Sep
29
2017

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Navigating Business Interruptions Due to Catastrophic Loss

Hurricanes Harvey, Irma, and Maria wreaked havoc across Texas, Florida, and Puerto Rico creating billions of dollars in damage for the individuals and businesses affected by the storms. Now that the storms have passed, businesses are actively filing their insurance claims, working on repairs, and quantifying business interruptions losses.

There are general nuances any business will face in the event they have a commercial property claim. In normal circumstances those claims can be challenging, but a catastrophic scenario changes the dynamic dramatically.

How does the claims process change with a catastrophic event?

In a “normal” scenario, an insurance adjuster will arrive on-site within 24-hours to assess damages.  When catastrophic events like Hurricanes Harvey, Irma, or Maria occur, the number of claims is overwhelming and carriers rely on adjustment firms specializing in catastrophes to manage the claims process. The agents working for these firms are responsible for identifying the loss, and while they will handle, process, and adjust the claim just as a typical adjuster would, they are typically less experienced.

That is when business owners need the support to help manage the claims process, quantify their claims, and advocate on their behalf.

Why you should hire someone to assist you with  the claims process?

When a loss happens, and the insurance contract goes into effect, you are now involved in a very significant business transaction. The claims process is very complex and has many moving parts. An expert in  property claims can provide the detailed forensic accounting review and calculation of lost business you will need to process, manage, and maximize your insurance recovery.

A good rule of thumb is that if the insurance adjuster has retained a forensic accountant then you likely need a forensic accountant to represent your interests. While your agency can help facilitate your claim and manage its status, preparing a business interruption calculation will fall outside of their scope and expertise.

The best news is that many policies will include language that will cover professional consulting fees or those paid to a forensic accountant. While the coverage will vary from policy to policy, some common phrases used are “Professional Fees Coverage,” “Loss Adjustment Expense,” “Claim Data Expense,” “Claim Preparation Expense,” or “Inventory/Appraisal.”

Preparing for catastrophic loss

Most people don’t think about how a catastrophic loss will disrupt their business until it is too late. Working with an advisor, before a loss happens, to develop a customized property loss response program can help eliminate the challenges inherent in the claims process and can significantly mitigate the impact a loss may have on your organization.

About Quantum Global Advisors

Quantum Global Advisors (QGA) is a leading international insurance claim and valuation consulting practice. Their team of multi-disciplined and experienced professionals has been assisting policyholders in the management, preparation, and certification of all aspects of property insurance claims in a variety of industries since 1945.  

About the Author

Kevin Grudzien, Director – Forensic Accounting
Quantum Global Advisors LLC

Since 1996, Kevin Grudzien has provided claim consulting and forensic accounting services to the insurance industry in the areas of business interruption, extra expense, contingent business interruption, cyber liability, property damage, employee dishonesty, fidelity, inventory, contents, and environmental. He has also assisted policyholders in the measurement of their property insurance values and exposures.  

Kevin’s experience encompasses a wide variety of industries including, but not limited to, agriculture, apparel & textile, aviation, chemical & petrochemical, construction, food processing & distribution, hospitality, manufacturing, metal production & processing, mining, real estate, professional services, storage & distribution, utilities, and wholesale & retail operations.

 

 

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