What are the fundamentals of risk management after disaster strikes? What do you do when the unthinkable materializes or you face the hundred-year storm three times in five years? Beset by multiple demands, stress, and decisions, risk managers might want to curl up in bed, pull up the covers, and wish that it would just go away.

This reaction is futile, however. You can run, but you can't hide. Facing the music, rolling up the sleeves, and having a plan is essential to keeping your wits about you.

Out of the Starting Blocks

After a loss occurs, contact the insurance company immediately. Report the loss by telephone and get a claim number. Send a follow-up loss report by fax, as well as registered mail, return receipt requested. Some insurance companies may even offer loss reporting via the Internet.

Use multiple channels of reporting to lower the odds that the insurer might claim that it never received the report. This also can provide a paper trail to prove that an accident was reported to the insurer if notice ever becomes an issue.

Prompt claim reporting is crucial, not just because insurance policy contract language mandates it; a reporting delay may give the insurance company reason to disclaim coverage or to becloud coverage through a reservation of rights letter. Although many states require that insurers show prejudice from the reporting delay, do not bank on that as an excuse to get casual here. Do not hand a coverage defense to the insurance company by letting it argue that delayed loss reporting somehow prejudiced its right and ability to investigate a loss or to conduct a cause and origin investigation.

Moreover, the sooner claims get into the insurance company's pipeline, the sooner those claims can be recovered. Thus, when attempting to recover from a property loss, a risk manager should act as if driving an ambulance, not a hearse. The sense of urgency and pacing should reflect that.

If the loss involves an official investigation (police, fire department, etc.) call the relevant authority and get an accident or fire department report number.

Mitigation

Protect property from further damage. On some property coverage forms, expenses incurred to prevent further damage may be reimbursable by the insurer. Regardless whether these expenses are reimbursable, however, spend the time and the money to mitigate further loss. Not only is it often required by insurance policies, it just makes good business sense.

Risk managers should have access to schedules of the insurers with whom they have coverage. Copies of these should be kept in multiple off-site locations. They should enlist the help of their insurance agents or brokers in making sure that they have identified all the insurance companies that might conceivably provide coverage applying to a property loss.

The following information should be obtained for all relevant insurance companies who might provide coverage for a loss:

A narrative memo or written statement from the person responsible for the property. This communiqu? should focus on factual information including the property's exact location, when it was last seen and by whom, the name of the person responsible for the property, who discovered the loss, when the loss first was discovered, and exactly how the loss occurred or why it occurred.

An additional statement from the person responsible for the property, itemizing preventive measures that have been or will be taken to make sure that similar losses will not occur in the future. This can help cushion the negative underwriting blow come renewal time.

A copy of original purchasing documents, i.e., purchase orders or invoices, that show original costs, dates of purchase, and purchase sources.

A complete description of all items (including makes, models, and serial numbers).

Documented, current replacement costs, which are the lowest prices available to insureds for comparable property with similar features (no upgrades). Keep in mind, that for computers and other electronic equipment, replacement costs often are less than original purchase prices. Include the names and phone numbers of the people providing the price quotes.

Submit claims as quickly as possible to insurers. Meet all insurance policy deadlines. If unusual circumstances create delays, contact insurers to explain the extenuating circumstances.

Secure any property that is damaged beyond repair and that requires replacement with insurance funds in a safe location for inspection by the insurance company and its claim adjusters. Technically, any property replaced with insurance funds may belong to the insurer.

Retain damaged property and the equipment that caused the loss. For example, if a faulty valve resulted in water damage to property, save the gadget. If the insurer is prevented from recovering against negligent suppliers, manufacturers, or installers, coverage could be denied. The insurance company will want to retain, inspect, and test the equipment for subrogation purposes. They likely cannot subrogate successfully without the product in question.

Comply with insurance provisions requiring the submission of all claim information in a timely manner. Otherwise, the insurer may deny coverage. Insurance compliance deserves a high priority in the recovery phase. The insurer will be unsympathetic to any excuse that risk managers were too preoccupied to concern themselves with insurance requirements.

Inventory Property

Another key component of property loss recovery is being prepared before a loss with complete inventories of owned property. Having comprehensive lists and descriptions of owned property can expedite loss adjustment following calamities. For example, some insurance agents encourage homeowners to photograph or videotape personal property and to store records off-site to serve as proof in the loss adjustment process in the event of fires or other losses.

Good advice for homeowners also makes sense for commercial businesses. Periodically, risk managers should inventory, photograph, or even videotape property to prove ownership and the condition of property that may be insured under various policies. The lists, photographs, or videos should be stored off-site in secure locations so that evidence is not obliterated by the same event that damages or destroys property.

Unfortunately for policyholders, the post-loss insurance adjustment process is not based on the honor system. Policyholders suffering property loss must prove and verify the ownership and condition of property to receive full value from the adjustment process. Minutes and hours invested in this documentation before a loss occurs can save months of litigation and haggling with insurance companies in trying to reconstruct this information after a loss.

Assess banking relationships. Can the company get cash if it needs to in case of emergency? If the finance department has no office to go to, can it still access company funds to make withdrawals or authorize cash and wire transfers? Will it still be possible to issue paychecks to employees, especially those who do not have direct deposit arrangements? In the case of an emergency, a company might have to pay cash in order to procure needed supplies. Companies may overlook these financial contingencies.

If Katrina teaches us anything, it is the lesson that many of us are woefully unprepared, on a personal and corporate level, to rebound from severe property losses. Use this opportunity to review and retool property loss recovery plans. Significant property losses are not just a way for risk managers to show their stuff in times of crisis, but a time for them to put their respective organizations back on their feet.

Kevin Quinley CPCU, AIC, ARM, is senior vice president of Medmarc Insurance Group in Chantilly, Va. He can be reached at [email protected].