Insurers View Disaster Recovery and Business Continuity As More Than IT Issues
Too Close for Comfort
If the recent business continuity experiences of some insurance organizations are any indication, a catastrophe doesn't have to physically touch a company's building to rock the status quo. Sometimes the threat of catastrophe -- and accompanying precautionary evacuations -- can be just as disruptive from a workforce perspective.
Pacific Life (more than $100 billion in assets) was one of many companies affected by the recent California wildfires. While the insurer's Newport Beach headquarters was not threatened by the flames, its Foothill Ranch, Calif., facility -- comprised of two buildings housing 540 employees and a substantial call center operation -- is located just a few blocks from the hills where a fire raged during the fourth week of October.
"It wasn't so much the fire that threatened our facility as it was the heavy smoke," explains the carrier's Jackson. "People were having trouble breathing."
Jackson says he was first notified that the Foothill Ranch location might need to be evacuated on Sunday night, Oct. 21; by Monday morning, it was apparent that the smoke would pose a real problem. Further, many area schools were evacuated, forcing workers with children to plan accordingly.
"Our business processes were not in danger at any time," Jackson says when describing the situation on Monday, Oct. 22. "It was strictly people availability that was an issue."
As workers shuffled in and out of the Foothill Ranch buildings on Monday, Jackson established and set up an incident command center (ICC) at Pacific Life's Newport Beach headquarters. "We monitored the situation throughout the day," he relates. But, "We didn't activate any business continuity plans or declare any sort of disaster."
But while Pacific Life was able to go about business as usual that Monday, Port Arthur, Texas-based Talon Insurance Agency was not so lucky in 2003 when the threat of Hurricane Lily forced an evacuation of its headquarters. Having just formed after the merger of two local agencies in May 2001, Talon had spent most of its energy putting the business together and had not yet formed any meaningful business continuity plans, according to Talon operations manager Linda Trevino.
As an independent agency, Talon shares many of the same business continuity challenges as a carrier. Often, clients look to their agents as the first point of contact when reporting a claim. If service levels suffer due to poor disaster recovery planning, satisfaction levels, and possibly retention rates, can drop accordingly.
When it was clear authorities would order an evacuation, Trevino says, she and another employee drove to the agency's headquarters at 5 a.m. and had only 45 minutes to remove critical hardware, equipment and data. "During that time, it became very evident that we did not have a plan," she admits.
Servers were dismantled and placed in vehicles for evacuation, Trevino recalls. In doing so, the company's Houston office also was brought offline, and phone calls to the Port Arthur location were unable to be forwarded.
As it turns out, Hurricane Lily missed the region. Still, the mere threat of catastrophe caused Talon's business to go down for three days. "That's loss of productivity; that's lack of service to our clients," Trevino says. "It was very unacceptable. We knew we had to do something to keep that from ever happening again."
While the mere threat of disaster can disrupt an insurer's business, the ramifications multiply when a catastrophe makes good on its threat.
By Wednesday, Oct. 24, the smoke that loomed near Pacific Life's Foothill Ranch facility the previous two days had inched closer. With the fire on the move and smoke issues worsening, management made the decision to activate a strategy that had been developed by a business continuity team in the days before -- to move about 50 people, primarily call center agents and support staff, to the Newport Beach office. "In case the [Foothill Ranch] building needed to be evacuated, there would be no interruption in service," Jackson explains.
Preparation for that move actually had started on Monday, with IT workers transforming the Newport Beach location's conference center into a temporary, but fully equipped, call center, according to Jackson. Displaced workers began arriving on Wednesday morning, and all 50 people had been accommodated by noon.
Jackson says that the maneuvering was almost entirely seamless from the customer point of view. "We were able to accommodate all [our call center workers'] needs," he asserts. "When they plugged into our network here at Newport Beach, they had all the facilities they needed."
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