Preparing for Disaster: What You Can Learn From Insurance Companies' Meeting Continuity Plans
By Leo Jakobson and Deanna Ting
February 1, 2013
On October 29, 2012, when Hurricane Sandy was barreling toward the country’s northeast coast, Gary Morris, CEO of Rampart Insurance in Lake Success, NY, was getting ready to hold an urgent meeting. The meeting was called to prepare his agents and support staff to handle the avalanche of claims that would be coming. “We’re based on Long Island, which was right in the path of the storm,” Morris notes, “so many of our attendees couldn’t make it into the office and had to teleconference in.”
The steps Morris took next followed a well-conceived playbook. To begin with, the agency emailed each employee a file that contained a claim-reporting form, claims contacts at commercial and personal insurance companies, and contact information for damage restoration firms. Via phone, Morris and his in-office staff trained non-agent employees to do claims reports. “After our meeting, all the non-agents were ready to take down claims information,” Morris says.
On October 26, three days before Morris was manuvering on Long Island, a member of Coreen Marcroft’s staff was conferring with the business stakeholders of an Aetna event scheduled to begin on the 29th in New York City — unless a decision was made to pull the plug or move the event to another location. According to Marcroft, a senior procurement manager for Aetna, the company has a business continuity plan team that created a series of disaster response protocols to assist in the decision-making process when catastrophic weather threatens meetings. In the context of these protocols, Marcroft’s staff member discussed the stuation with the principals and came to a decision. “We decided to call off the event and reschedule it for the following year,” Marcroft explains. “We took a look at the weather situation and assessed the impact it would have on the likelihood of [our stakeholders] achieving their goals, and then ultimately determined that we didn’t want to put our employees in any kind of danger.”
Whether a small agency like Rampart Insurance or a global giant like Aetna, when it comes to contingency plans for meetings, insurance companies can draw from a wealth of best practices. The industry wrote the book on disaster preparedness, notes Tim Brown, CEO of Meeting Sites Resources (MSR). “Insurance companies already have a mindset of being disaster-prepared in terms of all the different companies they insure and the coverage they offer,” he says. “Because of that, they have to have their own crisis management plans in place for when — not if — these incidents take place.”
Indeed, meeting planners for any kind of company or association can learn valuable lessons from their peers in the insurance business.
1. Have a Continuity Plan
The crisis management plan must be written out in full, with all stakeholders having had the chance to help develop it. “When a disaster happens, you shouldn’t be having a meeting to first create a plan,” notes Brown. “You have to have a plan in place, ready to execute.”
Aetna has long had plans in place to anticipate nearly any kind of bad weather situation or other extreme event. Decisions such as canceling a meeting are “the result of carefully going through a series of steps,” says Marcroft. “Our business continuity plan team includes within it a corporate-event response team, which is activated any time disaster threatens.”
Business Continuity Plan Manager Brian Olson and his team meet throughout the year, both in person and over the phone, to re-evaluate and update numerous contingency plans for Aetna events. “During Sandy, we activated this response team,” says Marcroft. “Each division called in, and together we determined what was best for our employees and our organization.”
Decision factors addressed during the teleconference included: an assessment of the impact the hurricane would have on the likelihood of Aetna and its event sponsor achieving the goals set for the event, and the level of risk the attendees would be exposed to if they attended the conference.
2. Train With Real-Life Scenarios
Even when there is no impending disaster like a hurricane or tornado, Marcroft says that Aetna’s continuity team works year-round to train staff and evaluate plans for crisis response. Part of that training involves quarterly simulations where natural disasters and other crises are enacted, and each team member is expected to carry out a specific role in response. “The simulations take place at sites all across the country,” says Marcroft. “We never know where it will be or what it involves until it’s activated. They just spring it on us.”
Undergoing simulations “enables people to get together and share their findings within small, focused groups while coming up with best practices based on the variables,” says MSR’s Brown. “Ultimately, it’s about solutions.”
3. Quickly Address the Aftermath
Whenever any kind of disaster befalls an organization, it’s important to have a meetings strategy flexible enough to address the immediate aftermath of the crisis, by way of a plan forged in training and education. “When a disaster occurs, clearly the dynamics of delivering education change dramatically. Often the window of time between the disaster and the event is quite small, so a company attempting to provide relevant training and education needs to have a strategy in place that enables them to create meeting content under a tight deadline,” says Brown.
The Risk and Insurance Management Society (RIMS) incorporates flexibility into the education agenda at its annual conference and exhibition held each spring. Although much of the conference schedule is set long before the event, a select group of hot-topic sessions remain open, pending on breaking world events that would be of particular interest to attendees.
Hurricane Sandy will be a hot topic at this year’s RIMS conference, to be held in Los Angeles in April, says Cheryl Berman, chairperson of the conference programming committee. While there likely will be only one session devoted exclusively to the storm, “it will be injected into no fewer than a dozen other sessions that touch on disaster preparedness and recovery, property coverage, catastrophe modeling, and the like,” says Berman, who serves as regional risk manager for ProBuild, a national supplier of home building materials. “We have a business-continuity insurance session, for example, that will use Sandy as an example of dealing with weather events that shut down or disrupt businesses.” She notes that the hurricane “created a record for the amount of insurance that will be paid out for events that were canceled due to a storm.”
The six-month lead time between Sandy and the RIMS conference allowed the education committee to wait until mid-January, after the impact became clear and the key issues emerged, to design the session content. As a result, the educational offerings will be robust. But that’s not always the case. The 2011 Japanese tsunami took place just three weeks ahead of that year’s RIMS conference, recalls Scott Beckman, who was vice-chair of the 2011 RIMS Annual Conference’s programming committee. As a result, his committee had to scramble to address it.
“We had to have less lofty educational goals in that situation,” he says. “What we ended up doing was providing a structure for delivering information on what occurred, how extensive the tsunami’s impact could be, where people were in the recovery process, and when the country would be able get beyond this and get operational again.”
Berman recalls that the Japanese tsunami “was so fresh that there was a lot of interest in the topic, but the speakers could only speculate on the outcome. If you have a little more room between the disaster and the conference, then you can provide education with more depth. But even if you don’t have the time to develop the ideal content, it’s important to have something. The main point is to address the issue in some manner.”
4. Face Tough Issues Head-On
There are many lessons to be learned in the aftermath of Sandy. One that some insurance companies are beginning to embrace is that big storms and other natural disasters have become more severe and more costly in the past 30 years, particularly in North America. Another is that there is a growing scientific consensus that climate change is at least partly responsible.
That last lesson is something the insurance industry has long been loathe to discuss in public, either with its own employees, independent agents, or the public at large, says Cynthia McHale, director of the insurance program of Ceres, a Boston-based organization that works with the corporate and investment community to advocate for sustainable practices. In part, she says, this is because “climate change has long been a very politicized issue, and thoughts on it are divided along party lines in the U.S.”
Dr. Michael Vinitsky, senior consultant at PDI Ninth House, a leadership coaching and development firm, and a member of the Society for Industrial and Organizational Psychology, notes that when dealing with any controversial content at an event, host organizations need to clearly impart the impact the content has on business and key stakeholders and offer solutions to the issues raised.
Recently, Tony Kuczinski, the CEO of Princeton, NJ–based Munich Reinsurance America, the U.S. division of one of the world’s largest reinsurance companies, used an event celebrating a green initiative that the company initiated to broach the subject of climate change and communicate how the organization wants its employees to deal with the subject in the marketplace.
The event was the unveiling of a project that covers the company’s parking lot with a huge array of solar panels to generate electricity for its offices. The new energy source also serves as a demonstration of the organization’s own commitment to reduce the amount of greenhouse gases it releases into the environment.
“As insurers, we see the effects of climate change firsthand,” Kuczinski told his employees. “After all, weather-related losses are among the things we insure, and we have seen the frequency of these events increase, especially in North America.” He continued: “Whether you believe global warming is in fact for real, or whether you believe it is caused by man or by natural phenomenon, you cannot argue with the concept that all of us have a responsibility to leave our planet in as good — if not better — shape when we are gone than where it was while we used it.”
Kuczinski’s address to his employees accomplished two things recommended by Vinitsky: “You need to tell the audience, ‘Unless we do something different, there will be consequences,’” Vinitsky says. “Second, you have to present a strategy to deal with those consequences and explain how adopting that strategy will benefit the stakeholders. You need to interweave both into your argument.”
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