May 14, 2014 by Canadian Underwriter
Insurance professionals need to be prepared in case natural catastrophes affect their own homes, and they also need to collaborate with competitors in order to develop an industry-wide solution for overland flooding, the head of a claims management firm’s Canadian subsidiary suggested Wednesday.
“How equipped are we (personally) to be prepared for power outages?” Pat Van Bakel, president and chief executive officer of Crawford & Company (Canada) Inc. asked an audience of industry professionals.
“Do we have food and water to help us through? Batteries, flashlights, lanterns? What about a portable generator? Are we reasonably well prepared to be outside of our homes for an extended period of time?”
Van Bakel made his remarks during a presentation, titled “Failing to Plan is Planning to Fail,” at the Insurance Institute of Ontario’s “At the Forefront” event in Toronto.
“Given the industry that we work in, we should be prepared” for disasters such as power outages and floods, Van Bakel said.
Van Bakel was appointed to his current position last year at Atlanta-based Crawford, whose services in Canada include property & casualty claims management.
During his presentation Wednesday, Van Bakel said when insurance executives make plans, they should also conduct a “pre-mortem,” which is essentially an exercise in assuming the plan has failed and figuring out what went wrong.
“I think you will be amazed at the outcome,” he said. “Take off the rose-coloured glasses, take off the blinders and before you even implement your plan, develop strategies to mitigate against those failure points, and your chances of success just went up exponentially.”
Van Bakel suggested that last year, some firms were not as prepared as they could have been for the flooding June in southern Alberta and the July 8 rainstorm in Toronto.
“I recall sitting in executive boardrooms around this time last year and being told not to worry about cat events, that internal plans and resources were in place and there was no need to develop cat plans with external stakeholders,” he recounted. “Fast forward about six weeks. Two of the most populated areas of Canada would never flood within two weeks of each other, would they?”
Van Bakel described what could happen to claims departments if they are not prepared for a major earthquake.
“Access to the region is impossible,” he said. “All cellular, hydro, water, gas and city services are out and will be for some time. Your boss is on vacation and off the grid. The person you have designated as your catastrophe manager is also on vacation. You are not able to make contact with any of the local staff in the affected region. How sound is your plan?”
Not only is individual and company-wide planning important, but insurance companies must work with others in the industry, Van Bakel suggested.
“Industry planning is a tough one,” he said. “Everyone worries about things like losing competitive advantage, helping a competitor to be more successful or worst of all to be accused of collusion.”
But Van Bakel added some issues, such as fraud, “can be dealt with much more effectively by an industry-wide approach” than by companies acting on their own.
“I would definitely encourage everyone to tear the logos off their jerseys to join a unified front against fraud,” he said. “This involves agreeing on things like data and intelligence sharing.”
Insurance firms should also work with others to develop an industry-wide solution to overland flooding, he added.
“As the insurance industry, we should want to be at the centre of this debate,” he said. “It gets right at the heart of what we do.”