One of the insurance companies has a television commercial with a catchy slogan, “Life comes at you fast,” therefore you need someone on your side. The real truth of the matter is that people fail to have a game plan in place to face the unexpected events that life throws at all of us.
As an ex-pilot, I still enjoy reading a monthly magazine called Flying. One of the first articles that !read is “On the Record,” that details. all of the recent ajrplane accidents around the United States. What comes up repeatedly is that when accidents occur, it is not just one event that caused the accident but a whole series of wrong decisions that finally lead up to the accident primarily because they failed to plan for all contingencies.
Propane marketers in California are faced with several potential natural disasters. There are earthquakes, forest fires and floods as well as other disasters caused by health issues, political rulings, economic failure, accidents, and death. Scientists are predicting more natural disasters m 2009 and they are becoming more frequent. The costs to your company to recover from a natural disaster or other form of the unexpected are soaring and most people completely underestimate the cost. So here’s the question·-how well are you prepared for the unexpected?
Years ago l worked for a large regional insurance broker that had an outside firm put on a planning seminar for all of the employees. The theme was what unexpected events will happen to the company in the next five years. We were broken up into small groups to think uppossible scenarios that we might face; The whole group then considered the probability of what might happen with all the possible events conceived. We then numbered the scenarios in order of the likelihood that the event would happen.
As I look back, the employees in that meeting correctly selected the five major events that would ‘impact the company in the ensuing yeears. The company had a disaster plan in place for each events and they survived.
The following questions should be asked of every-propane marketer:
• Do you have a disaster plan in place?
• Have you tested the plan qr has it been updated?
• Has your plan completed a thorough risk assessment?
• Have you thought-out all the potential “what if’s”?
• What about potential legal liability?
• Reviewed your insurance program to see if it is tailored to your specific company?
• Have a continuity plan in place?
But what about the “known” situations that occasionally happen in our industry? What about the newspaper article that came out Monday about a home that caught fire the prior Friday to one of your customers? What about the Saturday night phone call from the fire department stating that you need to secure your tank due to a fire? Do you really have a strategic plan that maximizes your loss control?
What you need is a damage control team. The size of the team depends on the size or volume of your company. If you are small, this could be you and several outsourced individuals that serve your company in various loss control, insurance, risk management or safety needs. If you are a large company, this could mean you, your plant manger, your service manager, the employees engaged with:the account and your outsourced risk management team.
The first thing we need to do is evaluate-you need the loss information as it pertains to your propane customer. You need to know the who, what, when and where. Likewise, you need to do the same internal evaluation within your company as to who filled the tank or serviced the location; when it was last filled or serviced, and why. Time is of the essence and it-is ok to wake employees to get the information. After listening to your staff, have them document any story and back up their story with other documentation such work orders, Gas Checks, and other necessary documentation.
©nee we have the evaluation and you feel we may have involvement, then I would like to turn to the damage control aspect. Who are the people that you can give the evaluation to verbally on a conference call to brainstorm the plan of action? Your insurance agent needs to be in the loop and if it is necessary the agent can engage the insurance company if they need to expedite an emergency response team or a cause of loss expert. It is interesting to note that getting trustworthy third parties involved in discussions regarding the loss can usually shake out different questions than the discussions you may have had internally.
The difference between proactive immediate evaluation and damage control versus the “turtle” approach could be the difference between a catastrophic loss and a loss going away. For example, a fire takes place resulting in third-degree burns to one of your customers. The turtle approach is to do nothing, say nothing and hope we do not get a lawsuit Eight months later you are served papers. That same example with an evaluation coupled with damage control would look as follows. Upon.hearing about the situation you collect the who, what, where, and when. You couple that with your internal evaluation and deem you are involved. A conference call commences with your damage control team and questions arise as to what to do next.
Three major items released any involvement or liability.
1. After contacting the fire department’s fire investigator it is acknow;ledged that the homeowners had been working on the cook stove.
2. The cook stove was in the middle of the kitchen pulled away from the wall.
3. Propane company’s work order documentation had written “declination of service” from the customer for testing of the system while a remodel took place.
Those three items saved the company perhaps several hundred thousand dollars, due to thorough evaluation and damage control. Life does come at you fast, but with the proper team and controls put in place prior to adverse situations, the easier it is to overcome them.
Frank Thompson, CPCU
PT Risk Management
Frank B. Thompson is a chartered property and casualty underwriter based in Phoenix. He is the owner of PT Risk Management, an independent insurance company specializing in writing propane and petroleum risk policies throughout the U.S.