Business interruption is a major exposure for any organization that experiences property damage. According to the Federal Emergency Management Agency, 40% to 60% of businesses fail to reopen after a disaster. Business interruption insurance can reimburse businesses for lost revenue, but such claims are typically subject to a sublimit and can be difficult to establish. For these reasons, mitigating business interruption and quickly and thoroughly documenting the restoration process can help smooth the claims process. When disaster strikes and your clients are impacted, you are most vulnerable. First Onsite can help you retain your clients and increase their satisfaction through our use of technology and thorough claim documentation, thereby reducing the length of the claims process as well as reducing your clients' overall business interruption.
The risks of property damage and business interruption may be omnipresent, and there is no shortage of restoration contractors willing to respond. Increasingly, risk managers and their risk advisors are realizing that a reactive approach is not the best way to ensure recovery and minimize downtime for a business when disaster strikes. As a result, there's a new mindset among leading risk management professionals: Restoration as an end-to-end solution for the entire claims process. The best restoration services aren't limited to cleanup and rebuilding, and the best time to think about restoring damaged property and facilities is before experiencing a loss.
A data-driven approach, with experience in serving specific industries and technology applied to measuring risks, is a good way to not only ensure robust response planning but also maximize loss control and prevent damage.
Despite the record number of hurricanes and wildfires in 2020, catastrophes are not the only events that can disrupt businesses and require restoration services. In the COVID-19 era, infection prevention and decontamination are critical for employees and customers. Similarly, specialized restoration treatment is needed to address the secondary damage from fire, smoke, flood and mold. With the Internet of Things and greater connectivity, the overall loss can be much more extensive than the visible physical damage. Better outcomes in all these risk scenarios are possible when organizations and their risk advisors select the right restoration provider.
Risks touch all stakeholders
Business interruption risks are challenging enough for risk managers, but the reality is the risk of disruption touches all stakeholders. Business owners face loss of income and profit, employees are displaced, and customers cannot be served while the business is offline. Business interruption claims are complex, and unpleasant surprises during such claims can damage the relationship between brokers and risk managers.
Communication gaps can occur during the restoration process, as often a claims adjuster and the insurer on the claim may have little knowledge of independent restoration contractors. Poor communication can lead to unmet expectations, and claims can strain the working relationships between risk advisors and their clients, as well as risk managers' reputation with their organizations' leadership.
Innovative restoration firms are using technology to capture and document information that smooths the claim submission process, making life easier for risk managers and brokers. Data on the loss and transparency in the components and services anticipated during restoration enable informed decision making and reduce delays that inflate business interruption losses. A clearer picture of the restoration process mitigates the loss of impact and underscores the value that risk managers and brokers bring to the table.
How to mitigate restoration risks
Having a good plan in place before an event occurs is far better than waiting until after it happens. Leading brokers and risk professionals have discovered that mitigating restoration risks begins with business continuity planning. Good planning shortens the time involving loss of business.
Organizations and their risk advisors therefore should ask questions to fully understand their exposure and impact to operations, including:
- How will our organization function if displaced by an event?
- What will we do if we can't work in our facilities?
- Can our employees work remotely?
- Is our network data in the cloud? Is it backed up on local servers?
- What materials and supplies would we need if we lost our roof?
- How long can our contingency plan survive?
Loss of production can have far-reaching consequences for supply chains, as the world learned during the global pandemic. Continuity planning and supply chain risk management are vital to recovery, but sometimes even simple steps can make a big difference. Having a backup generator, for example, can save a business days of downtime and reduce secondary damage.
One way to enhance the continuity planning process is to secure professional restoration services before the need for property restoration arises. Data-driven insights and identifying areas where organizations can implement loss control are keys to reducing business interruption losses. In addition, closing the loop between policyholder, broker, insurer and restoration company — involving all of them in the contingency plan — is a good way to prevent failures of service. The best loss is one that never happens, and the next best is one that is minimized through strong risk mitigation and planning.
Jeffery Magoon (left), Senior Vice President of Sales Development and Integration, First Onsite Property Restoration
Jeffery is a property restoration expert whose experience in the insurance, restoration, and technology industries give him a unique perspective on risk management and technology-based solutions for the restoration industry. Jeff led a team to develop a one-of-a-kind agnostic IoT platform that reduces insurance claims, mitigates risk, and lowers costs for insurance companies and their policyholders. He continually works to leverage technology to solve major insurance industry issues, e.g., water claims, crisis management and asset management. His specialized knowledge in implementing internet-of-things (IoT) technology into risk management plans help clients mitigate risk, reduce claims, and lower costs in ways others cannot. Prior to joining First Onsite, Jeff owned insurance agencies that operated in all 50 states, built an insurance program for a club association, and worked as an executive at a major restoration company.
Joe Poliafico (right), CSP, Vice President, Global Risk and Safety, First Onsite Property Restoration
Joe specializes in risk management for the construction and engineering industry. With 28 years of experience, Joe has a record of accomplishments in assisting organizations in the profitable implementation of organizational risk and safety programs. He has extensive knowledge in risk assessment, subcontractor default insurance, claims management, and overall risk management program design and implementation. He has been a speaker at IRMI and regularly for the Association of Builders and Contractors. He is a Certified Safety Professional and a graduate of Millersville University with a degree in occupational safety and health. He also holds a master of business administration from Eastern University.