INSURERS NOT FAZED WHEN LIGHTS WENT OUT

Although the blackout of August 14 left inhabitants of North America's eastern seaboard in the dark, disaster preparedness and insignificant insured losses helped to dim the event's impact on insurers.

Manulife Marches On
Toronto-based Manulife Financial's CIO and chief administration officer, John Mather, concedes that he didn't expect having to rely on his company's year-old generators so soon. But when the carrier lost power in its Toronto and Waterloo, Ontario locations, "it was a good thing the generators were there," he contends. As a result of the insurer's preparedness, "All of Manulife's systems continued to operate normally because our data centers are equipped with diesel-generated power."

Manulife's multiple locations-which include offices in Hong Kong, Tokyo, Boston, Montreal and Waterloo, Ontario-also contributed to the continuity effort. The carrier's locations and capabilities have been calculated into Manulife's Defense in Depth strategy-a comprehensive plan that includes multiple layers of backup for its 14 business units, according to Mather. The plan is supported by Manulife's 14-member business continuity team. Each is responsible for a particular business unit and each member has a backup representative.

When the incident occurred, conference-call lines for members of the team where automatically activated. "One of the big issues in Toronto was the lack of transportation," Mather explains. As a result, Manulife's Toronto office was closed for one day. The business continuity team put a plan into action and delegated call center functionality to its offices in Montreal and Boston.

Manulife's Toronto office reopened at the start of last week. In an attempt to honor the Provincial authorities' request to conserve energy, Manulife's Ontario offices continued to power its data centers with the diesel generator for one day of operation.

Back-Up Generators Power Progressive
Back-up generators also allowed Progressive Insurance's (Mayfield Village, OH) systems to stay up and running after the outage took effect.

Although transportation was not an issue in Cleveland's suburbs, where Progressive has offices, the carrier was working with a limited number of employees because many needed to be with their families. "Although we had power in our buildings we didn't have all of our people," relates Chris Garson, agent IT business leader, Progressive.

As a result incoming calls to the contact center were diverted to Progressive centers in Tampa, Fla., Colorado Springs, Colo, Tempe, Ariz., Sacramento, Calif. and Austin, TX. "Fortunately we were able to spread the call volume," explains Garson. Redundant phone lines carried data between the Mayfield Village data center and all call centers and claims offices "Also, since many of our customers live in blackout zones call volumes were down," he explains.

Although the breadth of this month's blackout surpassed that of a 1977 two-day blackout in metropolitan New York that resulted in $2 million in insured losses, the Insurance Information Institute (III) reports that losses resulting from the recent blackout will be modest. This is due to the fact that most commercial insurance policies exclude damage or impacts that result from power failure. Additionally, although homeowners' insurance coverage sometimes includes food spoilage, the III reports that this type of loss would typically fall below the average homeowner's insurance deductible.