Resilience & Sustainability

For all of us in the insurance industry, we have to be asking ourselves 1) if we are offering terrorism coverage to our insureds; 2) are we going beyond the offer of the Terrorism Risk Insurance Act and offering stand-alone terrorism insurance; and, 3) are we carefully documenting our conversations with our insureds about the terrorism offer?

This article discusses some of the unique and troublesome issues that are arising from Hurricane Sandy: 1) the definition of "storm" and its impact on insurance; 2) whether or not the damage was caused by a flood; 3) personal auto salvage concerns; and, 4) how lawyers are positioning their clients' cases.

Time is of the essence in crisis management, and it deserves its own plan specifying participant responsibilities. A measure of success is that the dimensions of the crisis are known and recovery activities are begun within the first few hours. In the absence of a tested crisis management plan, the crisis management process can be a turbulent and reactive instead of a calm and productive experience.

A Test Design Team is responsible for designing the test exercise scenario. These individuals should have in-depth knowledge of the organization and departments being tested, and are able to produce "credible scenarios" and yet stay on course with the test plan. Typically, the Disaster Recovery Coordinator serves in the capacity of the Test Design Team.

The success of any emergency, continuity, or disaster recovery plan depends upon its routine testing, audits and updates. Plans cannot be expected to work properly unless they have been tested prior to their actual implementation in an emergency. Don’t wait until an emergency unfolds to see if the plans and procedures you’ve implemented are effective in responding to and recovering from a crisis event.

Where the risk characteristics limit available carriers (due to restrictions on age, soil, etc.), there will be pressure to get increased rates.|

Does the recent string of catastrophes from New Zealand to Mid America to Japan matter to me and my Insurance Program? Should I worry about the impact and record breaking cost of these events? Currently the cost estimate is over 60 Billion dollars and counting. As with so many things in a global environment, are all of these events related and will they have serious implications for insurance pricing in the future? The simple answer is Yes.|