It is a different world for forensic accountants tackling business interruption claims today, as compared to even five years ago. So much has changed in this sector on a global scale, especially following the COVID-19 pandemic, with a host of updates and changes to case law that continue to shift how business interruption claims are handled. The COVID-19 pandemic has also exposed vulnerabilities in modern supply chains, which is now ranked as one of the most concerning business interruption risks for many policyholders.
Most notably, business interruption claims are not just about physical damage of assets anymore. There are still plenty of brick-and-mortar type cases and we should not underestimate these traditional property damage claims, especially in Asia where hospitality and manufacturing businesses often experience damages due to fire or extreme weather events. But business interruption cases in the past decade have grown more complex as factors like global supply chain interruptions and cybersecurity risks create sizable new grey areas for brokers and insurers to parse. It has become harder to understand and measure the level of risk that needs to be insured when a business’s operations extend beyond four physical walls.
As a result, the biggest problem we see globally, including in Asia, is that policyholders are underinsured in business interruption claims and quite often have not purchased the relevant extensions on the business interruption policy. Further, for those businesses that do have business interruption cover, the indemnity period only extends up to 12 months. In reality, as insurance experts we know that, whether policyholders are rebuilding after a natural disaster or awaiting operations to return to pre-loss levels after experiencing a loss, these cases can take much longer than 12 months to resolve.
We work closely with all stakeholders to effectively manage the business interruption loss and help policyholders recover from an incident as quickly as possible. Here are some of the steps we are taking to ensure that everyone gets a fair outcome from a claim.
Take a human approach to business interruption
No matter the situation in insurance, and especially in complex claims requiring the assistance of forensic accountants, listening will always be an essential part of the job.
There could be a property or asset loss due to a natural disaster or cybercrime, or business operations could stop due to non-damage triggers such as COVID-19. Each experience is felt by the people involved. Forensic accounting teams are quick to jump in and dissect the numbers, and our experts excel at this, but we’re also there to listen.
It’s important to hear what the policyholders are going through during these situations to better streamline the claims process, reduce friction, ensure a fair settlement and ultimately resolve claims faster. Approaching a case with empathy and care is a best practice we always try to take in every claim we manage.
Get forensic accounting experts involved early in the claim
When a crisis happens, time is of the essence. In interruption cases with property damage, for example, property loss adjusters are earliest on the scene to assess physical losses, and their response speed matters. But too often in business interruption claims, forensic accounting experts aren’t called in until a few weeks or even months into an assessment.
With the right expertise, forensic accountants can do way more than crunch numbers. They can serve as essential advocates for policyholders and contribute to a more accurate assessment if involved from the very beginning of a business interruption claim. At Sedgwick, our forensic accountants are also chartered loss adjusters qualified to advise policyholders and go beyond the numbers. We find that this additional experience is really valuable to get the fairest outcomes for policyholders and insurers in these complex cases.
Relationships are key to long-term success
Large and complex loss cases like business interruption claims take teamwork, whether you’re on the broker side or the insurer and adjuster side. We want to make sure that everybody involved gets a fair outcome as we go through a claims journey together.
Consistent communication is essential, and strong relationships are the basis of building trust with the policyholder and working with all parties involved in a claim. Policyholders in Asia need market experts that have full, localized knowledge of their area, as the diversity of language and culture impacts the claims process. At the end of a smooth process, policyholders get the help that they need and have trusted partners on hand when they renew their insurance. Strong relationships make sure policyholders are put first and protected from risk in the long-term.
Proactively plan for future loss events
With so many policyholders underinsured, brokers and claims management experts need to underscore that the potential for a loss, risk event or business interruption is not a matter of if but a matter of when. A policyholder’s preparation for that potential risk needs to go beyond just having an insurance policy.
Being dual qualified chartered accountants and loss adjusters, our Sedgwick forensic accounting team can help proactively put processes in place to mitigate risks, create systems for better financial documentation and build contingency plans like cost-saving measures, all in advance of a business interruption. As well as dealing with claims, our forensic accounting teams globally serve as pre-loss advisors to major and complex policyholders, connecting with their teams across the business to advise on coverage and understand how to better serve them from day one of a crisis.
Building for the future: Care, connection and capabilities with local expertise
The future leaders in the rapidly changing Asia insurance market will respond to the growing need for more expertise and dedicated problem-solving as business interruption claims grow more complex.
We are focused on changing and growing with the market by expanding our teams with local, homegrown expertise and native language capabilities in countries throughout Asia. As our teams grow, we will connect and communicate cohesively throughout the region, breaking down silos and ultimately helping policyholders even more comprehensively through these claims.
We have seen the impact that integrated insurance expertise and an empathetic approach can have to claims through our forensic work around the world. Business interruption claims deeply affect the people involved, especially the business owners involved in the claims process. It’s our mission to help these people work through the claim – oftentimes bad or even worst-case scenarios for their business – to reset, rebuild and plan for the future. A
Aruna Chandrapalan is the head of forensic accounting services, Asia at Sedgwick.