Burand’s Agency E&O Blog: Tip #27

Agency Catastrophe Plans. How to keep a catastrophe from becoming an even bigger catastrophe.

I don’t know who said it, but they correctly concluded that the best E&O audit is a natural catastrophe because so many clients have claims and the claims are of every form and fashion. Agencies without solid catastrophe plans exacerbate the problem and agencies with solid catastrophe plans become heroes to their clients and employees.

A good catastrophe plan is employee focused. It emphasizes what each employee is supposed to do and includes a multitude of different contact possibilities for the employer and the employees.

The second focus is on hardware and data access.

Third, a choice must be made as to whether the plan will include alternative power supplies or a different location (or both depending on the circumstances). Regarding power supplies, if you use a generator, consider propane rather than gasoline or diesel because the former is difficult to steal and the latter is not. Also if you use a generator, do not forget long power cords.

Without a catastrophe plan, E&O exposures increase because clients get more and more frustrated and more time is required to resolve claims. Exposures increase too because regular work cannot be completed on time, documentation fails, more mistakes are made, and so on and so forth.

Many good examples of catastrophe plans exist through industry associations and several quality catastrophe service companies exist. Another good resource is Disaster Recovery Journal (www.drj.com) which focuses on the myriad unexpected claims and risk management thereof. You may also find this resource useful for guiding your own clients through their disaster risk management needs.

Topics Catastrophe Professional Liability