Despite dire warnings from health officials and risk experts, only a tiny percentage of the nation's insurance carriers have developed formal plans to keep their businesses running in the face of a deadly, long-term influenza pandemic.While 82% of carriers have prepared business continuity plans (BCP) for survival in the wake of natural disasters like hurricanes, tornadoes and floods, only 11% are ready for a pandemic, says Clare DeNicola, president and CEO of IVANS, a Stamford, Conn., company that provides communications services to insurance companies. IVANS surveyed CIOs and directors in May 2006.

These [BCPs] are just not adequate if a pandemic happens because they fail to address most of the issues," says Judy Johnson, vice president and principal solutions architect at Patni Computer Systems Inc., a software and IT services company with global headquarters in Mumbai, India, and U.S. headquarters in Cambridge, Mass.

Consider the possible consequences: "After a disaster, 45% of the companies that experience a major business interruption do not fully recover and, therefore, are not in business five years later," says Johnson. "Some of our huge insurance conglomerates keep rolling along, but small carriers are seriously affected."

Typically, companies plan for the loss of a building but not for the loss of people, says Steve Pearce, director of global business continuity management at Aon Corp., a Chicago-based insurance broker and risk management consulting company. Businesses make provisions for an overnight loss of power, for example, but not for the drawn-out effects of a pandemic, which can linger for 60 to 120 days, he says.

The apparent lack of preparedness persists even though worldwide outbreaks resulted in death tolls in the United States of 675,000 in 1918-19; 70,000 in 1957-58; and 34,000 in 1968-69, according to the Centers for Disease Control and Prevention (CDC) in Atlanta.

The Vietnam War, by comparison, claimed the lives of 58,000 American troops in a decade of fighting.

Although no one can predict when a pandemic will occur, the CDC says many scientists "believe it is just a matter of time."

With that in mind, experts are tracking the avian flu virus H5M1, which displays characteristics similar to those of the virulent 1918 bug and had infected 238 people in 10 Asian and Eastern European countries by Oct. 1, says Aon's Pearce. So far the virus has been transmitted only from animals to people.

But the H5M1 virus or another strain could mutate into a state that transfers easily from one human to another, taking hold in days and spreading around the world in weeks, says Pearce.

"Imagine the virus racing through crowded cities and thriving in the recycled air of continent-hopping jetliners," he says. "Another pandemic is inevitable."


The harsh reality of keeping a business open in the face of a pandemic involves detailed planning because employees are bound to fall ill and some may die. Even those who remain healthy may steer clear of the office to avoid infection or may need to stay home to care for afflicted relatives, says Michael Romano, senior vice president of corporate compliance for Pittsburgh-based carrier Highmark Inc.

In December, after seven months of work, Romano's company completed and began testing a contingency plan for a pandemic. In a sense, however, the company will never finish the project, because management intends to make modifications as business needs change.

"It's not a plan that we put on a shelf," says Romano.

The company's Business Continuity Planning Department led the effort to create the plan, with help from employees in a number of other departments, including operations, finance and IT, Romano says.

Having an individual take ownership can prove crucial, says Patni's Johnson. "If it's not a full time job to put this plan in place, the plan will never be in place," she says. "And, it needs a budget," she adds.

Romano notes the importance of making the project "a corporate-wide effort so that we could address all the critical business needs and the support needed for those critical needs."

Patni's Johnson agrees. "Understand what is critical to running the business because not everything is going to be up if you've lost employees," she says. "Ask yourself: 'What would kill us if it were down?'"

The Highmark planning group used the company's established BCP template as a starting point. The BCP, also known at the company as a site outage plan, describes procedures for operating from the company's satellite office in Harrisburg, Pa., if the main office in Pittsburgh closes.

The pandemic plan should complement the BCP umbrella, with some pandemic components making sense for operations and recovery in other situations, says Romano. "It's not one size fits all, but they fit together," he says.

Highmark IT people had already developed BCP software that stores information, pulls information together and tests it. That same software serves the pandemic plan, says Romano. "It's kind of a homegrown process," he says. Commercial versions are also available, says Pearce.

"Some serious thinking needs to go into this," Johnson says of pandemic plans. "It can't be done generically or on a checklist. Every company needs to think about their own situation, their own suppliers and how they do business-and try to figure this out for themselves."


In the Highmark pandemic plan, the company lays out three scenarios: a normal flu season that triggers no special response; a pandemic that keeps 30% to 50% of workers out of the workplace; and an outbreak that results in a quarantine of the office.

In developing a plan to deal with a pandemic, Romano emphasizes that carriers need to look beyond their own companies and develop relationships with local officials, vendors, utility companies, customers, banks and health care providers to coordinate pandemic plans.

He advises keeping in mind that the pandemic will not stop at the doors of one's own company-every entity with which the company has contact could feel the effect. If 50% of a company's employees are out, 50% are out everywhere else, too.

"It's not something you can do by yourself," Romano says of creating a pandemic plan. "You need to have a lot of folks involved that you really don't have control over."

The need to keep receiving goods and services from vendors and suppliers will not abate if a pandemic strikes. That's why it's vital to work with those outside companies to create complementary pandemic plans.

Requirements for heating, air conditioning and electricity dictate laying groundwork with utilities companies.

For a health insurer such as Highmark, planners also need to work closely with doctors and hospitals to ensure that everyone can keep working together even under a pandemic's adverse conditions. Urban hospitals are farther along than rural hospitals in their planning, Romano notes.

Highmark also attends meetings with local officials to coordinate activities. Aon's Pearce notes that county and municipal authorities will take the lead in keeping society running during a pandemic. Bigger cities are farther ahead in planning, he says.

On the home front, Highmark considered electronic methods of collecting premiums and paying claims to keep the business going during a pandemic. Adequate staffing also is required to maintain the flow of business.

Highmark also reviewed policies on work time and time off, studying how those might change during a pandemic. Staggering shifts, for example, could limit contact among employees and thus reduce the chance of infection.

Some employees would work from home during the pandemic and that requires the right electronics for support and security. What's more, the people designated to work from home could fall ill and thus sink the plan - another possibility to consider.

Working from home also can raise issues with regulatory compliance and requires close scrutiny, says Andrew Coburn, a vice president who heads pandemic risk modeling for Risk Management Solutions Inc. (RMS), a Newark, Calif., a catastrophe risk modeling firm.

Most companies will need more network capacity if employees work from home, says Patni's Johnson. Most systems can process 10% to 20% concurrency, but 80% may be trying to get on the network at the same time and for a protracted period during a pandemic, she says.

"Most people assume the Internet will stay up, and that's quite a big assumption," says Coburn. "If demand tripled, bandwidth would be extremely limited."

At least the technology that could enable employees to work from home continues to improve, while becoming less expensive, says DeNicola of IVANS. "We see changes every couple of months on new opportunities to take advantage of better and better technology that is less expensive than five years ago," she says.

One example of those improvements is a client that employers can place on workers' laptops. The client does nothing and costs nothing until the company flips a switch to activate it and allow people to work from remote locations, DeNicola says.

Meanwhile, besides high tech, Highmark also examined the ways employees travel to the office, bearing in mind that interruptions could occur in public transportation and that some employees might shun crowded buses and trains.

The company could draft some employees for phone service, but months of training are required for customer service representatives and claims processing specialists, Romano says.

To promote pandemic education the company provides employees with an instruction booklet that describes normal bouts of the flu and offers advice on protection from pandemic flu.

Some Highmark staff members also are learning how to help a sick fellow employee leave the office without infecting co-workers.

Kits stored in the desks provide surgical masks and disinfectants. "That's just if it gets really, really bad," Romano says of the kits.

Carriers need to consider many contingencies, Romano says. With schools closed, for example, some employees might need to bring children to work, and companies need to anticipate that possibility.

In the event of a pandemic, Highmark plans to help customers stay calm by assuring them that their insurance will be in force if they visit a doctor or go to the hospital. The company expects a heavy volume of telephone calls from concerned clients, and answering those inquiries could prove challenging with a reduced staff.

Backups are named for decision-makers. If the senior vice president for operations, for example, became unable to work, the person designated next in line would take responsibility for appropriate duties. In some cases, employees are standing by "three or four people deep" as backups, says Romano.

Employees have supported the plan, showing few signs of resistance or carelessness, says Romano, probably because of strong interest from top management, says Romano.

Besides, having a plan simply makes sense to Romano. "We're better off if we have the plan and don't need it," says Romano, "than if we need it and don't have it."

Johnson seems less philosophical but equally certain. "We're likely to have some sort of pandemic in the next 24 months," she says. "Planning for this properly is part of fiscally responsible management."

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