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Loss prevention, mitigation key for public entities to reduce claims from large-scale disasters

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Loss prevention, mitigation key for public entities to reduce claims from large-scale disasters

Loss-prevention and risk-mitigation efforts by public entity risk managers can reduce overall claims stemming from losses after a large disaster.

After losing part of the roof of one of its schools in the 2009 Veteran's Day nor'easter that exposed four classrooms and flooded the entire second-story wing, Norfolk, Va., public school district conducts regular building inspections, said Dan Hurley, the district's senior director of risk management and safety.

Now, as part of its mitigation program, “we encourage and have a self-inspection form for our custodians to go up on the roof at least once a month and check roof drains and report any missing flashing,” he said.

Norfolk school district also contracts with companies to immediately assess and deal with damage after a storm, Mr. Hurley said, noting such efforts reduce mold-related issues, often excluded from general insurance coverages, and help reduce insurance claims.

Successful loss-prevention plans should include ways to capture critical data following a disaster, said Frank Russo, New York-based managing director of Aon P.L.C.'s global risk consulting unit.

Losses related to large-scale disasters often involve complex insurance recoveries by insurers and federal agencies such as the Federal Emergency Management Agency, he said.

“It is essential to quickly establish a system to capture all loss-related costs that will form the basis of the eventual claim presentation,” Mr. Russo said. “By quickly creating a system to capture and segregate loss costs, the public entity will have an easier time validating its claims to insurers and FEMA, and showing each where and why they should reimburse the loss.”

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As part of the loss-prevention plan for Corpus Christi, Texas, the city's risk management division conducts damage assessments immediately following a storm and reports the data to the city's emergency operations center, said Donna James-Spruce, risk manager for the City of Corpus Christi.

“We're basically responsible for coming in immediately after the 'all clear' and gathering and analyzing as much data as we can on damage to not only city property but other structures within the city,” Ms. James-Spruce said.

In the last few years, Corpus Christi also has implemented annual in-depth facility and site inspections throughout the year that examine many of the city's structures, varying from its wastewater treatment plant to its airport.

“Risk management … identifies not only safety hazards that may be present, but also any physical structure issues that need to be dealt with through facilities maintenance,” Ms. James-Spruce said.

Often faced with limited resources, public entities also should focus on loss-prevention activities that don't require a lot of cash expenditures, said Mary Breighner, Cincinnati-based vice president and global practice leader of FM Global's public entities, health care and education unit.

Risk managers who focus on loss prevention that integrates crisis-response planning, disaster recovery, insurers, brokers and restoration contractors “stand the best chance of mitigating the result of a disaster,” she said.

“Use the benefit of the experience of others to develop an emergency response plan that will help them deal with the protection of people and property,” Ms. Breighner said.