By: Jeff Esper | December 08, 2017

RWH Myers is a professional loss accounting firm that specializes in preparing claims for FEMA and commercial insurance matters. Having decades of experience in handling catastrophic property damage claims, RWH Myers has been through the process of assisting organizations with financial recovery in the aftermath of every catastrophic event in recent history. We dedicate our entire practice to assisting those faced with losses as a result of these events.

Our goal is to help prepare your FEMA claim in an expedited manner so that you can get back to business and are reimbursed for your losses as soon as possible. November's Insight explains the process and what you need to know to recover losses from FEMA.


If you have any questions or would like a PDF version, just reply to this email. We are happy to help you! 

FEMA Claims - Preparation and Management 


When the Federal Government declares a State of Emergency, individuals and organizations in the affected areas can make claims to the Federal Emergency Management Agency (FEMA) for property losses under the Robert T. Stafford Disaster Relief and Emergency Assistance Act. This Act is intended to provide financial aid and services to residents, public entities and Private Nonprofit organizations in the disaster area for losses not covered by insurance, such as deductibles. 

Any qualifying entity or individual is allowed one claim per declared disaster, which should include losses from all relevant locations. Only when more than one disaster is declared is a separate filing required. During a declared disaster, any organization that has sustained property damage in the disaster area may be able to recover a portion of their losses from FEMA. It is important to gather information and prepare claims according to both FEMA guidelines and the property policy as the incident unfolds. Insurance companies may involve FEMA experts, aka FEMA adjusters, to help policyholders file a claim with FEMA. Requirements are different and specific for FEMA claims and will be reviewed by a Public Assistance Coordinator (PAC). The Insurance adjusters will work as normal with the property claim made to the insurance company. 

RWH Myers’ loss accounting team works for the insured to maximize recovery from your insurers and FEMA claim submissions. We quantify and document the loss for optimal recovery in accordance with both the insurance policy and FEMA guidelines. Knowing how to handle claim preparation during a declared disaster brings order to a chaotic situation by reducing the time, effort and aggravation of a complicated claim process. For both claims, we will work with the assigned adjusters to ensure the claims are properly documented for each type of recovery.  The FEMA claim service we provide includes the following:  

  • FEMA application process 
  • Accounting methods to capture event related losses 
  • Allocating expenditures per insurer and FEMA requirements 
  • Preparation of worksheets including debris removal, code upgrades, emergency protective measures, and permanent and replacement work 
  • Integration of the insurance settlement amounts into the FEMA recovery formula 


Seeking recovery from FEMA requires a unique level of detailed documentation for submission in accordance with FEMA's forms and worksheets. Often times a FEMA claim will continue for years after the first party property claim is settled while the final physical damages are repaired and our client seeks reimbursement for out-of-pocket expenses. Our accounting fees may be included as part of your FEMA claim, just as they are with insurance.With time, patience and the right help it is possible to recover your losses, whether from insurers and/or FEMA. 

Let us help you by taking care of your claims, so you can focus on taking care of your organization. 

Category: Insights 

Tags: Claims 

By: Jeff Esper | September 15, 2017

After Hurricane Andrew in 1992, percentage deductibles became more popular in policies as a way to reduce the exposure to insurance companies. In a typical claim, you will know what your deductible is but with percentage deductibles you may not know until after your loss is calculated. A common misconception is that the percentage applies to the loss sustained when in fact the percentage deductible is a factor of the total insured value (TIV). The challenge with this method is that it’s variable depending on the size of your loss and your policy language.

Here are a few things to look for in your policy:

  • The following notice may appear on your policy cover - Florida information: "THIS POLICY CONTAINS A SEPARATE DEDUCTIBLE FOR HURRICANE LOSSES, WHICH MAY RESULT IN HIGH OUT-OF-POCKET EXPENSES TO YOU."
  • The percentage may be based on various parameters. It may be per location or be more defined by structure. When it’s applied by structure it can be more advantageous for policyholders since the percentage would apply only to that structures TIV.
  • It may pertain separately to property and time element losses of affected location(s) or it may combine business interruption and property. It is important to understand your specific policy’s wording to accurately calculate your out-of-pocket expenses before insurance kicks in. Further, contingent losses may again involve a separate percentage deductible.
  • Percentage deductibles are often associated with a minimum deductible and, less common a maximum deductible.

Policy Wording
Here are a few examples of policy wording related to percentage deductibles:
  • When a % deductible is stated above, whether separately or combined, the deductible is calculated as follows:
    • Property Damage – % of the value, per the Valuation clause(s) of the PROPERTY DAMAGE section, of the property insured at the location where the physical damage happened.
    • Time Element – % of the full Time Element values that would have been earned in the 12 month period following the occurrence by use of the facilities at the location where the physical damage happened, plus that proportion of the full Time Element values at all other locations where TIME ELEMENT loss ensues that was directly affected by use of such facilities and that would have been earned in the 12 month period following the occurrence.
  • As respects property located in high hazard zones for earth movement:
    • Property Damage: 5% per location Time Element: 5% per location
    • The above are subject to a minimum deductible of USD500,000 or if applicable the location deductible for Property Damage and Time Element combined, per location and a maximum deductible of USD15,000,000, combined all coverages, per occurrence.
  • When a % deductible is stated above, whether separately or combined, the deductible is calculated as follows:
    • Property Damage – % of the value, per the Valuation clause(s) of the PROPERTY DAMAGE section, of the property insured at the location where the physical damage happened.
    • Time Element – % of the full Time Element values that would have been earned in the 12 month period following the occurrence by use of the facilities at the location where the physical damage happened, plus that proportion of the full Time Element values at all other locations where TIME ELEMENT loss ensues that was directly affected by use of such facilities and that would have been earned in the 12 month period following the occurrence.

Calculating Your Deductible

Once you understand how your policy defines your percentage deductible, you’ll be able to calculate it accordingly.


Here is an example of how the combined % deductible is calculated:

  • Property, Plant & Equipment Reported Value of $250 Million
  • Annual Reported Business Interruption Value of $550 Million


Calculated Percentage Deductible as a Percentage of Total Insured Value (TIV)
    • Property, Plant & Equipment $250 Million
    • Annual BI Value $550 Million
    • Total TIV $800 Million X 3% Deductible
      • Equals $24 Million Deductible

Deductibles for CAT losses have become more complex over the years and interdependent operations spread the impact across the organization, so it’s increasingly challenging to have confidence in the preliminary evaluation, especially when informing key stakeholders. Those who have had losses know, with hindsight, there are gaps in understanding and initial questions that are critical to the deductible evaluation. Avail yourself of a candid, independent review from the start so that whether you have a recoverable claim or not, you’ll be prepared.

By: Jeff Esper | August 25, 2017

Since Hurricane Harvey made landfall, the affected area includes some of Texas’ most populous cities, consuming the state’s Gulf Coast from Corpus Christi to Houston, and inland to Austin and San Antonio. Parts of Louisiana are also expecting heavy rain. With the intense volume of rainfall, commercial policyholders in the region experiencing both physical damage and business interruption, will soon be working with adjusters to assess insured damages. 


If you have locations at risk, brace yourself for the claims process. If you expect to have a property and business interruption claim resulting from this hurricane, getting your claim together, i.e. measured, documented and submitted can be a daunting task. If you are unprepared, the process can drag out far longer than it should especially when adjusters are inundated with claims. 


The faster you get your claim together, the faster you’ll achieve a positive settlement. As a firm that specializes in claim preparation and insurance recovery, we know how to get the job done right the first time, so you can focus on your business needs. 

Here are three reasons to involve us immediately: 

1. Loss estimates and reserves 

Insurance companies set reserves based on estimates defined early in the process. They will have experts assigned to establish reserves and once they’re set, they prefer not to increase them. You never want them set too low. How can you ensure reserves are set appropriately? You’ll need the help of forensic accountants to make sure the “potential loss” is properly assessed and communicated, thus avoiding the dreaded understatement. During a CAT loss scenario like a major hurricane, the adjustment team will be overloaded with work, so it is imperative your accountants are involved from the start to police the reserve numbers.
 

2. Claim Competition

If you go to a restaurant (get in the door) and notice a large group about to enter, what do you do? Well, if you want to eat any time soon, you better get in the door before the large group. CAT insurance claims are the same only instead of waiting for your meal; you’ll be waiting for your money. If you want to get through the claim so you can get back to business, you need to get in the door fast. Once you have your version of the loss prepared, your loss accounting experts will know what to do e.g. submit interim claims for advanced payments. During a CAT claim, always be prepared for a settlement meeting. Insurers will be looking for the well-prepared claims to settle and get off the books. 

3. Experience. Experience. Experience.

You can’t expect your own people to be experts at something if they don’t have adequate experience. Insurance accounting requires a unique skill set developed through experience. Immediately after a disaster, hire experienced forensic accountants that you can trust and depend on for advice and a quality work product. If your team is organized and know what they’re doing, the adjuster will be more likely to spend their time on your claim over other less organized policyholders. Having an advocate that specializes in insurance claims on your team will lead to a faster and smoother claim process, especially after a CAT event. 


After decades of representing policyholders through complex CAT claims, we understand the importance of a fair and fast recovery. If you have suffered a loss caused by Hurricane Harvey or another peril, we’re here to help you recover your losses - fast! 


Contact us for a no obligation consultation!

By: Jeff Esper | December 02, 2016

Why You Need an Independent Review at the Start
Losses that appear to be under deductible always benefit from an independent review. Deductibles for CAT losses have become more complex over the years and interdependent operations spread the impact across the organization, so it’s increasingly challenging to have confidence in the preliminary evaluation, especially when informing key stakeholders. Those who have had losses know, with hindsight, there are gaps in understanding and initial questions that are critical to the deductible evaluation. Avail yourself of a candid, independent review from the start so that whether you have a recoverable claim or not, you’ll be prepared.
  
Many policyholders engage forensic accountants when they are confident the loss exceeds the deductible, but few think to involve help when unsure. Experienced, professional help can highlight the key factors in this evaluation, and will provide a result you can rely on to make better decisions and reduce potential wasted effort.

Here are three reasons to make this step a standard risk management protocol for your company:

1. Deductibles Require Measurement

Under or over deductible is the first question once you turn your attention to the financial response. Deductible policy language has evolved over the years as insurers respond to claim nuances and program needs. The professionals at RWH Myers have assisted clients with quantifying deductibles and preparing claims throughout these changing times. We understand the languages quirks and can quickly scope out the magnitude of applicable deductibles.


2. Insurance Accounting is Unique

Loss accounting is a different discipline than financial or managerial accounting. Misunderstandings waste time and create unwanted transactional friction. Breed process efficiency with the right questions and meaningful answers from a team with experience translating managerial accounting into insurance loss accounting for policyholders.


3. Consider Motivations

Are operations overly optimistic?  Is finance overly pessimistic?  Might reporting a claim impact contingent commissions? Independent expertise will navigate through any biases to pull it all together in a way that answers the important questions based on their merits, ultimately facilitating the financial recovery process. 

No one can anticipate a loss and policyholders actively work to avoid them, but that doesn’t mean you don’t need to plan for when you have a claim. A candid, independent review will give you the confidence of an appropriate deductible threshold evaluation and segue into a smooth and fair claim process.

by William A. Warren, CPA, CGMA

By: Jeff Esper | October 07, 2016

3 Reasons to Get Help - Now!

With Hurricane Matthew riding up the east coast, policyholders may have property damage and business interruption concerns. If it's been awhile since you've had a significant claim, we wanted to share a few  ideas to help you through the claims process.


Any experienced forensic accountant will tell you, "The faster you get your claim together the faster you’ll achieve a positive settlement." If you have a property and business interruption claim, getting your claim together, i.e. measured, documented and supported properly can be daunting, so for many policyholders the process drags out far longer than it should. And the longer it takes, the harder it is to recover what you deserve. Savvy risk management professionals know that they need help from the start, so they bring in the forensic accountants, specializing in claim preparation to augment their internal resources and expedite the process.

Here are three reasons why you should get help with your claim immediately following a loss, especially a catastrophic loss:

1. Loss estimates and reserves

Insurance companies set reserves based on estimates defined early in the process. They will have experts assigned to establish reserves and once they’re set, they prefer not to increase them. You never want them set too low. How can you ensure reserves are set appropriately? You’ll need the help of forensic accountants to make sure the “potential loss” is properly assessed and communicated, thus avoiding the dreaded understatement. During a CAT loss scenario like a major hurricane, the adjustment team will be overloaded with work, so it is imperative your accountants are involved from the start to police the reserve numbers.
 

2. Competition

If you go to a restaurant (get in the door) and notice a large group about to enter, what do you do? Well, if you want to eat any time soon, you better get in the door before the large group. CAT insurance claims are the same only instead of waiting for your meal; you’ll be waiting for your money. If you want to get through the claim so you can get back to business, you need to get in the door fast. Once you have your version of the loss prepared, your loss accounting experts will know what to do e.g. submit interim claims for advanced payments. During a CAT claim, always be prepared for a settlement meeting. Insurers will be looking for the well-prepared claims to settle and get off the books.

3. Experience. Experience. Experience.You can’t expect your own people to be experts at something if they don’t have adequate experience. Insurance accounting requires a unique skill set developed through experience. Immediately after a disaster, hire experienced forensic accountants that you can trust and depend on for advice and a quality work product. If your team is organized and know what they’re doing, the adjuster will be more likely to spend their time on your claim over other less organized policyholders. Having an advocate that specializes in insurance claims on your team will lead to a faster and smoother claim process, especially after a CAT event.


After decades of representing policyholders through complex CAT claims, we understand the importance of a fair and fast recovery. If you have suffered a loss caused by Hurricane Matthew or another peril, we’re here to help you recover your losses - fast!


Contact us for a no obligation consultation!

Category: Insights 

Tags:

By: Jeff Esper | September 07, 2016

Once disaster strikes, the first priorities are always safety and preservation of property, but there are priorities to consider ahead of a loss to avoid unexpected surprises. Disaster mitigation and restoration is a critical service after property damage, and how you manage it may impact the outcome of your claim. Though there are many capable firms that specialize in property damage clean-up and restoration, there are some that will make mistakes and others may even take advantage of the situation. When it comes to recovering the cost of mitigation and restoration services for an insurance claim, any mishaps can create big problems that may leave you stuck with the bill. 


Here are some techniques to prevent potential problems before they arise:

  1. Vet your emergency response team prior to loss - Preparation is the key in any endeavor but with property damage claims, you cannot be too prepared. Recovery service providers should be identified and interviewed. Make sure the company you choose will be able to handle your potential issues. Involve your insurer during vetting. There are “approved” vendors that insurance companies recommend; however, just because they are “approved” does not mean there will not problems. Notify the insurance company of who you plan to use as well. 
  2. Clarify and document scope of work - Be clear on scope of work with the recovery firm and make the adjuster part of that conversation. Often, emergency response does not follow the normal protocols of a typical project. There likely won’t be time for detailed estimates, so try to get the adjuster to approve work in real-time to avoid second guessing. 
  3. Take a hands-on approach - Your property may still be underwater, but once access is granted, you must be hands-on. No one should have access to your facility without the presence of a company representative. Assign a property supervisor to the affected site to keep track of who is there and what they are doing. It’s your property and your responsibility. The bigger the loss, the more people coming in and going out, so it is vital to have a company representative onsite to observe and answer questions.
  4. Audit contractor charges before approving - The first weeks after a loss is chaotic. It’s important for policyholders to put controls in place to monitor activity and to verify work has been completed to specifications and according to the terms of the agreement. Reimbursable insurance expenses should be separated and audited prior to payment for proper detail and accuracy. This needs to be done efficiently in real-time. If you don’t have the resources, this step can be completed by your claim preparation accountants i.e. forensic accountants. Having forensic accountants on your team, along with your technical experts, can process this information in the context of insurance recovery. Don’t assume your forensic accountants will automatically audit invoices. Identifying errors or worse, fraud, is critical to avoid delays in payment or project completion. If you hire RWH Myers, we will discuss the proper protocol and work with you to establish the internal controls to intercept errors. 
  5. Address issues immediately - When the first invoice arrives, insurance companies may act surprised and even deny coverage, especially if the steps above have not been followed. Make sure to get the parties together to discuss the issues. Don’t procrastinate and don’t assume. It is important to be proactive with any potential discrepancies. The policyholder is responsible if there are unresolved differences. If the adjuster disagrees with the work performed and the invoices are paid, it may be difficult to recover everything your expenses. 

The immediate aftermath of a disaster is stressful and hectic. Preparation and communication can help you weather the storm and minimize unwanted surprises when you’re looking for claim payment. Having an experienced and independent forensic accounting team will reduce the stress, the workload and reimbursement issues. Per the tagline for one of the largest restoration firms, in the end you want it to be “Like it never even happened.”

Category: Insights 

Tags: Claims, Property Damage 

By: Jeff Esper | June 28, 2016

I am not sure why policy language has to be so confusing. Truly there are some complicated risks that insurance covers, but even the simple ones seem to be made complicated by the language used. A good example of this is extra expense. The words themselves seem pretty self explanatory; a policyholder spends extra money due to an occurrence and submits the expenses as part of the claim. Though it sounds straight forward, within a property claim these expenses require different types of measurement, documentation and coverage. To ensure you are buying the right coverage for your risks, it’s important to understand the details and the differences.

Per the International Risk Management Institute (IRMI), extra expenses are defined as: 

…additional costs in excess of normal operating expenses that an organization incurs to continue operations while its property is being repaired or replaced after having been damaged by a covered cause of loss. Extra expense coverage can be purchased in addition to or instead of business income coverage, depending on the needs of the organization.” 

This is true, however there is another kind of “extra expense” that is included as part of your business income - this is commonly known as “expense to reduce loss.” These expenses meet the definition of extra expense, however, they are incurred to reduce the duration or magnitude of the business income loss.

Consider this scenario. A manufacturer is shut down because of a covered cause of loss. Despite damaged machinery, they manage to resume operations in the facility by performing work manually with more than normal labor. The extra labor costs enables the insured to maintain some production that reduces lost sales. Is this a business income loss, extra expense loss or both? 

In this case, extra expense coverage in excess of the business income would not be necessary since the extra expenses reduced the business income loss. Any sales that were lost could still be recovered as well. If only extra expense coverage was purchased, the manufacturer could recover the extra expenses but not any lost sales.

The distinction between “extra expense” and “expense to reduce loss” is important when you are placing coverage. Quantification and documentation of extra expense exposures depends on the types of expenses and the scenarios envisioned. If the only extra expenses that are foreseen would be to reduce a greater business income loss, then it might not be necessary to purchase the additional coverage. If business income is not at risk or can be avoided entirely with extra expenses, extra expense coverage may be the way to go.  

Another category of coverage that gets confused with extra expense is expediting expense. Per the International Risk Management Institute (IRMI) expediting expenses are defined as: 

…expenses of temporary repairs and costs incurred to speed up the permanent repair or replacement of covered property or equipment.

The need for expediting expense coverage came from a time when boiler and machinery coverage applied to specific objects written on separate policies. Modern all risk policies will include expediting expense as a part of expense to reduce loss or extra expense coverage.

Again it is important to understand how you might incur these loss related expenses when placing coverage. To the extent that you can save the insurance company money by expediting, you are less likely to meet resistance. If you will need to expedite repairs for other reasons, regardless of cost or time savings, you may need to get coverage that provides full reimbursement.

Understanding the different types of expense coverage and how they apply to your business risks is critical when buying insurance. You don’t want to find out how your coverage works during a claim or realize that you’ve been paying for coverage you don’t need. Think through your potential scenarios, consult your broker and a forensic accountant to explore what coverages and limits are best for your risks. Then, share your conclusions with your underwriter to make sure everyone is speaking the same language.

By Christopher B. Hess, CPA, CFE

 

By: Jeff Esper | May 31, 2016

From left: Chris Hess, Jeff Esper, Joe Wieligman, Mike Murphy

Whether the task at hand is recovering a business interruption loss or competing in a golf scramble, it takes a team effort to achieve a successful outcome. With the right combination of skills, mutual support and good fortune, your team will have a great chance of winning the day.


RWH Myers always enjoys supporting RIMS golf events. It's certainly a bonus when we put a team together that wins. In this year's Pittsburgh RIMS tournament, our team did just that. With a score of 59, we managed to capture our first RIMS chapter victory of the year. A big thanks to Joe Wieligman of Hylant and Mike Murphy, Director of Risk Management at Kennametal for excellent play and camaraderie throughout the day.


Also, a special thanks to another great team, the Pittsburgh RIMS chapter, for hosting a well organized and enjoyable day of golf, networking and fundraising.

Category: News 

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By: Jeff Esper | May 02, 2016

If you are responsible for your company’s Business Interruption Values (BIV) reporting, we have a special offer for you! BIV reporting is possibly the most misunderstood data requirement of all lines of coverage. We hear it from brokers and policyholders across the country. It’s a concern for many and now you can find out how your values stack up.


RWH Myers now offers a simple and effective three-part system to assess the validity of a company's reported Business Interruption Values.


  1. First, we'll walk through a simple questionnaire that examines the process currently in place to pull together the numbers. The process used is a major indicator. Why? By looking at how you come up with your BI Values reveals what you may be missing and where potential problems are lurking.
  2. Next, we can review your current BIV reporting. With this step we can gain insight in to the output and what the underwriter is seeing. Any unclear or inconsistent numbers will create uncertainty in the mind of the underwriter and drive up premium costs. We'll ask the questions that your underwriter won't ask so that we can identify areas to improve.
  3. Finally, we'll do a BI Benchmark against others in your industry segment to see how your current BIV compares to the benchmark number. Our proprietary BI Benchmarking tool is a popular and useful tool that displays a ballpark BIV displayed in a "worksheet" like report summary. How will it compare to your numbers? There's only one way to find out.


The benefits of getting your grade are many. Once you know your grade we'll share with you what is hurting your score as compared to what you should be doing to increase the accuracy of your numbers. The way to a higher BIV Grade is the way to more accurate ratable BI values which is used to calculate your premium. This offer is free of charge to policyholders so there's nothing to lose by signing-up!


To sign-up for your BIV grade click here and we'll get started. You may contact me directly with questions. jeffesper@rwhmyers.com


By: Jeff Esper | February 26, 2016

Q & A  with William A. Warren, CPA, CGMA

Contingent Business Interruption is a critical part of the business interruption and supply chain risks facing companies. You may have the coverage in your policy, but are you sure you have the appropriate language and an accurate measure of this exposure? It may be time to revisit this complicated risk area to prevent a costly surprise.An earthquake, explosion or Tsunami hits on the other side of world.


A key supplier is disabled bringing your production to a halt until an alternative supplier is in place and able to fill the void. Your company may suffer extra expense costs and/or a serious business interruption, i.e. contingent business interruption. Will your cover respond appropriately and make you whole?In this article, you’ll learn some important answers to critical CBI questions. I asked Bill Warren, CPA, CGMA and Partner of RWH Myers, an expert in valuing business interruption exposures, the following six CBI questions that policyholders need to know to get a handle on the relevance of their CBI risks.


When you do a BI values project for a client, do you always address CBI?

No. CBI exposure is a critical component in understanding and managing an organization’s risk profile, and it does adds time and effort to a first-party BI values and exposures project. CBI should be addressed as it’s own analysis to properly reflect the organization’s goal(s) and the complexities involved in meaningfully achieving those goals.


Does the BI worksheet ask for CBI?

No, the worksheet and schedule of values generally assigns an organization’s earnings contribution (BI value) to its own locations. CBI represents the interdependencies those earnings have on third-party locations. Therefore, CBI is separately addressed in the insurance program. Without specific information, the coverage (if it exists at all) is often sublimited to relatively small, tiered sub-limits for named vs. unnamed suppliers or customers. Even if specifically identified, appropriate terms and conditions are difficult to ask for, let alone get, especially if you don’t understand the risk yourself.


What is expected by the underwriter at renewal?

Renewals rely heavily on momentum … sometimes focusing only on major changes since prior years. Many programs have stable, incumbent participants who have been on the account for several years. Even when that’s not the case, there is usually substantial information from prior program marketing that is leveraged on an ongoing basis. The same goes for the policy’s CBI coverage. It has gained attention in recent years, and insurers are requiring more information to avoid limiting coverage terms in its absence.

How do we address CBI and what is the benefit of our approach?

The theory is to tie a third-party’s potential operational risk to the clients potential lost earnings. The method is always customized to the situation at hand. Even in the same industry, different organizations can employ a very different model that relies on a unique mix of suppliers/customers. Information about them is often buried in functional silos and can be difficult to identify. Even after we get the necessary information, it may be incomplete for the intended purpose. This is why our process is one of inquiry & discovery. There are some formulaic approaches to capturing data. Often the obvious, critical risks are known. However, the discovery process must include quality probing questions to identify potentially unknown risks, or simply, concerns that have not yet been communicated. We then build customized models that correlate this operational reliance to the potential financial impact. The models are designed for the organization’s financial reporting, accounting for additional internal interdependencies, inherent resiliency and explicit mitigation planning.


The benefits of this approach are many. At a high level, it provides an understanding of the potential magnitude of the exposures from these external risks so that clients can make informed decisions about the cost-benefit of mitigation planning as well as the risk transfer strategy, terms and pricing.

What are the common challenges with an inaccurate representation CBI risks?

The most common challenge is tying inbound raw materials and/or supplier spend (sometimes the only accounting data you really have about suppliers) to the potential revenue exposure if that one part/service were lost. Another typical challenge is obtaining ample information from the third party about their exposures, locations, and mitigation planning. A supplier will generally want to comply with their customer’s request for information, but the they generally do not want to burden their own customers with these requests. The latter is difficult enough in a real loss situation, let alone during an evaluation of potential exposure.The consequence of inaccurate representation could be a loss from a contingent risk that could have been proactively mitigated, consciously retained, or adequately transferred via a policy with appropriate coverage and limits. Even worse, after years of premium on CBI risk area, the insured learns the hard way, it’s either not an accurate limit or the coverage isn’t the right fit. It can be extremely frustrating, to say the least.

Why should policyholders seek help from an independent expert?

CBI is about protecting the balance sheet by protecting the continuity of earnings either via operations or insurance. To accurately express the risk that a supplier or customer disruption may pose involves a holistic look at the organization and its earnings streams. An expert will calculate the net earnings at risk to empower clients to make better cost-benefit decisions surrounding loss control, mitigation, and risk transfer. An independent expert brings an unbiased perspective. They are not constrained by the assumptions that internal personnel may make, and should not be directing the result to a predetermined outcome. They would have no agenda other than an accurate assessment prepared for the client.


Even when a company does examine CBI and supply chain risks, the project is often lead by procurement or operations functions and the results are not leveraged holistically for the benefit of enterprise risk management.


So, is it time to revisit your contingent business interruption risks? It’s a question worth asking inside your organization. Perhaps, Mr. Warren’s insights will help you come to the answer. In any case, it may be worth consulting with an independent and experienced expert to explore further. If your earnings are heavily dependent on direct suppliers and indirect suppliers, as well as direct customers and indirect customers, your CBI exposures may warrant a closer look.

Category: Insights 

Tags: Business Interruption 

By: Jeff Esper | December 15, 2015

The Right Way to Look at BI Values
As a professional loss accountant with more than twenty years experience with business interruption valuation, I can understand why policyholders struggle with their BI values. Over the years, some of my clients recognized the issues with the traditional BI values approach, and decided to make a change. Unfortunately, too many companies continue doing what they have always done, even when there is a better way available. The fact is that BI values are an important requirement of the insurance process. The challenge is finding a repeatable, efficient system that produces an accurate measurement of your BI exposure. 

Consider for a moment, just how important this information is to your underwriter. The numbers you report gives the underwriter the basis for writing coverage and calculating premium. Each renewal provides policyholders with the opportunity to present their unique BI exposure. Unfortunately, this opportunity is often squandered due to a multilateral misunderstanding of business interruption values and the exposures they represent. The point of this article is to share an alternative approach that is proven to help policyholders take control of their BI values reporting while maximizing the opportunity to enhance the value .

Understanding BI Values
First, there’s the Ratable Value. It is the “big number” that is calculated for the business as a whole assuming a twelve month total shutdown of all revenue generating operations. This worst case and often unrealistic scenario is the information requested by the insurance company, usually in the form of a one page worksheet. Without additional information, the underwriter will use this information to set limits and charge premium. The ratable value calculated is somewhat meaningless, except that it establishes the base assumption that is used as the BI value in all other scenarios, such as un-incurred cost categories. The ratable value is seldom a reflection of your exposures. A better way to assess your exposures are to examine your MFL and PML loss scenarios.

What is Maximum Foreseeable Loss?
The maximum foreseeable loss (MFL), as the name indicates, is the worst case scenario. This is not as extreme as the ratable value scenario, but pretty close. The assumptions used here include a complete breakdown of protection and loss mitigating factors while hitting you where it hurts at the worst possible time. An example would be the loss of a unique distribution center to a retailer during the holiday shopping season - say the distribution center that handles online orders going up in smoke on Cyber Monday. The factors used to measure the ratable value would be used here to determine the business interruption value for this scenario. Certain assumptions may change depending on the duration of the loss scenario. For example, labor expense may be considered completely saved in the ratable value scenario due to the assumption that there is nothing left, but only partly saved in an MFL scenario.

What about the Probable Maximum Loss?
The probable maximum loss (PML) is the same as the MFL, except that loss mitigation efforts and protections work properly. The PML also takes into account pure extra expenses used to retain customers. This can help with decision making on purchasing extra expense coverage.

What happens in underwriting?
Though I’m not an underwriter, I’ve typically seen insurance company’s take an engineers approach to MFL and PML scenarios that vary only in duration. This is singular perspective and does not account for the rest of the pieces of the puzzle. The other pieces are the finer details that actually occur during a claim. If it were a real claim, topics like seasonality, make-up and outsourcing would surely come up, but you won’t see them on any BI worksheet. 

The MFL and PML should be based on realistic loss scenarios and measured as if it were a claim. Simply applying the ratable value to loss period assumptions produces misleading and inflated numbers. This is precisely why it is in your best interest to develop your own valuation method based on real scenarios.

Why create Exposure Scenarios?
If BI values are based on assumptions and you are using the worksheet, then the assumption is a 12 month loss scenario. Can you imagine a scenario in which your operations would only be effected for 6 months? The worksheet makes a blanket assumption of 12 months whether realistic or not. Coming up with various loss scenarios by location would flush out a more realistic representation of the impact of each particular loss. It would further flush out high risk locations along your supply chain which will not only add value to your risk management approach but may also influence business continuity planning. 

An exposure analysis project is not only an accounting project, it’s a integrated business exercise offering multiple benefits to an organization. The goal is to identify and examine loss scenarios and the resulting the ripple effects. It isn’t necessary nor is it practical to anticipate every possible loss scenario. It’s better to prioritize by perceived risk and probability. Then, develop a good sampling of loss scenarios from which you can determine the impact to operations and the mitigating actions that would be taken. Depending on the exposure, involve the appropriate internal personal e.g. operations, sales, business continuity, IT, and accounting. The external experts you may involve are your broker, legal counsel and of course, a forensic accounting firm that specializes in insurance work. Additionally, your company’s Business Continuity Plan (BCP) and incident response plan, should be factored in accordingly.  How ever your scenarios play out, the loss accountants can calculate the business interruption as though it were an actual claim. 

As you can see, this approach would produce a more accurate BI value by location and overall. It’s the right way to look at business interruption so make it a part of your approach with underwriters. If you’d like to discuss this topic or any others, myself or my partners would be delighted to hear from you.


Published 12-17-15: InsuranceThoughtLeadership.com

Category: Insights 

Tags: BI Values 

By: Jeff Esper | November 06, 2015

Cyber Panel

It was our pleasure sponsoring yet another successful Partner Day hosted by Central Ohio RIMS. It was held at  Wendy's Corporate HQ in Dublin, OH. The Wendy’s conference center was one of the nicest and well equipped venues I’ve seen for a RIMS event. 


The agenda was complete with current events and relevant topics for all industries. Each topic involved a panel of experts with a moderator leading the discussion. 

The topics were as follows:


  • Workers Compensation and Marijuana

  • Millennials

  • Product Recall

  • Active Shooter

  • Cyber Liability/ Disaster Recovery                                                                                                                    

(Pictured above from left to right: Spencer Timmel- Hylant, Diane Reynolds- Taft Stettinium & Hollister, David Fine- FBI, Brian Minick- Morphick Cyber and Moderator, Bob Bowman- The Wendy's Company)

We would like to congratulate the Chapter Officers, Panelists and other contributors for a job well done. 

Looking forward to next year!

Category: News 

Tags: Presentations 

By: Jeff Esper | October 26, 2015

Policyholders insure against business risks to protect their financial integrity. When these risks become a reality, claim recovery is the return on investment. 

Unfortunately, it’s not quite that easy. Claim recovery is a process that requires expertise to secure a fair settlement. As you know, your carrier has experts assigned to adjust and audit your claim, so, in turn, you should have experts to help you quantify your losses and prepare a well-documented claim. But expertise is not enough. If you want the best chance to be made whole, independence definitely matters.

Many companies promote themselves as focused on client needs, but, in claim preparation, it has to be more than a slogan. When it comes to preparing claims, true independence isn’t as common as you might think.

Is your loss accountant independent?

The most common "claim preparers" are forensic accountants. Let’s take a look at where they exist in the insurance industry:
  • Insurance company forensic accountants
  • Insurance broker forensic accountants
  • Consulting firms with forensic accounting service offering
  • Accounting firms with forensic accounting service offering
  • Independent loss accounting firms

It should go without saying that the firms that are hired by the insurance companies cannot provide independent and unbiased service to policyholders, but many still do rely on the insurers’ accountants to measure their losses. If asked, the insurers’ accountants would likely recommend the insured retain an independent firm to assist them, yet there are those who don’t know and don’t ask. For the policyholders in this category, I hope you see the light after reading this article.

Broker-owned accounting firms have their own set of potential conflicts, starting with the strategic relationship they have with insurance companies. As a former broker, I can tell you these relationships are sacred. The carrier’s profitability is directly related to claims paid, and the carrier will reward brokers for profitable accounts with a bonus commission, aka contingent commissions. If you are on a fixed-fee arrangement, it does not mean there’s no contingent commission in play. Your broker wants to serve your needs and will work hard for you, but, when you have a loss, the broker has a conflict of interest.

It’s also important to remember that your claim can last longer than your broker agreement. It’s hard enough to end a relationship with your broker, but if the broker is preparing an outstanding claim it will prolong your dealings with the broker. If you change carriers and your broker at the same time, the situation can be harder to resolve. If you are using your broker for claim preparation, consider an independent option that only serves one master, you.

The large accounting firms with consulting practices will scale back their consulting activities when faced with financial debacles that cause regulators to scrutinize their independence. The inherent conflict of an auditing firm preparing a claim for a client should be obvious. The audit firm will have a direct impact on creating an asset or revenue stream, which the firm would then audit as part of the financial results. Those two activities need to remain separate to maintain independence.Also consider what it means if your claim preparation firm is also the auditor for your insurer. 

As you can see, there are potential conflicts on both sides. Why not avoid potential conflicts and work with an independent specialist?

Hiring consulting firms presents similar conflicts to consider. Is it a provider of another service to your company? Does it also serve your carrier in some capacity? Making this determination can be time-consuming, and conflicts can be easily missed. Any firm you consider should be clear about possible conflicts, but it’s your recovery at stake, so it’s best to do the proper vetting.

In the insurance industry, it’s the policyholders’ right and obligation to value their own losses for submission to their insurer. Your insurer may be more than willing to help, but is that’s what is best for your business? Claim recovery is the reason policyholders invest in insurance, so be sure to hire a firm that knows how to prepare a claim and is working on your behalf. 

Loss accounting is a specialized craft that comes as a result of experience and expertise with insurance claims. Seeking an independent, third-party valuation of your losses is not only smart business but may be a fiduciary responsibility, especially with a large property and business interruption claim.




Category: Insights 

Tags: Claims 

By: Jeff Esper | October 26, 2015

Jim Gillespie & Jeff Esper presenting to SV RIMS at Intel

It's been a busy year of delivering presentations for us. We've been asked to present across the United States at RIMS chapters and regional RIMS conferences. It's an honor and a pleasure to present at RIMS events and we're always working to keep the material fresh and interesting.


For example, our presentation for Silicone Vally RIMS (pictured above) hosted at Intel HQ, featured case examples relevant to companies in the region. The meeting was sold out weeks prior for our presentation which was on Business Interruption Values and Exposures. It was an interactive presentation with an engaged audience. Contingent Business Interruption seemed to be hottest topic filled with questions and comments from the RIMS attendees. CBI has become a bigger part of the BI Values equation especially among companies who depend heavily on suppliers around the world.


International events such as the Japan earthquake and tsunami in 2011 from which the total damages are estimated at $300 billion dollars (about 25 trillion yen), according to the Japanese government have spurred the increased attention to this risk area. 


For more information about our presentations, click on the Sharing tab above.

Category: News 

Tags: Presentations 

By: Jeff Esper | September 30, 2015

When I started as director of marketing at RWH Myers, I asked a lot of questions of the partners. With the firm specializing in loss accounting, I wanted to understand the most important attributes in a successful claim. What I learned seemed too obvious at first, but I soon discovered why each component was essential.


The five keys to successful claims are not rooted in complex business interruption equations or piles of documentation. They are critical fundamentals. Fundamentals in any endeavor are easily missed and hard to execute without practice. But if you master the fundamentals, you’ll be on your way to a positive outcome. Get them wrong, and you’ll struggle to recover what you deserve. When millions of dollars are on the line, risk management cannot afford to come up short on recovery. Our firm exists to help policyholders in their attempt to be made whole after a loss, so we thought it would be valuable to share what we found to be most important.


Here are the five keys to successful claims:


  1. Define the Claim’s Priorities

When you have a loss, it is important for everyone to understand what is important to the organization at that time. Is it the recovery amount? Is it the speed of settlement? Is it a smooth process? Is it cash flow? Is it resource relief? It may be all of these and more. Risk managers should discuss the priorities with executives and other key personnel to ensure all considerations are accounted for. When cash flow is critical, the claim preparation strategy should incorporate interim claim filings. If the primary need is to get the loss off the books before financial reporting, the strategy may focus on speed of settlement. Knowing the priorities of the organization will enable a claim strategy that can meet those needs. As the old saying goes, “If you don’t know where you are going, any road will take you there.” With a property and business interruption claim, everyone involved needs to know where to go.


  1. Have the Right Team in Place

If you’ve been through a significant property claim, you know that your insurer(s) will have a team of experts whose job it is to adjust and audit your claim filings. Their goal is not to pay out the claim amount. It is to minimize the exposure to the underwriter to preserve profitability. Insurance companies are for-profit enterprises, and they take their profits seriously. Knowing what their priorities are should reinforce the need to have a skilled team representing you. You will undoubtedly need to involve internal personnel to assist you, but know that they do not have the experience to match the insurers team’s acumen. It is in your best interest to assemble your own team of experts ahead of a loss. Savvy policyholders may specify certain adjusters to be written into the policy in an effort to minimize potential claim issues. No matter what, you should avoid relying on the insurer’s forensic accountants’ calculations as the measure of your losses. An independent loss accounting firm can not only provide you with an accurate loss valuation but will be instrumental in guiding the claim to meet your goals.


Experience matters greatly, and you will need it to ensure success. Professional fees coverage is available for this service. It is there to pay for the experts you’ll need. Take advantage of it. Having your team in place in advance will make a big difference.


  1. Develop a Claim Strategy

The claim process involves many activities that could be daunting and burdensome to everyone in your organization, but the demand to achieve your priorities is relentless. It is critical to develop an effective strategy to get the best results from your claim. Engaging experts can help develop your strategy as they will know the obstacles you will face and can plan for them. The strategy should incorporate your priorities and the steps to achieve them. It should involve analyzing possible adjustments and ways to overcome them. To keep the claim moving, create a timetable that maps each milestone. It should include request for information (RFI) responses and feedback, interim claim filings and audit results, periodic meetings and requested settlement date. Don’t rely on hope or faith that your carrier will do the right thing. The carrier will do what’s right for it, not for you. Engage your experts immediately after a loss so that they can be involved in the design and execution of your strategy from the onset. If you are looking to recover millions of dollars, you better have a solid plan to do so.


  1. Give the Claim Appropriate Attention

At the beginning, claims get a lot of attention, but, as time passes, other items will distract from your claim. Managing an insurance claim is not a normal part of the job for anyone involved unless that is their job. For the insurer’s team, managing the claim is their job. It’s what they do everyday. If you engage a loss accounting firm that specializes in preparing claims for policyholders, the firm will help to ensure your claim gets the appropriate attention. Not only will the firm keep your attention on the claim, but the firm will hold the insurer’s team accountable to the timetable. Claims take time. You must be patient, but persistent. You can ill afford to lose attention. Don’t let your claim get lost amid all your other duties.


  1. Prepare a Logical Claim

When I worked for one of the largest brokers in the world, I often wondered what exactly our claims group did to help clients with claims. I was surprised to learn that the onus was on the client to actually put the claim together — all the financials, the calculations, all the invoices, the claim report, everything. This documentation is the basis of the claim. It’s what’s reviewed, audited and adjusted. As the broker, I thought our claims group did it. I came to realize it’s not our responsibility, nor should it be. After all, we’re the broker, not the policyholder. For the clients that used a loss accounting firm, the claims went much more smoothly and were resolved faster. I didn’t understand why until I joined RWH Myers. Putting the claim together is only half the battle. There is a technique to it that makes the difference from start to finish. As the claim progresses, there are always gray areas. Sure, you’ll recover some of your claim regardless of your approach, but that gray area may represent 20% or more of your losses. If recovery is important, that 20% matters greatly.


When claiming time element as business interruption, you are claiming earnings that you would have earned had the loss not occurred. There is an art to the model used to calculate these losses and a science to showcasing the logic behind it. A simple, logical and easy-to-understand claim will meet less resistance and recover more than a complicated, confusing and overbearing claim. Unfortunately, there isn’t a cookie cutter formula. You can’t just teach it. Experience is the only way to ensure this “key” will lead to a successful claim.


The bottom line is that claims have lives of their own. There are two opposing sides with opposing agendas. Claims ultimately come down to a negotiation. The amount remaining at the negotiation table tells the tale of how well the claim was prepared, including all the fundamentals — the priorities, the teams, the strategy, the attention and the claim report. It all matters to recovering your losses efficiently and effectively.



Category: Insights 

Tags: Claims 

By: Jeff Esper | August 25, 2015

New information is slowly filtering out of China about the Tianjin explosion and many companies are trying to figure out how their operations and business income will be affected. As the proverbial dust is settling, the one certainty is that a critical cog in the international supply chain wheel has been crippled and will not likely be fully functional for some time. The insurance implications are expected to be substantial according to Reuters analyst Arian van Veen, “It is still very early to determine the level of insured losses, but the event is likely to be large with initial insured loss estimates of $1-$1.5 billion and a large number of insurance companies affected,"

If you expect to have a loss stemming from Tianjin, here are some tips that may be helpful:

Policy Communication

Communicate with your claims team, from brokers to forensic accountants, so they are ready to respond.  They also may have some information you do not have as they likely are speaking with many other companies in the area.  Review your policy for coverage availability and/or limitations.  What are the details of your CBI coverage, ingress/egress, civil authority?  Discuss potential claim strategies and prepare internally for documenting your claim.  

Internal Communication
Now is the time to communicate and gather information as best you can.  Your internal groups, from supply chain to finance, need to know you are a resource for them, but you need to stay in the loop with regular updates on what effects the company is feeling.  The more information you can gather right now, the better positioned you will be when discussing with your carriers how your policy applies to the loss.  

Adjuster Communication
You are likely in contact with the local adjuster regarding the possibility of a claim. Let them know that you are on top of things and that you’ll keep them informed. If information is requested be sure to maintain control of the information that is shared.

Category: News 

Tags: Claims 

By: Jeff Esper | August 18, 2015

It’s okay to get help!
Recently, we hired a business development professional. In learning our business model and marketing strategy, he asked, “Who is your biggest competitor?” We said: our customers — the “do-it-yourselfers.” This struck him as odd, but it is the absolute truth.We are in the business of preparing property claims that usually involve physical damage and business interruption. This is a very specialized practice that is part accounting, part insurance and part art. However, the companies we approach often feel they are in the best position to handle this process and do not need outside assistance.

Why is that? 
When a claim is reported, the insurance company will assign an adjuster to the claim — either an inside adjuster or an independent adjuster — sometimes both. The adjuster is hired by and paid for by the insurance company to make sure the claim fits within terms and conditions of the insurance contract. The adjuster will rely on specialists of his own — usually forensic accountants and forensic engineers. The specialists allow the adjuster to focus on his job of interpreting the coverage, reporting back to the insurance company and negotiating settlement on behalf of the insurance company. The specialists are there to verify the details of the claim that is presented to them by the policyholder. The insurance adjuster alone cannot and does not take on all of the responsibilities. The adjusters are the experts at this process — it is their business and they do it every day — but they still get specialized help.

So if the insurer handles claims this way, why would the insured not get expert help?
Think of the “do-it-yourselfer” project at home. Let’s say you’re pretty handy around the house, so you look at that bathroom that needs remodeling and decide, “I’ll do it myself this weekend.” Technically, you CAN do it yourself — you can take your crowbar and sawzall and do the demolition; you can handle laying the tile; and, with a little research, you could figure out the plumbing. The first weekend you go out to buy the extra tools you need and some supplies, and you get to work. Maybe the demo will go easily, but if you’ve ever tackled a home project, you know nothing is as easy as it seems, and it always takes more time than expected.If you make it through the demo, you spend the rest of the weekend figuring out your strategy for the new bathroom. Because you have a day job, each evening that next week you try to make progress, but by the end of the week you are bleary-eyed from the stress of this unfamiliar work and the late nights of trial and error. 

The next weekend, you cannot get back to the work, because you have family activities. When the vanity arrives, you realize it does not quite fit the way it should. Next, you realize you need more tools. Your weekend project turns into months of disarray. If you stay the course, months later you’ll have a functional bathroom, but there are usually a few steps that you decide you’ll have to get to eventually. At this point, you’re getting busier at work, and you just don’t have the bandwidth to get back to the myriad of subsequent bathroom issues, so you consider bringing in an expert to bail you out.

Preparing a claim is very similar, if you do it yourself. In addition to saving time, stress and compromising the results, your claim preparation expert has the tools of the trade, the skills and the experience to achieve an accurate and timely recovery. In contrast to the home improvement example, though, your claim preparer’s fees should be covered, in part or in full, by your property policy. So, if you’re not saving time or money by doing it yourself, and an expert will get you a better result, why would you not engage a professional claim preparer?That question seems like a no-brainer, yet so many still take the DIY approach to property claims.

To sum up, it is okay to ask for help. The policyholder is not expected to be able to “do it yourself.” That is why you have professional fees coverage. The insurance company assigns its experts to adjust and audit your claims, and they’ll be better-equipped to meet their objectives than you will if you take the DIY approach. They are the insurers experts, so it is advisable for you to bring in your experts to represent your interests.Here are a few suggestions of what to look for in a firm to prepare your claims.


  • A loss accounting specialist, because insurance accounting is a unique trade. Typically, the firm will identify itself as forensic accountants.
  • Experience with the types of property claims you have, in your industry or similar ones, and with at least 10 years in the field.
  • Independence. This will ensure the firm is on your side with no conflicts of interest. Avoid allowing your insurer’s accountants to calculate your losses. The same hold for any other party that may have a conflict.
  • A firm that qualifies for professional fees coverage. The fees should be based on an hourly rating scale, not on contingencies. Property policies will have specific exclusions, such as public adjusters and broker affiliated services.
  • A firm that is respected by insurers, adjusters and brokers. Your accountants should not threaten your relationships to achieve the result.

If you see the benefit of engaging a team to prepare your property and business interruption claims, do your due diligence ahead of a loss. Interview any qualifying candidates and make your choice. The firm should be involved in your claim from the very beginning.If you take this advice, your claims will go much smoother, and the claim will be free of leaks and loose tiles.


Published 8-18-15: InsuranceThoughtLeadership.com

Category: Insights 

Tags: Property Damage 

By: Jeff Esper | July 06, 2015

The 4th of July has come and gone, but we should not forget the reason we celebrate this holiday- Independence. The freedom and liberty we enjoy in our lives started with the need for independence. It is also a critical part of business, law, medicine, accounting and insurance.

In the insurance industry, policyholder’s insure against business risks in order to protect their financial integrity. When these risks become a reality, claim recovery is the return on investment. Unfortunately, it’s not quite that easy. Claim recovery is a process that requires expertise to secure a fair settlement. As you know, your carrier has experts assigned to adjust and audit your claim, so in turn, you should have experts to help you quantify your losses and prepare a well-documented claim. But expertise is not enough. If you want the best chance to be made whole, independence matters.

As service providers to insurance policyholders for several decades, the partners of RWH Myers have remained the independent specialists, free of conflicts of interest, and devoted to policyholders. This means that your interests, needs and objectives are all that matters. Many companies promote themselves as focused on client needs, but in claim preparation, it’s more than a slogan. It’s a matter of ethics and a code of conduct.

“According to AICPA Practice Aid 08-1, Independence and Integrity and Objectivity in Performing Forensic and Valuation Services, before accepting a forensic accounting engagement, one should carefully evaluate their relationships, if any, with all parties to the action to identify potential actual and perceived conflicts of interest. These parties include named and potential adverse parties, and counsel for the parties on the opposing side.” Richard Fletcher, Accountingtoday.com

In the claim preparation business, true independence isn’t as common as you might think. So why does independence matter so much in claim preparation? Independent loss accounting is the only way to preserve “client interests,” professional integrity, and freedom from conflicts. The partners of RWH Myers understand the code, but to us, it’s really a matter of principle. How can you put your clients interests first if you have other interests and influences? The only way is to remain independent.

Is your loss accountant independent? The most common claim preparers are forensic accountants. Let’s take a look at where they exist in the insurance industry:

    •   Insurance company forensic accountants
    •   Insurance Broker forensic accountants
    •   Consulting firms with forensic accounting service offering
    •   Accounting firms with forensic accounting service offering
    •   Independent loss accounting firms

It should go without saying that the firms hired by insurance companies cannot provide independent and unbiased service to policyholders, but many still do rely on the insurers accountants to measure their losses.  If asked, the insurers accountants would likely recommend the insured retain an independent firm to assist them, yet there are those who don’t know and don’t ask. For the policyholders in this category, hopefully, you see the light after reading this article.

Broker owned accounting firms have their own set of potential conflicts starting with the strategic relationship they have with insurance companies.  As a former broker, I can tell you these relationships are sacred and, for the most part, one cannot exist without the other. The carrier’s profitability is directly related to claims paid and they will reward their brokers for profitable accounts with a bonus commission, aka contingent commissions. If you are on a fixed fee arrangement, it does not mean there’s no contingent commission in play. Your broker wants to serve your needs and will work hard for you, but when you have a loss, they have a conflict of interest. It’s also important to remember, your claim can last longer than your broker agreement. It’s hard enough to end a relationship with your broker, but if they’re preparing an outstanding claim, it will prolong your dealings with them. If you change carriers and your broker at the same time, it can make it harder to resolve. If you are using your broker for claim preparation, consider an independent option that only serves one master, you.

The large accounting firms with consulting practices will scale back their consulting activities when faced with financial debacles that cause regulators to scrutinize their independence.  The inherent conflict of an auditing firm preparing a claim for a client should be obvious.  The audit firm will have a direct impact on creating an asset and/or revenue stream, which they would then audit the financial results.  Those two activities need to remain separate to maintain independence. Also consider what it means if your claim preparation firm is also the auditor for your insurer. As you can see there are potential conflicts on both sides. Why not avoid potential conflicts and work with an independent specialist?

Hiring consulting firms present similar conflicts to consider. Are they a provider of another service to your company? Do they also serve your carrier in some capacity?  Making this determination can be time consuming and conflicts can be easily missed. Any firm you consider should be clear about possible conflicts, but it’s your recovery at stake so it’s best to do the proper vetting.

In the insurance industry, it’s the policyholders right and obligation to value their own losses for submission to their insurer. Your insurer will be happy to help you measure your loss, but is that what is best for your company? Recovering your losses is the reason policyholders invest in insurance, so be sure to hire a firm that knows how to prepare a claim and is working on your behalf. Loss accounting is a specialized craft that comes as a result of experience and expertise with insurance claims. Seeking an independent, third party, valuation of your losses is not only smart business but may be a fiduciary responsibility, especially with a large property and business interruption claim.

RWH Myers stands by our declaration of independence and we’re proud to support your interests and your success. It’s clear, Independence matters to us. If you like the idea of conflict free claim preparation, then Independence matters to you too.

Category: Insights 

Tags: Claims 

By: Jeff Esper | June 04, 2015

This article might seem out of place coming from a policyholder advocate who is often at odds with property adjusters. However, I feel for them. Their job is not easy and is further complicated by the system that has evolved.

Having prepared property claims for more than 20 years, I have seen the process change into what it is today — and the change is not favorable to the policyholder. Historically, the adjuster was the point person for the insured to interact with. The adjuster was given authority to make judgments as to coverage and measurement of property and business interruption claims, often relying heavily on their expert accountants and engineers to form their opinions.

Today, the adjuster is still the point person, but there is a group in the shadows that makes most of the decisions. Much of the authority has been taken away from adjusters, oftentimes putting them in the middle between the ultimate decision makers and the insured. This leads to confusion, delay and frustration by all parties involved. I liken it to the “Telephone Game” — where you get a group together in a circle and whisper something to the person next to you; by the time the message makes it around the circle, whatever you said has been distorted into something completely different. Just like the game, the insurance process suffers from a communication breakdown that confuses issues and delays resolution.

Some would say this evolved out of necessity for the insurance companies. They do need to be on alert for fraud, so close management of the process by those paying the bills is reasonable. However, the point of assigning an adjuster is to avoid micromanaging the process and to delegate some of that authority. Additionally, the adjusters are the closest to the loss and need to be able to make decisions on ambiguous issues. Having them go back to their superiors to clear every agreement defeats the purpose of having an experienced adjuster.

There are better ways to prepare for the challenge of claims than pointing fingers:
1. Adjuster Selection – the policyholder may be able to specify certain adjusters and even have them written into the policy. Even though they are subject to the same system, experienced adjusters are more likely to have clout with the insurance company. This may allow them to have more freedom than those adjusters who are less experienced. Additionally, the adjuster will appreciate being a part of your program and will be less likely to create problems.
2. Leverage Underwriters – the insurance business has two sides: sales and claims. These sides do not necessarily communicate. Often, the policyholder can feel that one thing was sold and another is being adjusted. Make sure that the claims side knows that you are willing to involve the sales side if differences arise. While this is not something you want to do on every claim, it can be an effective way to correct the claim adjustment team on issues you feel strongly about.

3. Policy Acumen – Do not assume the adjuster knows how your policy should respond better than you do. Involve your broker and coverage counsel when facing interpretation issues. Often, we see an adjuster make claims of fact about adjustment methods that conflict with our experience with previous claims.

4. Claim Stance – It is the duty of the policyholder to prepare the claim. Prepare your claim as you see it and be prepared to defend it. Do not leave it up to the adjuster and his team to tell you the number. Understand the areas of your claim that might be subject to debate and prepare your best arguments. Recognize the strengths and weaknesses of your claim and anticipate adjustment attempts.

5. Empathize – It is common to think that the adjuster is out to get you and just wants to minimize your claim. Though it does happen, for the most part, the adjuster is just doing her job. If there are unreasonable positions coming from the adjuster, she is likely just the messenger. Working with the adjuster instead of against her, showing empathy, may just get her to empathize with you and your position. Help her help you!
Like with anything, preparation is the key to success. Add a dose of a positive attitude, and you might even enjoy the process. It’s a better approach than the blame game. When you are faced with an insurance claim, having the right perspective, a little understanding and being prepared will make a huge difference. Incorporating these steps will improve your claim outcomes and will help make the most out of any claim situation.


Category: Insights 

Tags: Claims 

By: Jeff Esper | May 28, 2015

The major storm and flood waters in parts of Texas and Oklahoma have caused death, destruction and despair affecting residents and businesses.  Those in Houston certainly remember similar experiences from Tropical Storm Allison in 2001.  Just like Allison, the waters will eventually recede and properties will be restored, but the impact will be felt for years to come.

To rebuild and restore businesses after an event like this involves time, effort and a good strategy. When it’s time to file a claim, having the right strategy will relieve much of the financial burden to your business. Coverage for the property damage may involve FEMA, Commercial Insurance, and other forms of aid. Maximizing recovery from all applicable sources is a daunting task, especially in the aftermath of catastrophic events. This is why informed policyholders turn to RWH Myers.

Just like the rebuilding and recovery effort itself, the financial recovery requires a team approach, but involving the right team is imperative. There are always those looking to take advantage of a disaster, so be cautious of who you hire for any service. It is always best to work with people you can depend on and trust. It is almost impossible to completely prepare for a disasters like this, but when it comes to preparing your claim, involving an experienced team will make a huge difference in both the process and the outcome.

The partners at RWH Myers have been through every named storm in the last three decades-including Allison, Ivan, Katrina.  We know how to accurately measure your losses, prepare your claims and recover what you deserve. Recovery may not come easily, but with the right team, it will be easier on you and your organization.

If you are in need of financial recovery assistance - including the preparation of insurance and FEMA claims related to this event - please contact the specialists at RWH Myers.  We are independent and devoted to the policyholder.

For more helpful information or to contact us visit- www.rwhmyersinsights.com.

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