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New York State Raises the Bar for Disaster Response Planning By Insurers

“Severe winter weather caused 15 percent of all insured auto, home and business catastrophe losses in the United States in 2014,” said Insurance Information Institute Dr. Robert Hartwig in a press release that year.  Worth noting is that these figures don’t account for hurricanes, tornadoes, flooding and other weather catastrophes which occur during other seasons.  Nor did they acknowledge the potential impact of non-weather related threats, including everything from active shooters to cybercrime.

Critical to facilitating recovery when disaster does strike? Insurers. In an effort to ensure that all insurance companies are proactively ready to respond, New York State recently implemented new rules mandating all insurers and property/casual companies conducting business in the state to submit disaster response and recovery plans to the Department of Financial Services (DFS) by June 16, 2017 and April 28, 2017, respectively. Here’s a closer look at the impending change.

Why Does Disaster Response and Recovery Planning Matter?

When disaster strikes in New York State, the New York State Office of Emergency Management is tasked with assessing the situation and deciding if/when to request a federal disaster declaration, along with how to prioritize and deploy state assets and resources. This determination is based on a breadth and depth of information related to the extent and amount of damages, losses, personal injuries and deaths caused by the disaster.

Said Financial Services Superintendent Maria T. Vullo, “It is important for all insurers, whatever the scale of their business, to understand that their ability to recover from a disaster ultimately impacts the needs of New York consumers. Disaster response and business continuity plans should reflect the nature, scale and complexity of each insurer’s business and these plans need to be updated at least annually.”

Where Business Continuity Planning Factors In

In addition to filing pre-disaster data with DFS, insurances are also being called upon to establish business continuity plans, including the following information, according to the press release:

  • Clearly defined roles and responsibilities of employees tasked with performing specific disaster-related functions
  • Identified lines of management authority
  • The distribution and maintenance of business continuity and disaster response plans, with additional copies stored at secure, off-site locations in case an organization’s computer servers become disabled
  • Mechanisms for reporting the results of a business impact analysis
  • Business processes and information technology recovery time objectives
  • Detailed procedures, resource requirements, and logistics for relocation
  • Detailed procedures, resource requirements, and a data restoration plans for information technology recover

Before activating its Insurance Emergency Operations Center (IEOC), which is responsible for coordinating disaster responses, the DFS takes into account the nature and extent of the emergency event while also consulting with the insurance industry whenever possible.

More than any other business, insurers have an obligation to their clients to be ready to respond in the event of a catastrophe. This latest news not only demonstrates the degree to which New York State is getting serious about disaster planning, but may also set a precedent for other states regarding the natural partnership between and the insurance industry and disaster planning.