The Risk and Insurance Management Society (RIMS), kicks off its annual convention in Orlando today. One of the basic principals of risk management is the avoidance of loss. A second principal is to mitigate the effect of losses. These are win/win situations for the policyholder and the insurance company because financial and time resources are not used on replacement of otherwise unnecessary losses. Indeed, if practiced widely, insurance premium rates should be reduced. It has been my position that loss prevention and mitigation must be part of public policy and should be reflected in building codes, life safety codes, and taxation policy. The benefit would be far greater than just reduced insurance premiums. Just as insurance is a societal product, risk management and loss prevention are socially significant. This should be reflected in our laws.
A recent news article, Disaster Planning By Businesses Helps Even When Minor Disruptions Hit, noted a book that I suggest every small business owner or manger consider purchasing. Donna Childs’ Prepare for the Worst, Plan for the Best: Disaster Preparedness and Recovery for Small Businesses, 2nd Edition, contains specific considerations and practical applications of how small businesses (the rules apply to large ones as well) can mitigate and prevent losses. Her initial findings are on point and a warning to business owners and communities that do not take these measures:
"Disasters occur more frequently than we realize. Research consistently shows
that for small businesses, the effects of a disaster can be devastating:
- More than one in four businesses will experience a significant crisis in any year.
- Of those businesses that experience a disaster and have no emergency plan, 43% never reopen.
- Of those that reopen, only 29% are operating two years later.
The losses that these figures represent do not appear to have motivated
preparedness efforts by small businesses: A recent survey of 2,500
small business owners found that 71% did not have a disaster preparedness
plan in place. Nearly two-thirds of them stated that they do not need one.
63% expressed confidence that they would resume business within 72 hours
if they were affected by a natural disaster, even though historical experience
shows that this is absolutely not the case.
Disasters are, for the most part, manageable. We cannot prevent disasters
from occurring, but we can equip small business owners with the knowledge that they will need to mitigate their risks and to recover quickly when disasters do strike."
Natural disasters, losses and insurance controversies are as certain to occur in the future as death and taxes. While they can be minimized, my law firm is there to help policyholders recover as fully and as quickly as possible. Insurance defense attorneys are there to advocate for the insurance companies and attempt to justify their denial and excuses for delay.
Recognizing this, we are distributing a small handout with some suggestions for business owners and risk mangers, A Risk Manager’s Guide To Property Insurance For The Upcoming Hurricane Season. We think some easy pre hurricane season risk management techniques can help all in the possible wake of a hurricane. Spring is here, and now is the time to prepare for possible catastrophes that we all hope will never come.