By Jay C. Hardy
It’s a scenario not many of us give a second thought to. What would happen if your pre-need insurance company should be hit by a major fire, flood or devastating tornado? Are your pre-need policies safe? Can your pre-need insurance company continue to do business as usual? To help answer that question, I turned to Mr. Jay C. Hardy, President, Unity Financial Life Insurance Company, Cincinnati, Ohio and asked him to share what special precautions any pre-need insurance company should take to be properly prepared.
What happens if, overnight, the Home Office of your pre-need insurance company is destroyed by a tornado, fire or flood?
Disaster Recovery and Business Continuity are major concerns for all insurance companies, including your pre-need carrier. Most insurance carriers should be able to recover from any disaster in 24 hours. This means more than just being able to answer a phone – it means having the full capability to issue policies, pay claims, transact with the bank and provide service to customers. How is that possible?
It really comes down to two primary concerns: workspace and office systems. If your insurance company is truly prepared for a disaster, they know exactly where they can relocate and how to activate all of the hardware and software needed to run the office.
If you were to ask your pre-need carrier “what happens after a disaster?” the answer should be clear and complete. The ideal back-up space should be far enough away from the Home Office that it is likely to survive whatever disaster affected the Home Office, but it needs to be close enough to the Home Office that employees can get there in a couple of hours. Some employees may end up working from their residences, but many of the collaborative functions that take place in an office benefit from a true office environment.
The more difficult part of the equation is often the timely recovery of data and systems. This process is one that is greatly aided by professional disaster recovery institutions. Many small companies try to manage their own disaster recovery platforms, which by industry experience is a very bad idea.
In the language used by professional recovery engineers, the two important metrics for information recovery are known as Recovery Time Objective (RTO) and Recovery Point Objective (RPO). RTO addresses how long it takes to recover after a disaster; RPO addresses the possible window of lost information. Your pre-need insurance company should be addressing both their RTO and RPO, and they should be able to clearly measure how large or small those time periods are. Companies should either have a full back up system that pushes all data off site every day, or even better, redundant servers in a remote location. Redundant servers reduce the risk of losing data between transfers and eliminate hours of “spin-up” time in recovery.
How does your pre-need insurance company know if their Disaster Recovery Plan will actually work? The only way to truly know is to shut down the Home Office and see how long it takes to turn every software system on somewhere else. A strong plan involves mock disasters every year because software updates often trigger glitches the first time they are installed on new machines.
Business Continuity and Disaster Recovery should be a vital part of your pre-need insurance company’s thought process when they establish new relationships regarding their data and telephone services, when they make changes to their existing IT landscape, and when they change their daily business processes. There are many advantages associated with new technology like hosted solutions and cloud computing. These new services can benefit how quickly your company can recover and minimize the amount of data that could potentially be lost.
Planning for disasters is expensive, both in terms of time and resources. The costs of maintaining a business continuity plan are borne by your carrier every year. The good news is that a well thought out plan, when needed, really can work well. In 2003, a pre-need insurance carrier in New Orleans, Louisiana was forced to evacuate a day ahead of Hurricane Katrina. The company had a solid plan in place and followed it just the right way. The entire office moved to Cincinnati, Ohio and set up in prearranged office space. Customers and agents were amazed that the company was operating in a “business as usual” way the next day. Can your pre-need insurance company do that?