Canterbury insurance wisdom, for everyone else in NZ. Ten insurance lessons for next time …
The lessons learned after the initial September 2010 earthquakes had barely begun to sink in before they were indelibly underlined by February’s deadly shake and a never ending stream of major, minor and all but constant aftershocks.
In one sense these events have been about the totally unexpected behaviour of nature; but in another they have been about the personal, social, communal and economic aftershocks where damage runs so much deeper.
For those of us in the insurance industry the timeless ‘model’ on which so much was predicated has been found wanting; for those of us in the professions whose clients depend on the acuity and effectiveness of our advice the scale has been unimagined.
As every commentator from the best qualified geophysicist to the Prime Minister himself has observed – who could have expected it?
People are fond of saying, “Hindsight is a wonderful thing” and on this occasion it has been gained at incredible cost to homeowners and business operators.
We owe it to those who have suffered to ensure that these lessons which have been so expensively learned are not forgotten.
Because the survival of businesses is axiomatic to communal recovery Crombie Lockwood has created ‘Ten Lessons’ that they use to help ensure their clients throughout New Zealand are not totally unprepared the next time it happens:
1. Disaster Recovery Plan
Do you have one? (you can pick one up from Gary Thomas at Crombie Lockwood) Where do you keep your DRP? Who has access? Who has custody?
2. DRP for your clients
If you’re in a business providing advice and at the risk of stating the obvious, you should also guide your clients in the necessity of having a sound DRP. Massey University’s recent study on the need has been covered in other media. http://www.stuff.co.nz/business/small-business/6872031/SMEs-need-crisis-planning
3. Adequacy of Insurance
Talk face to face with your insurance advisor; listen when they talk about extensions like ‘prevention of access’; increased indemnity periods; business interruption cover. These are the things that make the difference between survival and failure, over and over again.
The term ‘false economy’ has seldom been better applied.
4. Data Protection
From the well-attended school of thought that it won’t happen to me, comes the learning that everyone overlooks – data security. You know it can happen and in a major event it happens in spades. You can find out more at www.lock-IT.co.nz
5. Organic Growth Gaps
You may be familiar with the term ‘A victim of your own success.’ This might be where it comes from. Insurance is not a ‘set it and forget it’ business plan – it needs to track the growth and value of your business every step of the way. (This is a handy thing to point out to your clients, too) An annual examination and review will ensure that a business is not exposed to risk by its own growth; nor burdened by unnecessary covers if it is shrinking.
6. Loss of Rent
For landlords and property investors nothing is more damaging to the bottomline than loss of rents. When it comes to setting the indemnity period for your Loss of Rent cover be sure you take into account how long it might take to re-build the property. Enough said.
7. Building Valuations
Not to sound like a cracked record but this too caught out a lot of smart people. To ensure your building is adequately insured you need to get a valuation EVERY year.
8. Your Insurer
Choose on value not on price. No if’s, but’s or maybe’s. You have to be able to count on them when the chips are down. (Refer earlier note re False Economy)
9. Your Broker
Similarly, your choice of broker should be about outcome not outgoings. Admittedly we have a vested interest in this matter but the principal is inarguable.
If you don’t appoint a broker of sufficient means they will not be capable of absorbing and responding in a major event. The maxim might be, small enough to care; big enough to get the job done.
10. Nothing is normal
Forget every ‘normal’ process and access; every automatic fix-it; every kneejerk “we’ll just go and get…” There are no shops; no water; no phone; no power; no petrol; no heating; no place to stay.
When an event like this one happens nothing is normal. You have to be aware of that and take it into account along with everything else from  – .