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Aug 2022

Business interruption - improving customer outcomes

Source: Asia Insurance Review | Feb 2022

Linda SimIn almost every major loss situation, adjusters require the support and skills of other specialists and professionals to assist in resolving the more complex areas of the claim. And just as qualified engineers, surveyors and other technical resources form a vital part of every progressive adjusting firm’s response, in-house forensic accountants also provide prompt expert advice and support that can reduce costs and improve customer outcomes. Sedgwick’s Ms Linda Sim explains why.
Adjusters and forensic accountants working together can undoubtedly provide an integrated and coordinated claims management solution. Any market misconceptions that the accounting function isn’t independent in this model are easily addressed, as there is a distinct division of roles and professional responsibilities in the joined-up process.
Loss adjusting is all about interpreting the insurance policy and swiftly putting in place the correct measures to return the customer’s business to pre-loss levels. This includes the early appointment of forensic accountants and providing them with specific details regarding business interruption (BI) cover.
Forensic accountants are quantum experts – they are all about numbers. They are trained and experienced in identifying potential issues – such as increased sales or steep changes in exchange rates not matching out-of-date BI sums insured – and are completely independent in their thinking and methodology. It is a technical and very specialised area of insurance, and the effect that COVID-19 has had on a wide range of businesses globally is making the task even more complex.
Getting the reserve right
One of the adjuster’s first tasks in handling claims is to understand the likely impact on the business and advise insurers of loss reserves. And when considering the BI aspect, it makes perfect sense to involve accounting expertise at the outset.
Generating an accurate BI reserve requires a specific understanding of the current financial position of the business. Putting the right person – a professionally qualified accounting expert who understands insurance and speaks the language – in front of the customer at this stage is crucial.
While attending early post-loss meetings, a forensic accountant can take the opportunity to ask pertinent questions – about products, sales, pricing, production, mitigation and gross profit margins. This expert input in the initial stages of the claim not only assists the adjuster in setting an accurate reserve, but the insured also benefits from immediate support on the BI aspect of the loss.
Customer communications
Managing expectations is always key to the successful outcome of a claim. Any limitations of cover, such as underinsurance or uneconomic increased costs of working, should ideally be identified as early as possible to avoid future problems or disappointment.
Clear communications are essential at every stage, and the insured must appreciate that the loss adjustment process is collaborative. The forensic accountant should set aside sufficient time to talk the insured through the BI calculation framework and explain how the business information they provide will be used in the analysis and calculations.
The forensic accountants should also outline how the initial loss calculation has been derived, listen to any concerns and examine how these issues might be addressed. Then, working closely with the insured – with policy considerations and the insurers’ interests in mind – more often than not, you can iron out misunderstandings or review the model and agree on a mutually acceptable way forward.
In this less adversarial approach, you exhaust every alternative way of considering the BI loss before the adjuster sits down with the insurer to deliver a detailed overview of the loss, supported by the BI calculations. Specifically covering any points raised by the insured, the insurer can then make an informed decision. It truly is a collaborative and transparent process and an excellent blueprint for good customer care.
Collaborative adjusting and accounting
Loss adjusters are always acutely aware that they’re dealing with the customer of their own client – the insurer. How well they handle each claim will ultimately influence the insured’s loyalty at policy renewal.
When loss adjusters work with their own in-house forensic accounting colleagues, everyone is similarly focused on delivering against the same service level agreement. All actions are firmly fixed on the service ethos of the insurer, which inevitably centres around providing excellent outcomes for all parties. When both the adjuster and the accountant work within the same organisation, it’s also easier to have ad hoc discussions and arrange meetings. This can save on time and costs, introducing further tangible benefits for a joined-up claims management approach.
Protecting data
Data security is also a crucially important consideration. Most large adjusting firms have invested heavily in a comprehensive ongoing systems protection programme to safeguard insurers’ data from unauthorised access and corruption – across all applications, including the claims management platform. Working with an adjuster that has in-house forensic accounting expertise, you can ensure that all claims information remains on one secure system, which provides a high level of protection for insurers’ customer data.
Proactive and collaborative
The role of the forensic accountant is all about advising and helping insureds and insurers alike while mitigating losses. BI is a complex and technical area requiring specific support, preferably during the very early stages of the claim.
An in-house forensic accounting team offers a more proactive, practical, streamlined and secure approach to BI claims management. It allows the adjuster to concentrate on the critical aspect of coverage and progressing mitigation efforts, while expert colleagues manage the BI component of the loss. As a result, the claim moves forward more efficiently, with everyone understanding the service requirements and sharing the same goals.
In short, it’s a more cost-effective BI claims handling solution that provides better customer care and improves claims outcomes. A 
Ms Linda Sim is the head of forensic advisory services, Asia at Sedgwick Singapore.

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