Canadian Underwriter

Disaster Planning

October 12, 2012   by Margo Malowney

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Most businesses are continually looking for ways to enhance their service offerings and provide their customers with added value. Brokers are no exception, as they endeavour to serve both insurers and the end user. By utilizing the expertise of a professional disaster restoration company, they can help minimize risk and maximize the value of an insurance policy by helping customers plan ahead of time for a property loss and reduce business interruption. This gives brokers a valuable point of differentiation and an additional resource when they are working with insurers, underwriters and commercial customers.

An increasing number of brokers have been realizing that a formalized emergency preparedness partnership plan is a highly effective way to manage the cost of claims by setting expectations ahead of time, and keeping any surprises to a minimum.

What is an emergency preparedness partnership plan?

An emergency preparedness partnership is a collaborative plan developed between a restoration services company and a commercial customer before a disaster event occurs, which is specific to the business operations and needs of that commercial customer. It is often integrated into a company’s own overall Emergency Response Plan and specifically deals with the mitigation/restoration component. It supports claims administration for large commercial clients, has zero cost (in many cases) and comes into play during times of emergency.

Partnership plans generally begin with a discussion and formalized planning session before any disaster occurs, and could include input from facility and maintenance directors, financial directors, or the general manager. During the planning session, expectations and priorities are identified and tailored to suit the individual company needs. For example, a retail business may want restoration companies to protect their inventory stores before they address infrastructure, while a service based business may need their building and/or equipment to be dealt with first. In the instance of a disaster, understanding and responding to the unique needs of a business can help ensure that initial restoration actions are directed, prioritized and pre-authorized, further minimizing down-time and business interruption.

Professional restoration companies are experienced in myriad types of disasters – from floods and fires to tornados and hurricanes, and are staffed by contractors and technicians who are specially trained in disaster mitigation and restoration, as well as health and safety management. Partnership plans can apply this knowledge and experience to each unique client—whether a condominium building, a retail mall or a grain silo. By building a tailored plan based on the needs of the client, the restoration company is armed with the knowledge necessary to bring its experience to bear and respond rapidly to events in the most effective way possible. The restoration company may also work with the client to gauge the need to draw on outside resources in order to meet the needs of the business.

Being prepared is always the key to effective disaster management, and planning ahead will prevent headaches later on. In fact, it has the capacity to save a business. According to the US-based Strategic Research Institute, “companies that aren’t able to resume operations within 10 days of a disaster are not likely to survive.” By building a plan with a professional restoration partner before an event occurs, brokers can cater to the needs of both the insurance underwriter, and the end user.

At the end of the day, everyone wants the customer to be satisfied. When a restoration company satisfies an insured, and the broker has brought that added value into that relationship, the expectations of the client have been met and exceeded. It provides the broker with a point of differentiation that may aid with a future renewal, and may help the insurer retain the customer.

Broker Role

A solid partnership plan begins with a formalized discovery phase, and a possible walk-through of the insured facilities. This gives the restoration team a chance to become familiar with any logistical challenges, procedures, anticipate risks, and to prepare solutions ahead of time. For example, pre-determined knowledge of first points of contact, the most accessible points of entry, the location of power and/or water sources and even parking can significantly speed up the restoration company’s ability to begin mitigation efforts, and hence its ability to contain damage.

In addition, a communications strategy should also be developed, and all key stakeholders in an emergency and recovery situation identified. A restoration partner should have a client data sheet to help identify all the pertinent information, and should also be able to help prepare a communications plan for their partners, which is especially helpful when there are multiple locations involved.

A broker can also help the insured identify the risks that the business might incur; fire, wind, or flooding, and help the business identify the priorities and degrees of response they would require. For example, a food distribution company that supplies fresh meat, fish or produce to grocery stores whose electrical system is damaged may want to have refrigeration trucks available, or they may prefer to have their inventory transported or even choose to bring in generators to provide temporary power. Restoration companies can arrange any of those options as an element of their service and the broker can help the insured make those determinations.

Brokers who write for clients like a retail store or restaurant chains should further consider a restoration company’s ability to respond consistently across multiple locations, as well as the formalization and communication of their partnership plans. A formalized plan contributes greatly to the resulting service delivery expectations, as well as the ability to track and report work in progress.

Brokers can further add value by being involved in the build out and onboarding stages of the planning process and by acting as a liaison between the commercial client, insurance carrier and contractor to insure the claim is being carried out in the best interest of all parties.

Case Study

On a February weekend in 2011, a water line ruptured on the 27th floor of an office tower in Toronto, Ontario. By the time the flood was discovered, five floors had been affected. Security personnel immediately called the national disaster restoration company with which the building owner had developed its emergency preparedness partnership plan.

Months earlier, the disaster response teams had performed a walkthrough of this building (along with the owners many other properties across the country), understood how to handle the logistics of bringing in personnel and equipment, and were therefore able to get to work right away. When responding to a disaster such as a multi-level flood, minutes saved mean dollars saved, often a significant amount. In addition to mitigating the cost of the job, a speedy response means a smaller area to clean up, and a quicker recovery time.

A significant aspect of this particular plan was that the key personnel and contacts that were identified ahead of time. The flood caused some safety concerns with electrical equipment, and the head electrician for the building was brought in immediately to ensure that power was turned off to the affected areas, and crews were able to access electricity safely.

As crews worked to restore the five floors, safety continued to be a top priority. Office workers were back in the building as the restoration work proceeded, and the restoration company brought in a health and safety expert to ensure that all necessary precautions were being taken. The integration of additional health and safety components to the restoration plan mitigates the risk to personnel, and minimizes the chance of further claims arising.

Because restoration crews already understood the nature of the business conducted on the site, they were able to finish the job as office workers returned to work, and the building tenant was able to continue to operate with very limited business interruption. Under the circumstances, the job was completed as quickly as possible, and all restoration personnel had left the site after only a few days.


While the flood was considered a large loss by the insurer, it was contained and managed effectively so that the disruption to business operations at the property was minimal, and the total cost of the claim was minimized. (To demonstrate, consider the cost of drying a building and restoring its contents against the costs of replacing those elements. The cost savings can easily be in the tens of thousands of dollars without accounting for the cost of any business interruption or the possible loss of tenants in a case like this).

When asked, the operations manager of the company that owned the tower said: “The emergency preparedness partnership plan made this disaster manageable. Having knowledge of the site beforehand increased the speed of the crew’s response, the efficiency of the work, and the respect for the tenant’s business operations. Ongoing communication from crews addressed our concerns, which was a direct result of setting our expectations properly and having a relationship in place beforehand.”

Upon completion of the project, the restoration partner, FirstOnSite Restoration, led two post-mortem debriefings, one with the building owner and another with the primary tenant. Each was designed to analyze the response process, and identify successes and procedures that could be improved on.

Emergency preparedness partnership plans can help support ongoing relationships between the broker, the underwriter, the insured, and the disaster restoration company. They can not only provide extra comfort to the insured, but to brokers and insurers as well.

Margo Malowney is director of marketing for FirstOnSite Restoration. For more information, visit


Copyright 2012 Rogers Publishing Ltd. This article first appeared in the July/August 2012 edition of Canadian Insurance Top Broker magazine.

This story was originally published by Canadian Insurance Top Broker.