Disaster Planning & Recovery
This is the fourth and final article in a multi-part series on "victim management" in the wake of large-scale disasters and crises. Previous articles in the series can be found here: Part 1, Part 2, and Part 3.
The Vocabulary Of Victimization
As any seasoned investigator will tell you, if appropriately questioned and listened to, the language people use in adverse circumstances can be diagnostic of their situation. In the case of victims, there is specific vocabulary that crops up constantly that validates the fact that they truly are victims of the circumstances as they claim to be. The language victims use to illustrate their circumstances frequently includes the following terms:
- Anger: betrayal, disbelief, dread, anxiousness, anxiety.
- Frustration: powerlessness, helplessness, fearfulness.
- Inadequacy: self-blame, agonizing, lonely, luckless, worrying.
- Betrayal: trust no one, no one to trust, irritable, anxious.
Victim Behavior Is Predictable: Key Indicators
Victims' behaviors are driven by extraordinarily powerful emotions. Being a victim is, in my judgment, the most highly emotionalized state a human being can achieve. To the observer, many of these individuals seem to be so caught up in their circumstances that they are acting irrationally. Most critical incident response experts recoil at this characterization. But those in corporations and organizations who are creating victims tend to look at victims' behavior this way. In the minds of the perpetrator, the victim is behaving this way intentionally to gain power and compensation.
This is one of the extraordinary realities of being a victim — their behavior comes across as an irrational state. Perhaps the single most important reason victims are created is because those trying to help them are approaching them rationally when the victims themselves are emotionally energized and intellectually confused.
In fact, the behavior of victims is often quite puzzling. For example, friendly gestures are often interpreted as threats. The interests of someone trying to help may be perceived as intrusive or as a betrayal. Well-meant advice, even sensible advice, is often perceived as insulting or controlling. There is a pattern of victim behaviors beyond those that are clearly recognizable that need to be understood as a part of dealing with those who are victimized and for preventing additional injured, threatened individuals from becoming victims.
The Three Simultaneous States Of Victimization
Victims become intellectually deaf. When people are victimized, the first thing that happens is our inner voice begins shouting, interpreting what happened, how stupid we were, and how careless we probably had to be to get into this kind of jam. Our outer voice (the one everyone else can hear) is telling others about what we are suffering, what is happening to us, and warning others about avoiding what happened to us. This is what often makes dealing with victims so difficult. Victims instantly become self-absorbed and self-focused on the problems and afflictions that being a victim causes. They hear little. Their inner voice continuously rehearses their problems and circumstances. They use their outer voice to complain, whine, and warn. They notice little, and they are primarily stimulated by additional negative information about their circumstances or similar ideas and by people trying to help them.
Victims are emotionally engaged 24-7. Put yourself in their place. If you are an adult, you have experienced being victimized by something or someone. Once it happened to you, you were consumed by it, at least for a time. It is this 24-7 focus that gives victims their power. Their relentless suffering and communication about it can overcome even the most empathetic organizational efforts, for a while.
Everything is a question. When the victims' inner voice and outer voice are working at the same time, these individuals are incapable of taking in new information. So they ask questions. Victims generally, and repeatedly, ask the same questions, like "Who's responsible?" "Why did this happen to me?" "Why couldn't this have been prevented?" "Why didn't someone head off this problem before it happened?" "Who is going to pay all my bills while I suffer these problems?" "Why didn't you warn me if you knew this could happen?"
Despite the responder's most humane efforts to respond, until victims can focus on their own recovery, they tend to ask the same questions repeatedly. Responders and helpers must learn to answer these questions repeatedly until the victim can absorb the answer.
This is the third article in a multi-part series on "victim management" in the wake of large-scale disasters and crises. Additional articles in the series can be found here: Part 1, Part 2, and Part 4.
Crises And Disasters Create Many Kinds Of Victims
Almost every postmortem on crisis communication failure and management decision-making deficiencies identifies the failure to promptly address victims as the emotionally negative energizing force that causes trust to break down. Bad news of any consequence is about victims and victimization, or the potential for both.
When the emotionality of victimization meets the rational decision-making regimentation of management, there will almost always be casualties in top management. In every recent high-profile disaster and crisis, one expected casualty among the responders is the person on whose watch the bungled disaster response occurred.
Some Cannot Be Victims
Unless they are directly attacked or obviously adversely affected, corporations and large organizations, like government agencies, are almost never, from a public perspective, considered victims. Yes, Tylenol was a victim of a product tampering murderer in 1982 in Chicago and in 1986 in Westchester County, New York. Yes, the airlines whose planes were hijacked and flown into the World Trade Center in 2001 were victims. The syringe tampering incidents in 1993 made Pepsi, an icon American brand, a victim for 7 days. The government building bombed in Oklahoma City in 1996 was also a victim. Yes, there are circumstances — although very few in number — where one could genuinely consider a large organization and its leadership to be victims.
Generally speaking, however, it is more likely that large organizations that cause or fumble the response to a disaster will be immediately viewed as perpetrators, or at least as having culpability in the creation of victims. In these situations, it is equally true, but perhaps not as intuitively apparent, that some employees are victims in every scenario. If the response of the organization is to stumble, mumble, fumble, and bumble, any opportunity for the perpetrator to be perceived as a victim is lost.
While civil engineers may actually be on the periphery of the victim response, they are trusted advisers to those who do or direct the responding. Understanding the victim dimension helps advisers keep those at the center of the response focused on what needs to be done and on reducing the production of future victims. Management advisers, like attorneys and other professionals, need to recognize the crucial and important realities of the victim dimension and be prepared to coach management for victim response readiness and for the important humane behaviors required as disasters unfold.
This is the second article in a multi-part series on "victim management" in the wake of large-scale disasters and crises. Additional articles in the series can be found here: Part 1, Part 3, and Part 4.
Management Culture Prevents Adequate Victim Management
In America today, the process of becoming a leader, manager, or professional involves, in part, deliberate and calculated de-emotionalization. This is the attitude and practice that only those actions and decisions that can be easily measured, quantified, or metricized are important. This approach generally ignores people and people issues and the things that happen to people or that people care about. Management culture simply deemphasizes and devalues anything that is difficult to quantify — that is, emotional or "soft."
On top of this, managers, leaders, and professionals are trained to discredit, discount, disregard, disrespect, and even demean virtually every kind of emotional expression. Peers, shareholders, and colleagues in the business community expect crisis-affected managers to tough it out and avoid looking like sissies, at least at first. It is okay to give in after victims have been ignored, insulted, demeaned, and slapped around a bit. The result is that management's response to crisis often comes across as what it truly is — callous, arrogant, cold, and heartless. It is true that managers, leaders, and professionals are not compensated for their level of empathy, especially in crisis. The lesson is that what doesn't get paid for doesn't get done.
Our country's business culture systematically avoids emotional issues. Business people are taught a kind of decision-making ritual — one in which even the most urgent decisions are made through a process of conflict, confrontation, and aggressive intellectual and verbal combat. Looked at through the lens of victimization, this approach is time consuming and distracts from the humane immediacy victim response requires. Too much delay, and the perceptions of arrogance, callousness, and culpability take over, especially if management hesitates, acts timidly, or is initially hostile and negative toward victims.
What The Boss Should Really Do In A Crisis
From another perspective, one of the more powerful weaknesses in crisis response is the lack of specific roles and assignments for top management. The result of this crucial gap in crisis management planning is the mismanagement, lack of management, or paralysis that afflicts crisis response efforts. This defect occurs all too frequently in plans I review, responses I analyze, and scenarios I explore with client companies. In the course of directing crisis response, analyzing past responses to crisis, or developing powerful response strategies, it's clear that crisis response promptness and effectiveness depend on having five essential responsibilities spelled out carefully in every crisis plan for the CEO and top management (or surviving leaders):
- Assert the moral authority expected of ethical leadership.
- Take responsibility for the care of victims.
- Set the appropriate tone for the organizational response.
- Set the organization's voice.
- Commit acts of leadership at every level.
This is the first article in a multi-part series on "victim management" in the wake of large-scale disasters and crises. Subsequent articles in the series can be found here: Part 2, Part 3, and Part 4.
When disaster strikes, we do get glimpses of the physical and infrastructure damage, but the news and most of the pictures are about the victims. If anything, while the broken facility, structures, and topography of the land or substructure of the earth do get talked about, it is the relentless pictures, descriptions, interviews, commentary, and desperation of the victims that determine the coverage, the public consciousness, and the legacy of the tragedy. The most glaring deficiency in the crisis and business recovery plans I review each year is the absence of a victim management strategy.
Based on just over 30 years as a senior adviser to top management in crisis situations, it seems to me that almost every function in an organization in crisis focuses on its own activities or those directly allied to it and leaves the question of victim management to someone else.
My major career focus has been management communication and leadership recovery, always within the context of some serious, urgent, or contentious situation. I noticed early in my career that the main drivers of contention, confrontation, and conflict, aside from the news media, were generally the victims of the events at hand. They got the air time, they got the print space, and they got the attention of government. Yet managements generally treated victims as perpetrators, malingerers, and people in search of cash. But I also noticed that victims, even more than critics, tended to dominate the outcomes of the crisis and problems I was working on. Victims had enormous power.
In 1999, an extraordinary article appeared in the December issue of the Annals of Internal Medicine, "Risk Management: Extreme Honesty May Be the Best Policy" (Kraman and Hamm 1999). This paper described a 10-year study carried out by the Veterans Administration Hospital in Lexington, Kentucky, for the purpose of determining how to resolve patient-related incidents in ways that might reduce litigation by patients and their families. In the intervening years, a lot has been written on the subject of extreme empathy, candor, and apology, mostly driven by insurance companies who have discovered that these empathetic techniques, promptly applied, can reduce and in many cases eliminate litigation and speed settlement.
Today the most crucial component of all crisis response, victim management, remains missing from most responses. Clearly, it is possible to respond to crisis with a nearly textbook technical performance. But failure to promptly, humanely, and empathetically see that victims' needs are met will eclipse a flawless response, and instead the response will be remembered for its angry survivors, relatives, public officials, occasionally competitors, but almost always the critics, and the emotional voices of the victims.
Hurricane Sandy is said to have been the most damaging hurricane recorded in U. S. history. There appears, however, to be some dispute as to whether Hurricane Katrina holds that dubious honor. The loss estimates and concerns are changing daily. The cost of the storm, estimated by private firms including PricewaterhouseCoopers and the PFM group, points to the fact that Hurricane Sandy destroyed or damaged more units of housing, affected more businesses and caused more customers to lose power. Here is the breakdown provided on November 26, 2012: http://www.governor.ny.gov/press/11262012-damageassessment.
| Sandy in New York ALONE | Katrina & Rita in Louisiana | |
| Housing units damaged or destroyed | 305,000 | 214,700 |
| Power Outages (peak) | 2,190,000 | 800,000 |
| Businesses Impacted | 265,300 | 18,700 |
- Number of deaths is more than 110 from Hurricane Sandy http://articles.latimes.com/2012/nov/03/nation/la-na-nn-hurricane-sandy-deaths-climb-20121103
- The official death toll from Katrina was 1,723. http://robertlindsay.wordpress.com/2009/05/30/final-katrina-death-toll-at-4081/
- 7.5 million power outages throughout Hurricane Sandy's two day assault on land
- Moody's Analytics estimates the loss in the vicinity of the storm to be $50 billion, of which $30 billion will be directly from damage to property and the remaining $20 billion from economic activity, not all of which is going to come from an insurance policy.
- 60% of the losses in economic activity, or about $12 billion, will come from the New York City metropolitan area.
- Because of the storm's intensity and the breadth and scope of the damage, President Obama declared New York and New Jersey federal disaster zones without waiting for any damage estimates.
- As of 12/3/2012, the Federal government has already issued $180 million in federal contracts related to Sandy.
- The President has declared several areas as disaster areas, which means that federal funds will now be available to storm victims. (This is not limited to those without flood insurance.) This federal disaster assistance usually takes the form of low-interest loans to help home and business owners rebuild, which you can learn more about on the Disaster Loan page.
The statistics are staggering as are the losses (both covered and not covered) that are emerging from the storm. We will attempt to discuss some of the unique and troublesome issues that are arising from the storm.
Article Discussion Points:
- Definition of "Storm" and its impact on insurance
- Flood or NOT Flood?-that is the question (or the hope)
- Personal Auto salvage concerns
- The Lawyers are out to get you
This is Part 2 of a two-part series on claims management in the wake of a disaster. Part 1 of this series can be found here.
Protect All Property From Further Damage Every policy requires that the insured protect the property from further loss. Therefore, you should turn off any water flow to broken appliances or pipes, arrange to have openings in roofs or walls covered to protect from rain damage, and seek help from the adjuster to further protect your property from losses of all types.
Take any necessary emergency measures to protect the building and personal property from any further damage. Do not throw anything away until permission of the insurance company is obtained in writing and you have documented its condition unless the damaged property presents a hazard to the health or safety of your family or others.
If the insurer delays or refuses to authorize measures to prevent further loss, confirm the insurer's delay in a fax, email, and a letter, and take whatever reasonable measures you can afford to protect the property. If your loss is covered, the insurance company should also cover the cost of any reasonable emergency measures you took to protect your property. It is not unusual for an insurer to deny coverage for damage resulting after the initial claim on the grounds that an insured failed to comply with the policy condition to protect the property from further damage.
Document The Loss
If you were prudent and prepared, before the catastrophe, an inventory of your contents or took pictures of your contents, provide the adjuster with the inventory and photographs or videotape. Photograph, videotape, and inventory all damaged property after the loss. Make sure you record the date of the photos and videotape. It is important to document the source and the extent of damage whether by fire or water intrusion.
In most states, a material misrepresentation, concealment, or omission made in connection with the claim will give the insurer a valid reason to reject the entire claim. For example, claiming that an item was destroyed that really wasn't or substantially overstating the value of a damaged item is fraud. In most states insurance fraud is a felony that can place you in state prison if convicted.
No catastrophe is so bad as to cause you to attempt to defraud your insurer to make up for uninsured losses. You should never exaggerate, speculate, or guess about the loss or value of any particular piece of property. Make it clear to your insurer when recollection may not be accurate, when you are estimating value, and the basis for your estimate. For the value of items you are not sure about on a claim presentation, use the phrase "To Be Determined." If you do not have receipts to show the price of an item, information can be found in catalogs, statements from retail clerks, bank statements, credit card statements, or statements from family members or friends.
If all else fails, a formal appraisal can be obtained from a professional personal property appraiser. Save this as a last resort, since the insurer will usually refuse to reimburse you for the costs of hiring an appraiser, but may hire one at no cost to you if asked courteously.
This is Part 1 of a two-part series on claims management in the wake of a disaster. Part 2 in the series can be found here.
Presenting a Claim
If your house was damaged or destroyed by fire, windstorm, or flood as a result of state declared catastrophes and you had a fire, homeowners, flood insurance, tenant's homeowners or condominium policy, you will be dealing with an insurance adjuster. You should recognize that dealing with an insurance adjuster in a catastrophe is usually fairly easy because of the number of claims the adjuster is required to deal with in a short time.
Insurers will be in a very generous mood. They will be seeking good publicity by taking care of victims of the catastrophe quickly and fairly. To make the claims process go easily, the insured person must understand that both the insured and the adjuster have duties when damage caused by fire, windstorm, flood or other insured perils are discovered. The following list outlines the most important of these duties:
- You should be sure there is no unnecessary delay in reporting the fact of the discovery of damage to your insurer as a claim.
- You and the adjuster should establish that there is no unnecessary delay in responding to any fire, fire fighting, flood or water-related cause of loss where "mold" may result as a natural result of water, warmth, and existence of mold spores in all building.
- You may be asked to sign a non-waiver agreement.
- You may receive a reservation of rights letter advising you of your duties under the policy, the conditions that apply or might apply, and the exclusions that may apply to the facts of the loss.
- You, as the insured, should readily, and without objection, sign the non-waiver agreement or accept the reservation of rights as an expression of the status quo.
- The adjuster should remind you, as part of the reservation of rights letter and explanation of the duties of the insured, to preserve and protect the damaged property and to mitigate the loss with due diligence and dispatch.
- You can request from the adjuster the identity of respected, competent, and professional contractors experienced in fire reconstruction or the drying out of buildings and the prevention or restriction of further loss including mold growth.
- You should follow up regularly with the adjuster to ensure that he or she is meeting contractual obligations since a catastrophe often makes communications difficult.
- If you have failed to protect the property from further loss, the adjuster must remind you, in writing, of your failure and how that could effect your claim.
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The adjuster should consider advance payments to avoid any unnecessary difficulties so that you and your family will have a place to live while your house is being rebuilt.
- If your house is destroyed, you can expect an advance of $10,000 to $20,000 to carry you over.
- Even if your house was not damaged, you are entitled to additional living expense payments if you were ordered out of your house by the state government, federal government, Homeland Security, or the local fire department.
- Remember that additional living expense coverage does not pay all of your post loss expenses, only those over and above your normal expenses.
Over the next few days, you're going to read a number of comparisons between the current Hurricane Sandy and August 2011's Hurricane Irene. Firestorm urges you to read and take these comparisons seriously, as Irene killed 56 people with US costs upwards of $15.6 billion in damages. The total damages are still being felt.
Sandy, sadly, has the potential to be "the Perfect Storm." Some meteorologists say a rare combination of events — Hurricane Sandy combined with an outbreak of unseasonably cold air, and a strong land-based storm system — could deliver flooding rains, damaging winds of near-hurricane force, large waves, and even heavy snow inland.
This Public Discussion details meteorological observations as of 5PM Thursday evening, 10/25:
"...Later in the period ... some re-intensification is shown as Sandy deepens again off the U.S. East Coast while it interacts with another shortwave trough. Regardless ... Sandy is expected to be a large cyclone at or near hurricane intensity through most of the forecast period.
"... Sandy will be pulled northwestward and slow down on Friday while it interacts with the upper-level low. Then a north-northeastward acceleration is expected by Saturday as a long-wave trough move into the eastern United States. Most of the track models now show a turn back toward the northwest by the end of the period due to Sandy interacting with an amplifying shortwave trough over the Carolinas and mid Atlantic states. However ... there remain some significant differences in the timing of this interaction ... as the ECMWF has Sandy farther west and interacting with the shortwave sooner relative to most of the rest of the guidance ... which shows a wider turn and a track farther north. The new NHC forecast is close to the previous one ... and lies roughly between the ECMWF and the GFS ensemble mean. Regardless of the exact track of Sandy ... it is likely that significant impacts will be felt over portions of the U.S. East Coast through the weekend and into early next week."
Firestorm's Jim Satterfield states:
"While Sandy's pattern is similar to last year's hurricane, the water temperature is lower and wind impact may be less. Even given lower winds, flooding is extremely likely and combined with down trees and the possibility of ice, loss of power is expected as the hurricane moves inland. For businesses, now is the time to reconfirm call in numbers and messaging. The European model shows that Sandy has the potential to become a massive storm. If this model is correct, outages could be in days and even weeks."
Most ceding companies avail themselves of catastrophe reinsurance, a product that pays anywhere from 90 to 100% of aggregated event loss after the ceding company's retention up to the limits obtained. Generally the retention is determined as some fraction of the company's surplus and the exposure profile of the company from any one catastrophe. The ceding company wants that retention high enough to not merely be swapping dollars with the reinsurer for frequency events, but low enough that the "shock" of the sudden demand for cash to pay claims does not impair the company.
When a broker tells a ceding company what the rate-on-line is for a catastrophe treaty ... (the rate for a limit of coverage) or the inverse of a payback period, that number is not assuming any reinstatement of limits occurring. The reinsurers have now worked it that the reinstatement premium will in effect accelerate the payback period and increase the actual rate-on-line by requiring 100% as to time in reinstatement calculations. This was not always the case — at one time the reinsurer only charged for the reinstatement limits at a pro rated factor of the time remaining on the treaty.
Catastrophe reinsurance is somewhat unique in that its limits must be reinstated, but reinstating those limits now generally comes at a price higher than the original limits costs. This is so because the reinstated limits are only good for the remainder of the treaty period, not for the entire annual contract period as were the original limits. For example, suppose a Texas ceding company had a catastrophe treaty for the period from Jan 1, 2012 to December 31, 2012 and a hurricane came through Houston on October 1, 2012, exhausting the cedant's treaty limit. The cost to reinstate that entire limit is the same dollars as it was to initially secure the original limit, but the second limit is good only from October 1, 2012 to December 31, 2012. Thus, the limits costs are the same for a three-month period reinstatement as they were for a twelve-month original limit of the same amount.
Reinsurers may tell ceding companies at renewal time that they are renewing at the expiring rate, but what the ceding company must be aware of is that a reinsurer's practice is not unlike the federal government saying it will not raise tax rates, but then taking away some deductions so that the net effect is to increase the tax owed. At renewal, the ceding company may find that because of some change in the treaty definitions initiated by the reinsurer, it will have to pay more for the treaty even thought the "rate" stayed the same. The net effect may be that while the rate did not change, the measurement against that rate did change, making the actual treaty costs increase or coverage decrease.
Consider also that if the ceding company had been carrying its original limits equal to the one in one hundred year storm, and such limits were appropriate, the reinstatement limit is now being carried for a second one in one hundred year event occurring in the same year, but happening again in the next three months, a highly unlikely scenario. The reinsurer is actually making the ceding company reinstate the catastrophe limit at a higher cost for an event that is even less likely to occur ... but never fear, the reinsurer will offer to sell the ceding company yet another product that will cover the reinstatement costs ... a treaty now for a charge slightly below the reinstatement costs that will pay the reinstatement premiums for the catastrophe treaty so that the ceding company will have reinstatement limits available in the event a second one in one hundred year catastrophe strikes within the next three months. (A pre loss, pre pay option treaty so to speak, where the ceding company can prepay the reinstatements now at a discounted rate!)
Insurance Thought Leadership joins with our friends at Crisis Care Network in expressing our sympathy to the people, families, and businesses impacted by the tragic violence which took place today in Aurora, Colorado.
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