How to ensure your company is ready for the next Hurricane Sandy

Neil Harrison, AGRC, group managing director, Risk Control, Claims & Engineering, Aon Risk Solutions

Ron O’Neill, senior claims consultant, Aon Risk Solutions

Learning how to deal with disaster during a crisis is not a good idea. Hurricane Sandy’s aftermath reminds employers of the importance of insurance, disaster planning and claim preparation.

“Always at a time like this, organizations who were not affected need to take a step back and ask themselves, ‘What if?’” says Neil Harrison, AGRC, group managing director, Risk Control, Claims & Engineering, at Aon Risk Solutions.

Smart Business spoke with Harrison and Ron O’Neill, senior claim consultant at Aon Risk Solutions, about best practices business owners can use to ride out any disaster.

How did Hurricane Sandy affect the insurance industry?

With an event like Sandy, the insurance industry plays a role in business specific and general economic recovery. Brokers and insurance companies expect to be judged on their performance and response. With a significant amount of claims, there is a lot of resource pressure. Resource scale and leverage become key, and operational efficiency is a prerequisite for success.

It’s too early to comment on the longer-term impacts of insurance pricing or coverage availability. With these events, everybody has an opinion, but nobody knows at this early stage. Property damage, business interruption and contingent business interruption all create the overall cost. Also, just because a company is based in Detroit or somewhere out of Sandy’s way doesn’t mean businesses didn’t have customers, suppliers or vendors affected.

How should you handle an insurance policy?

The first step is ensuring you’ve got the right insurance coverage — the terms, the conditions in place, definitions of perils — and that you understand items such as limits and exclusions. Business owners should aim to have claims preparation coverage on the property cover. Then you can engage an expert for accounting work critical to quantifying and making the claim, and, generally, the process runs more smoothly.

Also ensure the values at risk — asset values and business interruption values — are understood and accurate. Too often, an organization has a claim and is underinsured or overinsured. A best practice is having an external expert work with you on assessing values during your policy renewal process. The business interruption is particularly important because it’s complicated to work out in post-loss panic mode. Since the recession, everybody has different values at risk, but organizations may have continued to index link their values or sums insured.

Beyond insurance, what can businesses do to respond well to disasters?

Organizations that have responded well are those with business continuity plans that are well defined, kept up to date, frequently tested and broad. The plans cover not just the direct issues of building damage but also employee safety and welfare issues, supplier issues, customer issues, etc.

Insurance is an outcome, in many ways, of business continuity. Take a broad look at the business, plan for every eventuality, make sure everyone knows what to do and have restoration firms on contract, as well as access to alternative power.

How should a business submit claims if it suffers damage?

When a significant incident hits, the company has some responsibility to mitigate the damage and cost. Much of it is common sense, but that’s easier to apply when it’s written down with clear responsibilities. Make sure that you:

• Report the loss to a broker or insurer immediately and there are clear lines of communication.

• Take immediate action to minimize loss.

• Keep documents, invoices or receipts, which become part of the insurance claim.

• Take photographs of the damage.

• Engage an external expert, if needed. When a business is in trouble mode, it’s all about recovery. Outside expertise allows you to talk to customers, suppliers and staff, while the expert handles the tactical, and somewhat more mundane, issues.

It’s important to have continuity planning, follow insurance best practices, consider a claim preparation clause and ensure common sense is applied after a loss. Disaster response, claim response and claim preparation are specialist technical disciplines, and businesses find investments in these areas have a positive return.

Neil Harrison, AGRC, is group managing director, Risk Control, Claims & Engineering, at Aon Risk Solutions. Reach him at [email protected]

Ron O’Neill is a senior claim consultant at Aon Risk Solutions. Reach him at (248) 936-5243 or [email protected]

For information from the Aon Situation Room, Post-Tropical Sandy, including videos on claim steps and business interruption, visit For an archived webinar on Post-Tropical Sandy, visit

Insights Risk Management is brought to you by Aon Risk Solutions