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Disaster Recovery: Plan Now, or Face Regret Later

Daniel Joelson February 1, 2008

A widening array of solutions is giving carriers more options to backup and safeguard their critical data.

If it is at all possible to find a silver lining in the spate of natural and manmade disasters afflicting the United States since the turn of the century, it is that they remind companies to prepare themselves so that the next disaster causes minimal damage. And yet, in spite of the devastating effects of 9/11, Hurricane Katrina and Hurricane Rita, the California wildfires and many other disasters, circumstantial evidence suggests that many insurance firms do not have strong and steadfast business continuity plans in place.

MISPLACED CONFIDENCE

Too often, insurers “logically” deduce that they are out of harm’s way and only act after it is too late. For instance, one carrier was talking with the Bothell, Wash.-based technology provider AMS Services about signing a deal for recovery support, but kept dragging its feet, recounts Nanci Taplett, the vendor’s public relations manager. The insurer procrastinated until suddenly, an AMS salesperson received a call from the insurer crying: “We have to move now. We have been in a flood and have lost everything.”

While the United States has been fortunate to avoid major disasters in past months, the result is that some firms may again be relegating disaster recovery plans to the back shelf.

One reason disaster recovery solutions are not a higher priority is that they can be expensive, especially when a firm builds a data center, with a staff, to which they can fail-over critical business operations.

Yet, cost is simply an excuse for some carriers. “The technology has become less expensive and more efficient,” says Stephanie Balaouras, senior analyst, Forrester Research Inc., a technology and market research company based in Cambridge, Mass. “So the opportunity to use the technology is there.”

Simply having a modicum of foresight and barebones technology, such as a few telephones working in other locations, can be very helpful in at least ensuring good client service, observes Linda Trevino, operations manager for Talon Insurance Agency, a firm based in Port Arthur, Texas, that has recently weathered hurricanes, tropical storms and fires. She recalls how several insurers were so unprepared for Hurricane Rita that employees merely left a note on the headquarters’ front door as they left town, noting that they were gone and ‘to contact this number’ (numbers that were not even those of company agents).

Companies can husband resources by focusing on those systems that must be most rescued or duplicated, rather than backing up their entire IT infrastructure. “It is possible for you to focus on very specific areas that must be up and running immediately and where you can’t afford any downtime,” says Andrew Barnes, senior VP of corporate development of Neverfail Inc., an Austin, Texas-based provider of disaster recovery solutions. Doing this can set back an insurer tens of thousands of dollars, rather than millions.” Insurance companies themselves have to make sure that IT dramas do not become crises,” explains Barnes. “And they become crises if the disaster recovery plan is out of date or doesn’t recognize the importance of communication and collaboration.”

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