Gordon Bass: Today we’re talking to Kevin Sandlin, who is Director of Risk Management Services for Argo Insurance. And Kevin, to start with, tell me a bit about your role and what you do.
Kevin Sandelin: My team and I we work with our brokers and our policy holders. We provide support and guidance on reducing hazards specific to policies and operations. We do focus on our technology based risk management program, it’s called Argo Risk Tech. It’s a digital platform we provide to our clients. My job is to prevent bad things from happening really.
Gordon Bass: We’re talking about bad things happening, and as we record this, we’re in hurricane season. So hopefully businesses have taken the right steps to prepare. But tell me, at a high level, what are some things that businesses should be doing during the season to manage their risk?
Kevin Sandelin: August is the peak of hurricane season, and it’s not too late to prepare. I don’t want to say it’s never too late because there is a point where it is too late. But, everyone in the hurricane prone areas hears it every year, you need to prepare. I know that sounds simple and is about as high level as we can get. It’s not always taken seriously enough though. Outside of four years of college, I’ve been in South Florida my entire life, so trust me, we hear it every year.
Businesses have to plan kind of in three stages. You want to go before, during and after the storm. Each of these three time periods is going to require some different actions, but they’re going to overlap.
So, regarding plans, businesses should be looking at very specifically three things, operations, facilities and employees. You could refer to them as people, premises and processes, if you like the alliteration there.
To give an example, imagine if you had two small manufacturing companies, each making the same type of product or widget. One owns their building, the other leases. Maybe one has a retail storefront, and the other relies on distribution. One has employees on the payroll and the other uses contractors. Similar companies just from a high-level.
But when you dig into those three different pieces of operations, facilities and employees, they’re going to have to plan differently.
Gordon Bass: So obviously different industries are going to have different exposures when it comes to hurricane damage. Can you talk about some of the ways that different industries have varying exposures?
Kevin Sandelin: Real estate has probably the most broad answer here in that you’re protecting the property. Not only focusing on wind, a lot of people forget that a lot of the damage and a lot of the death, dare I say, from storms, comes from water, particularly rising water areas that are prone to flood.
But also, think about the continuity side of it. How do you get your business back open? Can I open this facility? If you’re a commercial real estate owner and you own a shopping plaza and you’ve got Home Depot on one side and you’ve got a grocery store on the other, and you’ve got a whole bunch of small, local companies in the middle, what are they going to do? How do you support them? What do the leases look like? Who’s responsible?
So really good early on to look at the responsibilities. And if there should be a conversation between the landlord and the lessees to understand responsibility, we do find that often becomes an issue when there’s the, well, “I didn’t read the lease,” or “It’s not clear.”
If we moved on to another industry, maybe schools, schools are a really big topic right now, given the current situation that we’re in, and then wondering if schools are going to open back up. But what schools do, municipalities along with it, a big part of their planning is, when do we close? How far in advance do we close to allow parents to prepare with their children, but also not too far in advance because that does become a burden?
Thinking about other industries, retail and hospitality. If you’re on the hospitality side, when it comes to hotels, are you staying open? Are you meeting the wind ratings to be a place for people to safely shelter? And if so, what do you do? How many people do you bring in? What rooms are available to use? Do you have food coming in available? How is it being stored? Do you have backup generators? When are they being fueled? Is it dual fuel? Have they been checked recently? Last thing you want is the generator to turn on where it’s supposed to turn on and it doesn’t.
Let’s maybe pick one, let’s take construction.
Again, who’s responsible for the site. Is it the owner? Is it the GC? Is it a sub? Is it a number of them? In a prior life, when I was in construction and commercial roofing, our focus was really about timing, because we had to download a roof. And if you have a 100,000 square foot facility loaded with roofing materials, and paper and tar and equipment, and you’ve got these sites all over your area, how do you get there? How fast? And at what point do you do that?
So there’s a lot of things in flux for those types of businesses to understand, well, how soon do I have to shut down, particularly if I have to do extra work? As opposed to just stopping a lot of times. If you function, you have to do more work to prepare that site.
And you don’t want to do it too far in advance and sort of jump the gun, but you don’t want to wait until it’s too late and you can’t use your crane. Once you get to a certain wind speed, you’re not allowed to use the crane to take that equipment or materials off the roof. So, a lot of different things to think about there.
Gordon Bass: Let’s assume then that whatever industry we’re talking about, you’ve taken the right steps to prepare for the storm. Now, once this hurricane is active, what should a business be doing?
Kevin Sandelin: Looking at conversations, are you having the phone calls? Are you scheduling your conference calls? If you’ve got multiple locations or multiple areas, bringing the operations folks in, talking about what’s going on, talking to your different managers or to different locations.
Reviewing with them, the plan, okay, here’s what’s happening, we’re X days out. When we get to this point, or if we reach a certain wind speed, or if we end up in a warning or a watch zone, having those steps really it’s going to be, “Okay, now let’s review what we all know, make sure everybody understands what they’re responsible for.”
A lot of companies when it comes to emergency management, where they falter, is because maybe they’ll have a great plan laid out, but nobody knows who’s responsible, or somebody thought someone else was responsible.
Gordon Bass: Okay, let’s shift now to the post-storm scenario. You prepared, did everything right before and during the storm. What should businesses be prepared to do in the aftermath of a hurricane if there has been some damage, if something bad has happened?
Kevin Sandelin: What are your steps when it comes to recovery? Are your generators being filled if your power’s not on there? So it’s really starting to go down the checklist. Having your facilities inspected should be part of it, if you’ve got facilities you’re responsible for. Or, talking to your landlord.
Now, something comes up and it’s outside of what you normally deal with. Hopefully you also have a resource that you go out to. So, maybe it is your insurance carrier. Maybe it’s your broker. Maybe you work with a third party recovery company, many companies do that, depending on what’s going on. Some will offer advice, some won’t necessarily show up until there’s a real issue.
And one of the things that almost gets lost, because most people are cognizant of this, but sometimes it’s not necessarily in the plan, especially for recovery, is checking on your people. How are they doing? Can they get to work?
What kind of information does the business need to provide to the insurer in the aftermath of a hurricane and there’s damage? What does that conversation look like? Typically it’s a lot of documentation. Take as many photos as possible.
And something I didn’t touch on is, beforehand, take photos of your facilities. If you’ve got a lot of facilities that may not be something you can do, but if you’ve got one plant, one manufacturing facility, one storefront, take photos before and after.
That’s very helpful, it makes it very clear for the insurance company to understand what the damage really is, and where they’re going to be able to come in and help.
Gordon Bass: As if we don’t have enough to think about with hurricane season, we’ve got COVID. Are there things that companies, businesses should be doing differently because of the pandemic?
Kevin Sandelin: It’s probably the most interesting question during this conversation. When you think about the idea of a co-catastrophe, having been in the middle of this COVID pandemic and having a hurricane or tropical storm come through.
The good news is, I’d say the silver lining right now for some folks is that a lot of companies have transitioned to work from home, if not permanently, at least temporarily and they’ve gotten used to it. So if you do have employees who are able to work from home, you may be able to continue that, and that may actually ease a little bit of a burden we’ve had in the past.
Outside of that, you also have to think about the fact that, again, people are already going to be at home and there may be things at your facility that’s missed. So you do need to make sure you still take all of those steps to go back, check on your facility before hurricane comes. And we really should be reviewing our plans to see if there’s something that’s changed, that’s affecting us.
What has changed in the past five to seven months here? Does it affect me when it comes to a hurricane? And is it going to be something I need to make changes for, I need to make expectations around? If you have transitioned to having people work from home already, and that’s the new normal for you, what happens if they lose power? Now you have a work from home employee who might not necessarily be able to work from home.
Gordon Bass: One last question for you. You are a Floridian, right? So you’ve lived through years of hurricanes. Any personal advice or insight, what are the things that you think about every hurricane season to make sure that you’re prepared?
Kevin Sandelin: I think a lot of people in South Florida are… maybe we’re stubborn because we’ve been through it. I can say that I’ve definitely been that person. I can tell people, “I was there for Hurricane Andrew, and I came out and it looked like a different world that I lived in.” And now I’m much more cognizant of the fact that hurricanes are dangerous, it’s not something to be taken lightly.
In South Florida, one thing to know is that the infrastructure is hardened. It’s different here than it is in other places in the country. After Hurricane Andrew happened, the building code changed, more power lines were put underground. Those that were not were secured and hardened. It makes it easier to recover. We have more grocery stores and gas stations that have generators built in.
But, I think it’s just being cognizant of the fact that there is a lot going on. People are extra stressed right now. That is one thing that I will say that has come up in conversations with just friends, even, is, “Gosh, what is it going to be like if we get a hurricane when all this is going on.”
Gordon Bass: Thanks so much for this insight. Have a safe hurricane season. Hope you ride out COVID safely as well. It’s great talking.
Kevin Sandelin: Thanks Gordon, it’s a pleasure.