There is no "one size fits all" program to respond to the catastrophic loss. Each program must be developed to fit a particular company and the industry in which it operates. Your goals and resources will determine the structure and timing of your program. If you currently have such a program, you have an interest in assuring that it is tested in advance of the need to use it. You also recognize that periodic revisions are probably needed. If you don't have such a program, you have an interest in finding the best way to go about developing one.
In either case, an examination of catastrophe response programs can begin by asking two pointed questions: What works? How can I apply what works to my company?
The difficulty in finding answers to the "what works" question is that it pre-supposes one or more catastrophes in which a program was utilized. Many companies have never experienced a catastrophic loss. Others experience such losses so infrequently that those who last dealt with them may be retired at the time of the next occurrence.
The aviation industry provides a useful starting point for the examination of catastrophes.
Over the course of many years a number of airlines have experienced large and highly visible losses. In our preparation for and response to more than forty-three major air disasters involving more than four thousand serious injury and death cases, we have identified certain elements common to those present in major or catastrophic losses involving hotels, manufacturers and a wide variety of industries.
Those elements are:
- Immediate response by a trained team;
- Coordination of rescue and relief efforts;
- Command and control of information, personnel, and physical resources;
- Early identification of critical issues and assessment of potential problems;
- Continuity in the supervision of factual investigations;
- Reducing uncertainties and assuring financial exposure containment through the practical management of liability problems and transactional costs.
While some companies may rely exclusively on law firms or third party administrators, few of them have handled a catastrophic loss, fewer still have experienced two, and almost none have handled more than three from the time of the accident through the last settlement or appeal. Consequently, those companies that plan for and remain actively involved in the response to the catastrophic incident and the claims and litigation that follow are more likely to achieve material savings in time and money.
A 1988 study by the Rand Corporation's Institute for Civil Justice compared the disposition of cases arising from aviation accidents with other tort cases. The Rand study found that procedures we developed in connection with claims and suits arising from aviation accidents resulted in case dispositions in 50% less time and at 30% less cost. (Costs and Compensation Paid in Aviation Accident Litigation, by James S. Kakalik, Elizabeth M. King, Michael Traynor, Patricia A. Ebener, and Larry Picus, R-3421-ICJ, 1988).
These same procedures have recently been effective for ICALM in managing the resolution of claims (including settlement and jury verdicts) arising out of three aviation accidents involving a single major air carrier in the United States. ICALM's results were achieved at costs that were 50% better than the industry average. Similar results can be achieved in cases in which your company may be involved by means of a three phase program. For a copy of the program outline, contact the Office Administrator at ICALM Group.
Disaster Preparedness and Crisis Management
ICALM can assist with operational and contingency planning for catastrophes through periodic audit and training programs. We can also assist companies in identifying and coordinating the resources necessary to respond to a crisis situation and can implement and actively manage the response. Whether a particular crisis involves premises, products, services, employees or third parties, a prompt and professional response can result in minimal damage to corporate image and improve the ability to contain financial exposure.
ICALM's services are comprehensive and include the establishment and revision of disaster plans, recurrent training, maintenance of strategic relationships, immediate response in the event of a disaster, prompt investigation and early analysis of factual and legal issues, damages assessment, assistance in responding to the demands and concerns of government investigators and regulators, the media, employees, the public, etc., computer storage and retrieval of relevant documents, selection and supervision of appropriate experts and attorneys, development of effective claims resolution and litigation strategies, litigation management through trial and appeal, and such other services as may be appropriate to supplement the efforts of a company's insurance, risk management and legal personnel.
The kinds of occurrences in which ICALM can be of assistance include, but are not limited to, the following:
- Tainted food products - potential deaths and injuries throughout the United States and claims against manufacturers, distributors, retailers, etc.;
- Hotels, amusement parks, entertainment venues, special events, etc. - fires, collapse and malfunction of apparatus, improper operation of equipment, premises defects, security lapses, etc.;
- Medical implant devices, such as spinal fixation devices, breast implants, pacemakers, heart valves, etc. and manufacturer, physician, and hospital exposures;
- Pharmaceuticals, diet drugs - contamination, tampering, etc. - Tylenol, L-Tryptophan, Fen-Phen, etc.;
- Major transportation accidents - plane crashes, train derailments, bus and trucking accidents, etc.
- Energy and pollution problems - radiation leaks from nuclear power plants; toxic discharges on site or during transport, with immediate and long term health consequences, etc.;
- Construction project failures and defects causing major losses - roofing, plumbing, insulation, stucco, etc.;
- Product recalls in connection with injuries from toys, tools or other products;
- Errors, omissions, malpractice, misconduct, etc. resulting in product or service catastrophes
These are illustrative but not exhaustive examples of the kinds of situations that would benefit from the expertise ICALM can provide. Any one of the incidents described above, which may involve a company's product, service, vehicle, building, association with another corporation, working environment, etc., can impact multiple sites and give rise to injuries and claims throughout the country.
Preparedness combined with a prompt and effective response by experienced professionals can protect the integrity of the corporation and enhance the public's impression of the quality of its product or service. In addition, prospective claims and suits can be resolved in less time, at lower cost and with more successful results.