Lessons from Last Year's Hurricanes Can Help Businesses Prepare for 2006
WARREN, NJ, May 17, 2006 - Many businesses were caught off guard during last year's record-setting hurricane season. Catastrophic flooding, wind-driven
rain and other hurricane-related conditions rendered buildings uninhabitable, destroyed business property and severely hampered
businesses' activities for several months.
"Hurricanes Katrina, Rita and Wilma collectively helped to redefine the phrase, 'worst-case scenario'," said Steven D. Hernandez,
senior vice president of Chubb & Son and worldwide loss control manager for Chubb Commercial Insurance. "Most businesses were
simply not prepared for the destruction wreaked by these storms."
Hurricane Katrina was the most costly hurricane in U.S. history, and Rita and Wilma were among the seven most costly U.S.
storms, according to the Insurance Information Institute.
As the 2006 hurricane season approaches, businesses should apply the lessons learned from last year to help protect their
operations from a storm potential that can lead to financial disaster. The U.S. Department of Labor estimates more than 40%
of businesses never reopen following a disaster. Of the remaining companies, at least 25% will close within two years.
"Business owners should have a disaster plan that addresses ways to prepare for, respond to and recover from a natural disaster,"
Hernandez said. "Many businesses affected by last year's hurricanes had no disaster plan at all or had a plan that considered
a business closure of a few days. But in New Orleans, in particular, it was weeks before many business owners could return
to their buildings."
Based on the 2005 hurricane season, Hernandez makes the following recommendations:
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Keep backup systems and records off site so that they can be accessed when the building is inaccessible or severely damaged.
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When boarding up a building, do not neglect roof and wall vents, where water can enter and cause damage.
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Make sure vents and air conditioner units on the roof are properly secured to the building. If these are torn loose by strong
winds, they can leave holes in the roof that allow water into the building and cause significant damage to other property.
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Inspect roofs and flashing to ensure that they are in good condition and adequately anchored. Wind-driven rain that gets under
a roof can cause water damage throughout a building.
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Even if you are not in a high-risk flood zone, take steps to prevent flood damage, such as moving computers, critical files
and electronic equipment out of basements. Remember that coastal regions, even those that seem sufficiently away from water,
are at risk of localized flooding caused by tidal surges and consequential rising of the water table.
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Have a backup power generator. Power outages could last weeks, which means air-conditioning systems would be shut down. This,
coupled with water infiltration, can lead to a mold problem.
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Know where your staff is and how to contact them, especially your key personnel. Have access to home phone numbers and cell
phone numbers and know to where they are relocating if they need to evacuate the area.
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Be aware of neighborhood exposures. If the building next to yours is under construction, make sure building materials are
secured before a storm hits. Lumber and other materials can be lifted by strong winds and blown through the windows of neighboring
buildings. Also, ballast on the roofs of neighboring buildings can become projectiles in a hurricane.
Businesses outside hurricane-prone areas also are at risk of financial loss. Last year's storms closed key ports and roadways
and shut down businesses that supplied products and services to other parts of the world. Fuel prices skyrocketed after Katrina
shut down refineries in the Gulf region. Hernandez recommends that any business recovery plan should consider backup suppliers
and business partners in case of a disaster elsewhere in the world.
"Businesses can help to mitigate their losses in the event of a major catastrophe with a disaster plan that is updated and
tested regularly," Hernandez said. "It could be the difference between staying in business and closing for good."
For more information, read Chubb's Hurricane Preparedness guide online at www.chubb.com/businesses/cci/chubb1160.pdf.
Chubb Commercial Insurance's Loss Control Services provides loss prevention and premium audit services to more than 100,000
customers annually. With more than 400 risk engineers around the world, Loss Control Services offers Chubb customers specialized
assistance in disaster planning; fire prevention, detection and suppression; employee health and safety; security; preventive-maintenance
planning; and asset protection.
The member insurers of the Chubb Group of Insurance Companies form a multi-billion dollar organization providing property
and casualty insurance for personal and commercial customers worldwide through 8,000 independent agents and brokers. Chubb's
global network includes branches and affiliates in North America, Europe, Latin America, Asia and Australia.
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