Business Continuity and Disaster – Joplin tornado draws $509M in insurance claims so far

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Business Continuity and Disaster


Insurance Matters


Joplin tornado draws $509M in insurance claims so far

SUMMARY: Missouri officials said insurance companies have paid out $509 million in claims tied to the May 22 Joplin tornado, and that figure is expected to multiply by three or four by the time all claims are settled. The estimated EF-5 twister — the highest level on the tornadic scale — destroyed vast swaths of Joplin, killing 156 people. The largest number of claims so far has been from homeowners, who have submitted a little more than 7,000 and received $311.7 million in payments. Officials expect a total of 8,005 claims by the end. Commercial property owners have submitted 1,533 claims and received $157.8 million. More than 1,700 claims are expected in total.

News Item quoted
Analysis by Jim Satterfield, Firestorm President/COO

What is the impact of a disaster? Can half a billion cover the damage? Can a billion? Early estimates of damages generally understate the total impact. Insurance carriers establish reserves to pay claims. Over months and years after the disaster, the information develops and a better understanding of the losses occurs. Reserves grow.

Ozark Center for Autism, owned by Freeman Health System, was completely destroyed, as were several other Ozark Center buildings

Does insurance pay 100% of the loss? … NO.

Many do not have insurance. Many do not have sufficient coverage or have gaps in coverage. Insurance cannot address all losses. There is always delay from the disaster until insurance funds are received. Can your business survive without revenue for weeks or months? How do you replace the customers that you lost? How can you get them back? Where does your insurance make you vulnerable?

Is insurance necessary? … YES.

Is insurance sufficient? … NO.

Good governance requires insuring risks. In today’s environment we focus on cost; What is the least that I can pay?

How much would it cost you to rebuild?

Insurance has become a commodity and is treated as if all is insurance is the same. It is not. Understanding risk is essential. Understanding the impacts is critical.

Business Continuity and Disaster Planning Starts with these Questions:

  • Do you know the critical business functions in your organization?
  • Do you understand the inter-dependencies?
  • Have you calculated the cost of down time?
  • Are your critical vendors prepared?
  • What risks do they face?
  • Are you insured for losses as a result of supply chain failure?
  • Do you have plans to mitigate impacts?
  • What are your recovery time objectives?

If you don’t know the answers to any of these questions, you are at risk.

Your insurance will not and cannot make you whole. Don’t wait until the disaster to understand the extent of the disaster. Do it now. These are questions that your insurance broker cannot answer. These are questions that you must answer. Predict.Plan.Perform.®


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