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Treasury Official On Flu: Start Washing Hands Now

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Financial services companies should promote good personal hygiene and the infrastructure for shifting work to employees’ homes now, before a severe influenza pandemic strikes.

D. Scott Parsons, a deputy assistant secretary at the U.S. Treasury Department, gave that message today at a hearing on pandemic preparedness that was organized by the oversight subcommittee of the U.S. House Financial Services Committee.

Preparing for a severe pandemic, or international epidemic, is forcing financial services companies to change the way they think about business continuity, Parsons said, according to a written version of his remarks.

Experts have estimated that a severe flu pandemic could cause absence rates of 30% to 50% in many different areas of the world for extended periods.

“A firm cannot simply move to out of region back-up facilities and restore operations because it is likely those facilities are also experiencing challenges associated with the pandemic,” Parsons said.

The Treasury Department and emergency preparedness agencies have tried to prepare by holding a “tabletop exercise” with a coalition of Florida financial services companies and related public and private organizations, Parsons said.

The department is planning to hold similar exercises with financial services coalitions in markets such as Houston, Las Vegas, Philadelphia, the San Francisco Bay area, Seattle and Southern California, Parsons said.

One lesson that the Treasury Department has learned is that encouraging hand washing and other simple steps to prevent the spread of disease should start now, not during a pandemic, Parsons said.

Experts say financial services companies also should consider stockpiling masks, gloves and antiviral agents, and coming up with strategies for identifying and isolating employees who may be sick.

Employers also should be cross training workers so that workers can handle multiple jobs; identifying jobs that can be performed at home; and making sure that internal information technology can support employees who work from home, Parsons said.

Many financial services companies are requiring that key vendors and business partners have business continuity plans of their own, Parsons added.

Once a pandemic strikes, he said, employers will need to provide extra parking for employees who may not want to take public transportation and temporary child care to help workers during periods when schools are closed.

Parsons noted that the government may have a role to play in supporting a dramatic increase in the number of telecommuters.

“We are considering whether the telecommunications infrastructure would be adequate to support the Internet traffic generated by a large number of people working at home, especially the residential portion that connects an employee’s residence to major trunks of the Internet,” Parsons said.

Dr. Robert Gleeson, medical director of Northwestern Mutual Life Insurance Company, Milwaukee, represented the American Council of Life Insurers, Washington, at the hearing.

“It should be emphasized that an influenza pandemic is neither an imminent threat, nor a novel one,” Gleeson said. “Quite certainly, the world will have another pandemic, because they occur every 30 or 40 years.”

But planning for high-impact, low-frequency disasters, such as a possible bird flu pandemic, is an integral part of life insurers’ business processes, Gleeson said.

U.S. life insurers ended 2005 with $3.3 trillion in policy reserves and $256 billion in capital and surplus, and that should be far more than enough to cover the cost of even a catastrophic level of claims, Gleeson said.

Gleeson suggested that the effects of a severe pandemic on life company operations could be more serious.

Gleeson said Northwestern is coping by identifying the minimum amount of staffing it needs to handle critical business processes; planning for communication with employees, field representatives and policyholders; and making efforts to keep buildings and employees as “flu-free” as possible.