The Importance of a Catastrophe Plan
Working with many companies over the years, I’ve found that every company has a business continuity and disaster recovery plan in place. However, many forget to create a formal catastrophe (CAT) plan. A CAT plan is very similar to a business continuity and disaster recovery plan but there are differences.
A business continuity plan outlines how a business will continue operating during an unplanned disruption in service. It contains contingencies for business processes, assets, human resources, and business partners – every aspect of the business that could be affected. A disaster recovery plan is a part of the business continuity plan that contains strategies for handling technical disruptions to networks, servers, personal computers, and mobile devices. The plan typically covers how to restore office productivity and enterprise software so that key business needs are met.
The business continuity and disaster recovery plan is critical for any business as it documents how you will react when your business has an unplanned disruption. Why do you need a CAT plan? A CAT plan documents how you will respond when a disaster affects your customers. This is a critical difference. How will you help your customers, how will you meet their needs during a weather-related or other CAT event?
In May 2019, more than 225 tornadoes across a 13-day span. We are seeing an increase in wild weather across the country regularly and on June 1, the 2019 hurricane season officially began. Where will you find the additional resources needed to handle a high volume of claims – from FNOL to follow-up on repairs? How will you manage communications – not just to policyholders but to agents and other involved parties? How will you maintain the customer experience for those customers not affected while managing a CAT event?
Having a detailed CAT plan enables not only efficient handling of a high volume of claims, but also affects other areas— higher customer satisfaction, policyholder retention, positive brand awareness drawing new business, fewer litigated claims, and better control over expenses.
Is your CAT plan in place?