| ISSUE # 22 | SEPTEMBER 1 9 9 8 |
Insurance & Risk Management Ideas Made Simple in Two Minutes |
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CATASTROPHE PLANNING To best protect a business, insurance agents are required to be pessimistic. Look at the worst possible scenario. That would be a DISASTER: stuff like fire, tornadoes, huge explosions, things that don't happen often but when they do occur - it's a DISASTER! A real CATASTRAPHE!! By the way, expand your thoughts to include weird events such as a bomb threat, termites, terrorists, and other occurrences that may not be covered by insurance!! THE FUNCTION OF INSURANCE Forget all the glossy Madison Avenue advertisements in Fortune magazine - insurance is a financing vehicle. It pays for loss. That's it. Nothing more. Oh sure, there are a bunch of great value added services that take place: claims adjusting assistance, surveys, inspections, loss control visits, etc. SURVIVAL That's the basic goal of any business. Beat the competition, grow, new product development and make a profit. To achieve these goals you no doubt have a business plan. Do you have a written disaster recovery plan? BUSINESS INCOME INSURANCE The first step in establishing a disaster recovery plan is buying insurance. Make certain your business insurance package includes business income and extra expense. This will provide monetary benefits to pay for your continuing costs during a restoration period while you get back in business. Expenses such as advertising, ordinary payroll, additional costs to ship goods quicker, and a lot more. Every single one of our clients who did it, hated it but: complete a business income worksheet. It's the only way of determining how much insurance to buy. Takes into consideration the amount of down time, how long it will take to rebuild, and a bunch more. A WRITTEN CATASTROPHE PLAN Ok, so the insurance company gives you a big pile of money following the disaster. What are you going to do with it? Unless you've thought about it in advance, you really won't know. A good catastrophe plan involves both pre-loss and post-loss planning. |
Loring & Company can help you get started on a plan. Here's a "teaser" listing some typical topics contained in such a plan:
There are some really basic concepts most folks don't think of. Call your customers immediately, let them know you have a plan and will be back in business. Most customers will be sympathetic to the problem, may help out and once they understand will be loyal to you when the doors re-open. AT LORING & COMPANY, Dan maintains a computer at his home equipped with modems (cable and telephone), 3 phones lines, and other stand by arrangements where we can operate a make a shift interim insurance agency. The insurance companies we represent also have contingent plans to help us out during emergency periods. YOUR BUSINESS Every business is unique. There simply isn't a "one size fits all" disaster recovery plan that we can send you. Take some of these concepts, analyze your operations, and design a plan for your company. Use your imagination, ask your managers, foremen, the bookkeeper, maybe even use a little of your professional staff such as the company attorney and accountant. You may find an outside supplier with existing plan for your industry who will share it with you to help you get started. SUMMARY Insurance proceeds plus a written disaster plan will increase the likelihood you business will survive a catastrophic event. One without the other may not. P.S. A Good recovery plan will be 30 to 40 pages long, depending on the company size and complexity. This is the best we can do in two minutes. |
