, furs, and draperies.
13. Metal objects, including guns, drapery rods, and the electric motors in home appliances should be dried and rubbed or sprayed with oil to prevent corrosion. Radios, televisions, and other electronic systems should also be dried out, but not oiled.
14. Bedding and upholstered furniture must be dried immediately if saturated with water. Vacuuming will remove some of the odor and grit left by smoke damage, but these items should be separated from other possessions since they may affect nearby items.
15. Antiques, paintings, art objects, silver, and brass must be given special care. Dry them with soft cloths, but do not apply oil or rub them. This treatment will mar or otherwise damage hard finishes or surfaces.
What to Do About Flood Damage
1. Notify your independent insurance agent. He or she will assign the loss immediately to a qualified adjuster, who will call on you as soon as possible to inspect the damage. Following a major storm or other catastrophe, even with many additional adjusters on site and others enroute, it will take time to process an extraordinary number of claims. If your home has been destroyed, or yours is a serious case, tell your independent agent that you need priority help.
2. Before you enter a flooded building, make sure it is not in danger of collapse. Let your house air out to remove to remove foul odors or escaped gas.
3. Be alert for holes in the floor, loose boards, hanging or loose plaster, snakes, and other hazards.
4. Don't smoke or use an open flame until you are sure it is safe to do so.
5. Turn off gas at meter tank. Do not turn on the electrical system; it may have become short circuited.
6. If it is not off, the main electrical circuit should be turned off. Be extremely careful to stand on a dry surface and avoid touching the metal handle of the switch box. Use a piece of heavy rubber, plastic, or a piece of dry wood to open the metal door and throw the switch off. If you have gas service, be alert for fumes. Call your local utility if you detect any fumes.
7. Pump or bail water out of the house and shovel out the mud while it is moist. Give walls and floors an opportunity to dry.
8. Before the house is fully aired out, scrub all woodwork and floors with a stiff brush. Always start washing a wall from the bottom up. Starting at the top may cause streaking.
9. Take all wooden furniture outdoors and remove all drawers and as many moving parts as possible. Clean off all mud and dirt. Do not leave them in the sun as they will warp.
10. I upholstered furniture, especially any that has been or badly damaged, should be cleaned, dried, and examined by an experienced upholsterer.
11. Clean metal objects as soon as possible. This is especially true of iron, which should be cleaned with a cloth saturated with kerosene.
12. Wall-to-wall carpets should be raised to allow air to circulate.
Draperies, upholstery, and clothing should be laundered.
13. Do whatever you can to avoid further damage and to make temporary repairs. Keep records of expenses incurred in preventing further damage.
Newsletters
Even newsletters can get into the disaster preparedness act! Here is an example of one of the IMMS newsletters, designed to make clients and prospects aware of many insurance-related topics, including earthquake preparedness.
Be Ready, Be Safe, Be Prepared for an Earthquake
Just like surfing and beach blanket bingo, earthquakes happen only in California, right? Wrong! Many people are surprised (and dismayed) to learn that earthquakes of a frightening intensity are as likely to occur on the Eastern seaboard or the plains of Missouri as they are in California-or in many parts of the world (e.g., India, Armenia, Mexico). That's why earthquake preparedness is extremely important, regardless of where you live.
Be Prepared, Lessen Chances Of Injury
You can lessen the impact of an earthquake by being prepared. Most earthquake casualties result not from the actual earth movement but from building collapse, falling objects and debris, and so on. Proper preparation can prevent many injuries.
First, for earthquakes or any other emergency, you should have these supplies on hand:
- Flashlights with spare batteries. Matches or candles should not be used after an earthquake unless you are certain there are not gas leaks.
- A portable radio with spare batteries. Radios might be your sole source of information for as much as three days.
- First aid kit and first aid knowledge. It's helpful to have several family members know CPR.
- Food. Keep a supply of non-perishable food on hand that can be rotated into your diet and replenished on a regular basis. You should have a supply good for at least 72 hours.
- Water. Store water in airtight containers and replace it about once every six months. Store at least 3 gallons per person to be prepared for a 72-hour period.
- Tools. A pipe wrench and crescent wrench are handy for turning off gas and water mains.
You can also be prepared for an earthquake by being aware of and eliminating or minimizing possible hazards in your home. These hazards include:
- Tall, heavy furniture that could topple, such as bookcases, china cabinets, and wall units. Consider bolting these to the wall.-Hot water heaters that can pull away from pipes and rupture.
- Large appliances that could move far enough to rupture gas or electrical lines.
- Hanging plants in heavy pots that could swing free of hooks.
- Heavy picture frames or mirrors over the bed.
- Latches on kitchen or other cabinets that will not hold the door closed during shaking.
- Breakables or heavy objects that are kept on high or open shelves.
- A masonry chimney that could crumble and fall through an unsupported roof.
- Flammable liquids, like painting or cleaning products, that would be safer in a garage or shed.
You can eliminate some of these hazards by securing or relocating heavy items. If you can't eliminate them, do your best to be aware of and avoid them should an earthquake occur.
Coverage for Shakes, Rattles, And Rolls
After a quake, many people find themselves with no resources to rebuild or replace property because they weren't insured. Most standard Homeowners policies specifically exclude losses from 'earth movement.' Coverage must be added by an endorsement or a separate policy.
Earthquake coverage provides for earthquake damage up to the limit on your Homeowners policy or up to a specific dollar amount. The endorsement does not increase the limits on the policy, and special deductibles apply to each loss. In territories where earthquakes are more common, the deductible is usually 5% or 10% of the replacement cost amount or actual cash value of the building, and in other areas, it's 2%, but it usually does not go below a minimum of $250.
The coverage defines a 'single earthquake' as all earthquake shocks that occur within a 72-hour period of time. Some forms specifically land shock waves or tremors that accompany a volcanic eruption.
Don't take the attitude that earthquakes happen only to other people in other places. Make sure you're protected by being prepared and being insured. Just give us a call for more information.
Conclusion
Gather your forces and start preparing your agency's disaster plan immediately. Review the plan periodically, so that each person is fully aware of his or her job and areas of responsibility. If and when a disaster hits your area, you'll be better prepared than most to protect your clients and your business-and thus, you'll help lend credibility to the insurance profession as a caring, proactive industry that is sensitive to the needs of its community.
Of course, it is impossible to plan for every disaster, every contingency. In the event of a disaster, you will no doubt face challenges that weren't considered, encounter barriers you didn't know existed. This is inevitable, because none of us has a crystal ball. However, having a disaster plan ready for implementation can make the solution of the unplanned-for problems that much easier, because you'll have more time to devote to them. Remember, you have planned for many, if not most, of the difficulties you may face when disaster strikes. Such planning can drastically reduce the potential for injury to your employees, inconvenience and loss to your policyholders, and damage to your structure and property. And that's the whole idea of disaster planning!
Riding Out the Storm (by Judi Snelson)
It wasn't supposed to happen. Charlotte is 200 miles inland and hurricanes generally don't maintain their fury that far from the sea. But Hurricane Hugo did when it hit Charlotte last September. And it was responsible for the almost 2,000 homeowners claims for Allied Assurance Agencies of America.
It's difficult to comprehend how devastating such a major disaster can be. When my husband and I drove toward Charlotte on the second night after the hurricane, there wasn't a single light to be seen-and Charlotte is the largest city in North Carolina.
'Horrible Hugo' was responsible for the development of a disaster plan for the agency, which we hope never will be used again, but which will provide stability to the agency if another disaster strikes in the future.
Our disaster plan was formulated very quickly by the principals and office manager of our agency. Most of it was fashioned during the first few days after Hugo hit-when we has no electrical or phone service. We literally were out of business. But we knew that we would be working long hours once we were up and running, so we devised a plan to handle the expected claims.
The first thing we realized was that there would be no 'business as usual' for the time it took to repair the damage done by the storm.
The storm's effects made it impossible to open the agency on the day the hurricane hit. We spent the weekend looking after our own affairs and attempting to contact as many employees as possible. Phone service was sporadic; I could call out only to phones with the same first three digits as mine. Despite the difficulty in communicating with employees, they all arrived at the agency 90 minutes early on Monday morning. They had arranged their personal affairs so they could devote their full time to servicing our clients. There was no need for management to ask them to work overtime; they all said they were willing to put in 12-hour days for as long as it took to handle the claims. Everyone was willing to work through the lunch hour the first week; we sent out for food.
We were fortunate that several outsiders agreed to help us. Volunteers included the wives of the regional and district underwriting managers and an underwriter trainee for Crum & Forster's regional office, the personal lines underwriter from Amerisure, a personal friend of three members of the Carolinas PIA staff who spent several days offering help to all local members.
The majority of our claims were in personal lines, resulting from felled trees, high winds that stripped shingles from roofs and flooding from drenching rains. There has been no preparation for the disaster, other than bringing things like yard furniture inside. So everyone was caught off guard by the severity of the storm. However, one of our carriers, Auto-Owners Insurance Co. had the presence of mind before the storm struck to ship us pre-completed computerized claim forms for each of its policyholders at our agency. They were in alphabetical order, so all we had to do was pull out those for whom we had claims, enter clients' phone numbers and the extent of their damages and send them to the carrier. This bit of foresight was a godsend to us, because we received 1,565 homeowners claims during the first five days following the storm. It was helpful to be able to process the claims affecting that company quickly and efficiently.
We soon realized that we didn't have enough ACORD forms on hand to handle the number of claims we would receive. So we separated the forms we had and used the single sheets to process claims, making copies to serve as duplicates. Our assembly-line operation called for those answering our eight incoming phone lines to take initial claims information, as the others pulled customer files and still others entered policy numbers and coverage descriptions. We moved a disk to the center of the office and designated it an 'information center.' We attached a sample ACORD form for each personal lines company we represent with required claimed information highlighted. Some need only the client's name, policy number, and a description of the damage; others required more information, including form numbers. The completed ACORD forms were sorted into piles by carrier. Most of the carriers sent couriers to pick up the forms daily; others were faxed or hand delivered to carriers' offices by our sales staff. We had no mail service in our office for seven days following the storm.
Few clients expressed impatience; many actually apologized for 'bothering us with their claims,' because they knew many other residents were inconvenienced more than they were. A number of clients came to the agency to report their claims because they couldn't reach us by phone because of the volume of calls we were receiving.
The carriers prioritized claims according to their severity and assigned adjusters by zip code. Not surprisingly, carriers were short of adjusters, especially after some were transferred to California to adjust claims from the San Francisco earthquake. Adjusters from other states weren't familiar with North Carolina coverages. Several of them came to our agency to ask for coverage synopses. Since I teach classes in homeowners insurance, I had a complete manual of coverages which we copied for adjusters. Because of the large number of claims and the unfamiliarity of many adjusters with local coverages, settlements were relatively slow at the outset.
Many carriers either completely suspended their draft authority or greatly reduced it during the emergency period. This practice cost everyone must time and money, because we could have handled many claims ourselves if we had had the authority. As it was, we could handle fewer than 50 claims with the draft authority we had.
The direct writer agents looked good because their adjusters had field-draft authority, while those representing our carriers didn't. Some claims fell through the cracks when the adjusters handling them were sent to San Francisco. Some home office claims people didn't realize the magnitude of our situation; they tried to do business as usual and alienated agents and policyholders alike with their slow service.
A few companies announced that they would pay for food spoilage which resulted from home freezers thawing, even though this coverage is not included in most homeowners policies. This caused some ill will on the part of policyholders whose companies refused to pay for food spoilage.
We were grateful that all of our policy information was not entered in our computer, since we were without power for several days and couldn't find a generator to put our computer back in business. Even if we had had a generator, it would have been difficult to obtain gasoline for it, since few service stations were operating prior to the return of electrical power. Our staff was accustomed to completing the ACORD forms manually, and coverage information was easily accessible from our files.
As of February, we had processed 1,977 homeowners claims, 11 percent of which had not been resolved. We feel this is a pretty good record, considering the situation. On the whole, our clients were pleased with the way claims were settled.
Each agency should have a disaster plan. We didn't but fashioned one quickly. It would be difficult to design a plan that would anticipate every eventuality, but most agents have some idea of the types of disasters that may strike their areas.
Of course, a disaster can be so devastating that no plan can be of much help. However, we know that other agencies in Charlotte were less effective in processing claims than we were, because their principals had not devised efficient emergency procedures. For instance, we assigned specific tasks to individuals, eliminating duplication of effort. Our claims processing people weren't distracted from their work because others were performing tasks that otherwise would have interrupted them.
No disaster plan should be cast in stone. It can be-and should be- altered as the situation dictates. The plan may not be finalized until the disaster is history, but it provides a framework to avoid confusion and to get started on the right foot. We feel our agency's disaster plan is loose enough to permit us to function in almost any situation.
During the emergency, we maintained strict supervision of agency operations. We insisted that every CSR fill out a backlog control sheet at the end of each week. These sheets listed every item of business on each CSR's desk that hadn't been completed. The sheets were turned in to our office manager who prioritized the remaining tasks and made sure they were completed before less important business was handled. We didn't want to set ourselves up for