Business Continuity for Insurance Claim Departments
Business Continuity Planning (BCP) is a popular topic these days, partially because one in four businesses never re-open after a disaster, according to the Institute on Business and Home Safety. We have recently seen it play out over and over with the frequency and severity of the latest disasters.
Organizations wonder how it’s possible for their company to fail following a disaster. The longer a company is down, the higher the risk of a company’s ability to “recover” their operations. This is primarily because companies have catastrophic loss of data and/or assets, ultimately resulting in loss of revenue. When companies prepare a BCP, it provides simple and easy to follow policies and procedures that are specifically designed to prevent and minimize these critical impacts of a disaster.
Although a compliant BCP or Continuity of Operations Plan requires a Certified Business Continuity Professional to prepare, your office can take a few simple steps to benefit from a similar and effective strategic plan. The five tips below are a valuable starting point for insurance claim departments to follow to make sure they can continue to provide their services and do not become a casualty themselves.
Tip 1: Backup Your Backup…and Sometimes Backup Again
This is the most common issue we address during our Business Continuity Planning projects. Regular on-site and cloud based backups are designed for common, everyday mishaps and are not sufficient for securing your data in a serious disaster. This is especially important in the insurance claims process because of the need for time-sensitive availability of your data access during emergencies.
Depending on the sensitivity and importance of your on-site data, an off-site data center to back-up your crucial systems is frequently required. For companies with large amounts of data critical to daily activities, a third layer is sometimes necessary. This third layer is called a “mirrored backup.” One of the best ways to prepare is to ask your IT manager what they recommend. The solutions are sometimes costly upfront, but well worth avoiding the headache to restore sometimes unrecoverable lost data.
We came across this “mirrored backup” issue during one of our recent projects with one of the largest online video content providers in the U.S. The insurance underwriter had required the client to have a BCP in place for their policy renewal, so we analyzed their usage of data during the planning process. We discovered three things:
- The client’s backup was a server farm across the city that contained only hosting site information and newly released content, just as vulnerable as its office close by.
- The company’s on-site servers hosting administrative systems and email had no backup and no secondary cooling or power.
- If it lost any one system the company would be unable to recover from a major disaster. With any downtime over 1-2 weeks, the executive board was confident the company would be unable to recover the business and it would be forced to close.
The solution to this seemingly gigantic problem was a simple remote “mirrored” backup at a data center far enough away to be unaffected by a localized disaster. By simply identifying the outcome of a fairly common catastrophic data loss, management could make a justified investment in a “mirrored” backup.
Tip 2: Know Your Providers
Whether it is your vendors, contractors or other departments; understand their plans and how to interface in an emergency. Many departments and vendors have their own plan but simply fail to share them with each other. Unless your claims department understands how your brokers, adjusters, supporting departments and outside vendors will react, you are no better off than having no plan.
Many vendors will allow you to form agreements to guarantee you as a “preferred” customer when you need them the most. Take for example if you use independent or shared adjusters. If they hold a contract with other organizations, they could easily be overwhelmed by a competing office or company. If you think ahead and negotiate first refusal rights, you can secure their services above others.
Tip 3: Prepare Your Staff
This is another common oversight of our clients, unprepared staff. Many organizations will take extensive workplace planning steps but overlook their most important asset, their staff. In reality, one of the most frequent issues in a disaster is staff not returning to work.
Assuring your claims staff are well prepared outside of the office will allow them to efficiently address personal emergencies and return to work quicker. With a resilient staff, your operations will recover quicker than the majority of other businesses.
Tip 4: Secure Your Workflow
Bottlenecks are amplified in an emergency, addressing them now will prevent issues down the road. If your claims department is aware of problems that arise during busy periods, expect those to be the pain points in a disaster. Frequently, allowing staff to work from home is an easy solution to this problem.
Communication and pre-authorizations go a long way to alleviating bottlenecks. Having a clear chain of command and a communications plan can allow staff to focus on key activities rather than mundane communications. The same goes with pre-authorized purchases and workflow processes. If departments know they are allowed to bring in temporary help, lift claim rules, purchase meals while working late or automatic overtime; all these things can help secure your workflow.
Tip 5: Alternate Worksite
Water damage, total loss or dangerous conditions can prevent an entire office from re-opening and keep staff from accessing important resources they require to efficiently do their job. By securing a physical backup office space with either a temporary provider or with a partnering company, operations can quickly be restored.
Companies can also prepare a “virtual office” where employees are able to virtually access all vital systems and work from home. This is much easier when remote “mirrored” backups and cloud hosted services are in place.
Josh Bashioum is co-founder and CEO of Calif.-based Homeland Advisory Group, a business continuity and disaster planning & training company. He can be reached at
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