Our sister publication, PropertyCasualty360.com, ran this article to help agents on the edge of the business interruption insurance market understand how BI claims work. If your own office is in the area affected by Harvey, or your clients’ offices are in that area, you might find knowing a little about this topic helpful in dealing with your own affairs, and with talking to your clients.
The devastation in Texas brought on by destructive winds and flooding rains from Hurricane Harvey brings the reality of hurricane season into focus for many. Harvey has delivered a devastating wake-up call to the U.S., and as residents begin their long recovery process, determining the true value of their losses will be a priority.
For many adjusters in the industry, there hasn’t been a major storm since the beginning of their careers, and many have never experienced a catastrophe on this scale. That makes Harvey a first for many adjusters. The business interruption (BI) impact of a hurricane (or any other natural disaster, for that matter) can have some unique elements and often affects insureds who do not have experience in filing insurance claims. Addressing these types of losses can be challenging for both the first-time claimants and the adjusters assigned to manage the process. Having a thorough understanding of the BI loss analysis process and knowing which financial experts are available will help equip those responding to losses from Harvey.
In assessing a BI loss resulting from a hurricane or other natural disaster, it is important to set clear expectations with the insured and bring the financial expert(s) in early. A forensic accountant will work with the adjuster and insured to present an independent and accurate review of the loss, evaluating the claim, assessing relevant business factors and helping set the direction for the final resolution.
The period after a disaster can be a very trying time for a claimant. Properly preparing them for the claims process is a critical step in facilitating a smooth review. This involves outlining the steps in the process, setting expectations and defining the role and purpose of any financial experts hired. Adjusters should also help claimants understand the financial documents that will be requested and what the timeline for resolution will be.
(Image; Bram Janssens/Thinkstock/Hemera)
Documenting and reviewing a BI claim is about more than reviewing the historic numbers. Forensic accountants seek to understand the whole picture of the insured and their business. The goal is to answer the “who, what, when, where and why” of not only the loss, but also of the affected business. Using widely accepted methodologies and industry understanding, the forensic accountant then utilizes this information to piece together the story behind the numbers and quantify the reasonable business insurance loss for each claim.
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