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: Christopher Hess | July 15, 2015

The world is getting smaller. Companies of every size do business around the globe. This poses business interruption risks both direct and indirectly. Recent examples include the devastating flooding in Thailand and the Tohuku earthquake and subsequent tsunami in Japan. Property claims can be hard enough when they are at home; adding distance and language differences can make things more time-consuming and add expense to resolving a claim. There is good news, though: International claims are not that different than any other claim. 


For example, in 2013, when Ingersoll Rand suffered an $11 million-plus flood loss at a manufacturing plant in Shanghai, we calculated the property damage and business interruption loss amounts, prepared the claim and worked with the loss adjustor and the insurance company’s forensic accounting team. We effected a settlement within three months of the end of the loss. 


Experience is the key. 


The Language 

The insurance world speaks English. The first question we are asked about preparing international claims is whether we have someone who speaks the local language. While this might have some benefit, it is far more important that someone understand the process and the numbers. On the rare occasion where a translator is necessary, that is all that is needed: a translator. It is not necessary to have a claims practitioner who is fluent. You are much better off with practitioners who know what they are doing on a property claim. 


The Location  
The time and cost to fly consultants around the world is a real concern. Often, policyholders will be inclined to hire less experienced professionals because of their proximity to the loss. This is a mistake. For the most part, information can be transferred electronically and explained over the phone. For companies based in the U.S. with operations abroad, all information necessary to prepare a claim can be transferred through headquarters. 


There are certain elements of a property claim where on-site assistance is needed (physical inventories, building or equipment inspections, etc.) This type of specific technical assistance can be coordinated with the insurance company and local resources. As with accounting information, the results of these physical inspections can be documented and sent back home. There is usually no need to send someone from here to there. 


As real examples, we have prepared and settled dozens of claims around the world without setting foot on the loss site. This is accomplished by sharing information electronically and communicating by phone, web meeting, web sharing portal, etc. The alternative of using local, less experienced professionals would undoubtedly add confusion to the process. Experience is the most important requirement in preparing any property claim. Don’t get the wrong impression – we have traveled all over the world for our clients when asked. Sometimes, the parties involved require the travel, or the loss simply demands it. However, this type of travel is less frequent now. If required, travel should be scheduled to maximize productivity to reduce the amount of travel needed. Again, experience and expertise allow this to be accomplished most efficiently. 


The Local Policy  
Local policies that cover losses abroad may have some differences from the global policy. If these differences affect recovery, in general the master policy can be invoked to make up any differences. You will want to prepare the claim according to the local policy, but be aware of differences. Your broker should be able to help sort out any differences and the reasons for those differences.

 

The interpretation of the local policies by local adjusters can create confusion. Just be aware that the intent of the local policies should fit in with your global program – to indemnify for the loss. 


Summary  
Losses happen all over the world. Just because you are in New York and the loss is in Paris, France, does not mean you should treat it any differently than if it were in Paris, Texas. Language and location are not a barrier in this day and age. If you compromise expertise for proximity to the loss location, in the end it will cost you more. Look for a team that has had success managing international claims throughout the process, leading to results for clients.


Published 7-9-15: InsuranceThoughtLeadership.com

Category: Insights 

Tags: Claims 

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.

By: Jeff Esper | May 07, 2015

It was another exciting RIMS Annual Convention last week! New Orleans is always a great destination and with the city filled with insurance professionals, it was really bustling. 


The RWH Myers exhibit booth had frequent visitors. Some came by to learn about our company and several friends and clients stopped by to say hello.  And, everyone wanted a chance to win our booth prize, The Parrot Bebop Drone. With a fish bowl filled with business cards, the winner was pulled: William McBain, Assistant Treasurer at Samsonite. Congratulations William!


After each day at the exhibit hall, the nights were spent at industry events from The French Quarter to the Superdome. We capped off the week with our annual client dinner Wednesday night at Bayona which was a brilliant venue for a relaxing and delectable evening.


Well, another RIMS Convention is in the history books so we're looking forward to next year in sunny San Diego!

Category: News 

Tags:

By: Jeff Esper | April 15, 2015

When a property claim occurs, with or without business interruption, it is very common to assume that it will be straightforward. Just submit your invoices, and your insurer sends you a check. You may think, “We can do it ourselves,” or, “We have it under control.” If this has been your approach, you need to read on.


There are many potential issues when preparing a property claim that are commonly overlooked or misunderstood. The challenge is even greater if there is a business interruption component to your claim.


From experience, my partners and I have identified the most common property claim issues that can slow down the claim process and have an adverse affect on recovery.


 


1. Repair vs. Replacement

Repair vs. replacement comes up in almost every significant property claim. The issue arises when it becomes a battle of opinions and assumptions. We all know the humor on opinions and assumptions — but your property damage claim is no laughing matter, so let’s explore what can happen.


If you have a replacement policy, you have the option to repair or replace. If it makes more sense to replace with a new and improved item, then you should do what’s best for your business. However, if repairs are possible and at a lower cost, the adjuster will undoubtedly dispute the claim, and you’ll be debating a matter of opinion. When the adjuster’s experts recommend repairs that you know are not guaranteed to work, especially long-term, you face a challenge. As a business, you cannot afford to risk a failed repair, so you elect to go with new equipment with a warranty. The repair option will now be a theoretical scenario that your insurer can leverage to adjust your claim payment. Regardless of the adjuster’s position, you did what was best for your business, but there’s a way to neutralize this potential adjustment.


    •    First, the worst thing you can do is proceed on a plan without sharing your logic with the adjuster. Include the adjuster in the initial assessment and decision-making process. While you have the right to do what is best for your business, the adjuster’s involvement and buy-in early on will make them part of the decision and can help to avoid an issue down the road.
    • Next, get several (at least three) independent quotes to repair or replace the equipment — these quotes should include the time, expense and predicted reliability of the repair. If you only get a quote from the original manufacturer, there could be a perception that it has an ulterior motive. Armed with data, you will have an easier time justifying your decision. For example, the repair option may be cheaper, but if it takes longer to complete, it will add to your business interruption claim and ultimately cost more.
    • Finally, perform a realistic analysis of various failed repairs scenarios and the potential impact on timing and costs. Discuss your findings with the adjuster to ensure any subsequent repairs and resulting business interruption would be covered as part of this claim and not a separate occurrence. After all, everything is technically repairable — it is just a matter of determining the most practical solution given all the circumstances.

2. Betterments

Losses often present opportunities to make useful changes and improvements to operations. Adjusters anticipate this and will be prepared with reasons to limit recovery by labeling certain repairs, reconfigurations, and replacements as betterments. Most of the time, newer is better, and that is why you pay for a replacement policy. However, just because something is better does not mean you should not get full replacement value.


Let’s say you are replacing a piece of production equipment that was damaged as part of your loss. In searching for a replacement, you find that the as-was capacity replacement for your equipment is no longer available and that the alternative equipment has a 10% greater production capacity than the damaged property. In this case, the adjuster may argue for a credit for the increased capacity. Though the new equipment is clearly a benefit to your business, because the exact model that is being replaced is no longer available, you don’t have an equivalent alternative. If required to justify and validate your decision, simply compare the cost/time differential between your decision and a custom order built to spec. In cases like this, you should not be penalized for the betterment.


There are valid adjustments for betterments, but it’s important to understand the difference between a betterment and your rights to a replacement of like kind and quality.


3. Property Damage vs. Extra Expense

From a policyholder perspective, the types of expenses related to the claim do not really matter because they are necessary to get back in business. The insurance company, however, needs to see expenses segregated into their proper insurance claim buckets. To ensure a smooth claim process, knowing how best to account for expenses is critical to the outcome of your claim. Let’s say you have payroll expenses for cleanup and remediation. If you consider that property and extra expense are subject to different limits and deductibles, it makes good sense to claim them according to your coverage limits. As a rule of thumb, look at the property bucket first for expenses related to cleanup and repair of the property because the extra-expense bucket will offset business interruption, thus allowing you to operate as normally as possible during the indemnity period.


As an example, assume you have production labor working overtime to keep production going and to clean up and repair damage from the loss. This time should be separated as normal labor, property damage cleanup and repair and extra expense. To complicate things further, both normal rates and overtime rates need to be factored into each calculation. Finally, you have to keep detailed records that document the who, what, when and where that is involved in the work being done.


Remember, when appropriate, it’s best to claim expenses as property damage, provided the costs can be documented. It is a more tangible approach and will avoid conflicting with the business interruption calculations for extra expense and inefficiencies, which are based on assumptions and subject to debate.


4. Actual Cash Value

Immediately after a loss, you are entitled to recover the documented actual cash value (ACV) of your damaged property. You may claim ACV as the amount you are due before exploring replacement options. This is a good tactic if you want to get the cash flowing early in the process while the replacement values are being determined and decisions on replacement are made. However, accurately determining ACV can be challenging.


Typically, the starting point is the asset ledger that shows a depreciated value of the asset. However, this number is usually used for tax purposes and may not represent the actual value of the asset. Other options to value the asset include pricing based on what a willing buyer would pay or replacement less physical depreciation based on the actual life of the asset. These methods vary state by state. Do your research to value the asset appropriately under the circumstances and know that there is not one right answer.


Additionally, some policies allow you to recover full replacement value for assets even if you do not replace them. The policies usually require that you spend the money on a capital project that was not approved at the time of the loss. The capital improvement does not necessarily have to replace capability of the lost assets. If this is of interest, check with your broker about adding this option to your program.


5. Period of Indemnity Impact

In general, the period of indemnity is the length of time it takes (or should take) to make property repairs. Once repairs are complete or should have been complete, the period of indemnity terminates. While you can, and should, attempt to settle portions of the property claim as you go, any agreements related to the property side of your claim can have a costly impact on the indemnity period for the time-element portion of the claim. It is critically important to address property issues in tandem with time element, to avoid unnecessary recovery issues.


This can be a little confusing. As an example, let’s assume you have a total loss to a piece of equipment, and the replacement cost is known. It would be reasonable to settle for the replacement cost of that equipment. However, the adjuster assumes an aggressive timeline to order and install the equipment, not considering how installation might affect continuing production. When this happens, make sure the timeline and assumptions for installation are clear and acceptable before settling on the cost to replace the equipment. Otherwise, you might get what you want on the property settlement and then lose on the time element.


If you have a separate team working on the property and time-element claims, collaboration is essential to avoid assumption-based adjustments, This becomes especially important when repairs are theoretical, as this will be the basis for the time-element recovery. Always remember to consider all assumptions needed for time-element claims as part of any property settlement.


6. Residual Value Adjustment

If you have a significant property claim, you may need to purchase equipment or supplies on a temporary basis. The validity of these purchases is not in question, but their use once permanent repairs are made is. For items such as this, the adjuster may look to take a residual value credit. Essentially, the adjuster agrees that you needed that item, but when the permanent repairs are made (and paid for), you will no longer need it. This may be true, but this does not always mean you should not get full value for the item.


For example, you have an electrical loss that will keep you out of business for an extended period. You purchase a generator to provide basic power to areas of your business. When repairs are complete and power is restored, you no longer need the generator but still have the unit. Because you still have it, the adjuster takes a residual value credit. Is that fair?


The first question you need to ask is whether you want to keep the generator. If there is some value to you, a fair credit can be negotiated with the insurance company. If you do not want to keep the item or do not feel the credit is reasonable, you can have the insurance company take possession — after all, the insurer paid for it. If the insurance company thinks it can get value from the generator by taking possession and selling it, the company will probably take you up on this. More often than not, this is not cost-effective, and you can minimize or eliminate the residual value credit.


7. Documentation

If you have never been through a significant property claim, you might not appreciate the level of detail that is required to document your claim. The general perception is that you gather some invoices and quotes on a sample basis, and that should be enough. Unfortunately, the requirements for an insurance claim are more detailed than most capital projects and audits. Quotes and estimates need to be extremely detailed, and proof of payment needs to be documented almost entirely — if you cannot properly document a claim, it will likely not be paid. It may not be acceptable to the insurance company to use a dollar threshold for charges because the company will insist on auditing 100% of the charges.


To demonstrate the level of scrutiny that claims come under, I refer to an experience I had on one of the largest claims I worked on. The property portion of the claim was close to $200 million. Months of work and tons (literally) of paper were presented to support this claim. During a meeting between the accountants and engineers, one of the engineers made copies for everyone of one invoice presented for payment. He adamantly pointed out that the invoice had been duplicated in our claim submission. It was for one $5 roll of duct tape.


The point is that handling and organizing all the documentation required to support your claim can be daunting. To avoid mistakes, it is advisable to assign a dedicated person or team to locate, scan, print and manage all the support documentation. Bringing in an expert forensic accountant is always a good option to consider, especially for larger, complicated claims or just to relieve your team from these tedious and burdensome tasks. Forensic accountants that specialize in claim preparation may be covered in your policy to work on your behalf. Though you will still have some work to do, your claim will go more smoothly, with fewer pitfalls.


Now you know why property claims are not as easy and straightforward as you might expect. After decades of preparing claims for policyholders, we can attest that what you don’t know comes at a cost in both time and money. We hope the information above can help you prepare for at least some of the issues you might encounter should you have a future property damage claim.



Published 3-31-15: InsuranceThoughtLeadership.com

Category: Insights 

Tags: Property Damage 

By: Jeff Esper | March 27, 2015

March 10, 2015: Orange County RIMS

Jim Gillespie and Jeff Esper presented to the Orange County RIMS Chapter on the topic of Property Damage Claim Challenges. They shared the most common pitfalls that influence the timing and recovery of property claims through an engaging and interactive luncheon presentation.

To learn more about the topic, submit the request form on this page for our featured Insights Brief, Property Damage Claim Pitfalls
.

Category: News 

Tags: Presentations 

By: Christopher Hess | March 09, 2015

How to Recover from Winter Losses

Ten things you should do immediately after a loss

As far as winters go, this one has been a doozy in the Northeast. Record setting snowfall coupled with record low temperatures means roof collapses, frozen pipes and sprinkler leakage. If you are one of the unlucky businesses affected by this winter, this list is for you. 


Here are ten things you must do after disaster strikes:


  1. Safety first - make sure all employees are accounted for and safe.
  2. Secure the location - temporary fencing and security may be required to make sure the site is secure. You will want to preserve the damage for inspection by the insurance adjuster and other interested parties. Do your best to salvage and preserve undamaged property.
  3. Report the loss - call your broker or insurance agent to report what has happened. Do not speculate on damages at this point but act fast to get in line - adjusters will be busy. Alert third party vendors that you may need their help with recovery, including forensic accountants, forensic engineers and attorneys. 
  4. Secure temporary facilities - try to get up and running in temporary space as soon as possible.
  5. Assign internal responsibilities - you will need point people for information gathering and communications. If you have a risk manager, much of the coordination will be through them related to insurance, but operations and management will have to be involved as well.
  6. Locate/acquire "as was" estimates of damaged property - the "as was" estimate will likely become the baseline for your property claim, regardless of what you actually do to repair or replace property.
  7. Prepare estimates of property and business interruption losses - even early in the process, it is important to develop the best estimates you can so that the insurance company can set reserves.
  8. Meet with management - it is important to set reasonable expectations for recovery. Do not overstate how much might be recoverable.
  9. Meet with adjustment team - the initial meeting should cover procedural and communication protocols as well as contact information. If estimates are available for reserves, those should be shared.
  10. Finalize and execute reconstruction plans - decisions to re-build, not re-build or build differently can take time. Do your best to finalize these plans in a reasonable amount of time.

RWH Myers is a forensic accounting firm dedicated to assisting policyholders through all stages of the insurance process. We assist in calculating loss amounts and presentations to insurance company representatives on your behalf, with the goal of settling your claim for what it's worth as quickly as possible.  If you would like a personal consultation about winter losses or anything related to property damage claims, please do not hesitate to contact any of our offices.  We take great pride in our services and enjoy helping when we can.

Category: Insights 

Tags: Claims 

By: Christopher Hess | March 05, 2015

New Office Location in Austin, Texas

Welcome Sara Coleman to RWH Myers!

We are excited to announce that we have opened a new office in Austin, Texas, to serve organizations throughout Texas and along the Gulf Coast.


"Austin is the perfect location to support our clients throughout the region and to develop new relationships with organizations looking for an independent specialist to serve their forensic accounting needs," says Bob Kirchmeier, Managing Director of Business Development.


We are delighted that Sara Coleman has joined us as Manager of the Austin office and the most recent addition to our professional forensic accounting team.


Sara Coleman, CPA
Sara has a unique blend of experience and expertise, and she knows- first hand- the value of independence in forensic accounting. Having previously managed a consulting firm that analyzed and reported on critical data in the regulatory utilities space, Sara is poised to tackle the challenges of business interruption accounting. Sara has over 21 years of accounting experience in the Gas, Electric, Nuclear, Water and Cable industries and frequently served as an expert witness in proceedings. Like all professionals at RWH Myers, Sara is known for her consistency, work quality, and reliability, and we're confident you will have the same experience. 

We’re extremely proud to spread the good news that Sara is now a part of our team. Please join us in welcoming Sara to RWH Myers!


SaraColeman@RWHMyers.com p: (512) 577-4346

Category: News 

Tags:

By: Christopher Hess | January 26, 2015

Business interruption (BI) losses are among the most confusing types of claims in the insurance industry. As claim specialists, we are often asked for a “checklist” filled with action items for when a loss occurs. A “checklist” isn’t practical because there are too many variables and “if/then” scenarios to map out. When you have a significant property damage and business interruption claim, only experience can guide the way to a fair recovery. 

However, there are actions that can be taken ahead of a loss to ensure you are prepared. The following seven items represent such a “checklist.” It will not only help with your next loss but can have an immediate benefit to your risk management program.

1.    Prepare accurate ratable business interruption values 
The annual ritual of preparing the business interruption worksheet is often treated as an administrative nuisance.  It should be looked at as an opportunity to accurately account for the insurable risk for which you pay your premium and to accumulate annual values for future trending. 


The worksheet provided by the insurance company is woefully inadequate to explain the nuances of most businesses. Go beyond the worksheet and explain your business more completely to underwriters. For an effective BI values methodology, solicit help from the specialists, such as an experienced forensic accountant. The results will be appreciated by underwriters and should translate into more appropriate coverage and possibly a more favorable rate. Once a system is in place, accuracy, consistency and efficiency should be improved. 


2.    Analyze exposure scenarios and calculate MFL and PML 
Once the ratable BI values are calculated, policyholders should explore realistic loss scenarios. The BI value is an annual number that does not factor in real-life responses that would generally mitigate a claim. To get to the actual exposure to risk, companies should determine the maximum foreseeable loss (MFL) and probable maximum loss (PML) measurements. The MFL measures a “worst case scenario” in which all of the loss-control protections fail. The PML is the more realistic loss scenario, in which mitigation systems work and contingency plans are executed properly. In both cases, the property damage and business interruption effects would be calculated as if they had occurred. 


Loss scenarios should be postulated in detail, e.g. by location and by occurrence, considering all factors. These numbers should not be measured by simply applying a daily “BI rate” to an engineered loss period. It is more realistic to prepare as if presenting a claim, exploring all “what if” possibilities. Insurers may offer some assistance in this process, but remember, their version will be from their perspective. As with any claim, you should always prepare your own scenarios and your own calculations according to your understanding of your operations. An independent forensic accountant will have prepared claims just like your scenarios and would be able to accurately value the losses. 


3.   Analyze contingent risks 
Concurrent with the MFL and PML analysis, you should work to understand contingent risks to your business. Knowing what your suppliers’ and customers’ exposures are is important. Policyholders should involve leaders in operations, procurement and sales to help identify contingent exposures. If you have a sole supplier, your contingent exposure may be greater than anticipated and should be examined. 


It is important to understand how your current policy language would respond to the contingent loss scenarios you’ve identified. For example, if suppliers in your policy are referred to as “direct supplier,” make sure you understand how this would be interpreted in a claim. If “direct” means only those suppliers with whom you have a direct contract, and an indirect supplier, i.e. a second-tier supplier, has a loss that affects you, would you be covered? These scenarios should be discussed with your broker and underwriter to ensure your policy will respond as expected. 

Once the values and scenarios are updated, you will be better able to make informed decisions about your insurance coverage, limits and terms. 

4.    Business interruption vs. extra expense 
Another common discovery from performing an exposure analysis is which type of time element coverage is the best risk transfer solution. Considering each location, if the risk is a lost of sales, BI would cover the lost earnings. If sales are not the risk or they can be sustained at an extra expense, extra expense coverage would be more appropriate. If sales are at risk but can be mitigated to the degree contingency measures are enacted at an additional expense, it’s a combination loss exposure. 


It’s of value to risk managers to know what the exposure truly is because, if an exposure can be covered by extra expense coverage, it may eliminate or reduce the need for BI insurance. For example, if you are a distributor with multiple warehouses whose inventory is insured at selling price, what’s at risk? If you have alternative space or can quickly secure temporary space, the likelihood of experiencing a sales loss that exceeds the sales value of your lost inventory is remote. How much BI coverage should you buy vs. extra expense? Exploring your loss scenarios and subsequent contingency plans would allow you to better quantify your risks and select the option best suited to your needs. Extra expense is a more “tangible” risk than BI, making it easier for underwriters to rate, and it generally will cost less. 

5.   Gross earnings, gross profit and business income 
The names are different, but the intent is the same – to protect earnings lost because of damage or loss of use of insured property. The history of each of these forms would take a separate paper to detail, but, in a nutshell, gross earnings is a form commonly used in the U.S. with a basis in manufacturing risks, while gross profit is used throughout the world and has its basis in mercantile operations. Business income is the term used for the current ISO forms. Today, all forms have been modified to accommodate almost any business — however, there are some situations where one form may be preferable. The terminology and the mechanics of calculating business interruption loss varies among the forms, but the answer should be the same, regardless. 


The exception to this has to do with the period of indemnity — the gross profit form is usually limited to a specific time, while gross earnings will continue until repairs are (or should be) completed with “due diligence and dispatch”; there is the ability to add an extended period to recover sales. It is important to make sure the form you have would cover your potential loss period. For example, if you have a manufacturing company with specialized production equipment that have long lead times to replace — longer than the period that a gross profit form would cover — you should probably have a gross earnings form. If you do not see a scenario that would exceed the gross profit period and you cannot accurately predict an extended period required to add to gross earnings, the gross profit might be a better option. If there isn’t any scenario that would create a loss that exceeds the gross profit period of indemnity and you are comfortable that you can cover that time to recover sales, than either form would work. 


There are new options that allow you to pick which form you would like to use up until the closure of a claim — these forms eliminate the need to determine which form is right for your business. Just make sure you have a form that will cover your worst-case scenario. 

6.   Professional fees coverage 
Most policies now include professional fees coverage. Insurers recognize the need for dedicated claim preparation experts and are willing to pay for it as part of the claim. Often, this coverage is subject to limits that can be negotiated. If you are not familiar with this coverage or do not have it, you should discuss with underwriters. For the most part, this coverage can be included at some level just by asking. The benefits of having specialized claim preparation experts available as a resource for a claim can make the difference between a successful claim and a headache. 

7.  Organize your claim team 
In addition to forensic accountants, a claim may include forensic engineers, attorneys and others. It is a good idea to know those you want to use before needing their services. Meet with the various providers beforehand and select those that fit best for your organization. Typically, paperwork associated with hiring someone can be completed before needing their assistance (i.e. non-disclosure, purchasing, W-9, etc.) so that if something happens they can begin work immediately. Additionally, there may be an opportunity for the provider to help with reporting issues on business interruption values. 

While no business wants to suffer a loss of earnings, the more prepared you are the better the results will be. The steps shown above may take years to fully develop and should be evaluated annually to account for changes to your business. 

If these recommendations are incorporated into your insurance program, there’s no need for a claim checklist. Your risk management team will be prepared for any worst-case situations with the best-case solutions.


Published 1-26-15: InsuranceThoughtLeadership.com

Category: Insights 

Tags: Business Interruption 

By: Christopher Hess | January 16, 2015

Companies have many risk management concerns. It’s a part of business and a part of life. So which areas are of most concern to risk managers today?


According to the fourth annual "Allianz Risk Barometer," which surveys over 500 risk managers and corporate insurance experts, business interruption (BI) and supply chain, natural catastrophes and fire/explosion are the biggest concerns at the start of 2015. This should come as no surprise considering this unstable global environment. With today’s integrated business world, the ripple effect from catastrophic events affects businesses in ways that are hard to fully comprehend. We all remember the 2011 Tohoku earthquake and tsunami. The endless images and footage of the massive destruction is forever imprinted in our minds, and the ripple effects reached deep into the insurance industry. Companies worldwide that depended on Japanese suppliers suffered a supply chain disruption creating a wave of contingent business interruption (CBI) claims. Calculating these CBI claims was not the trouble. The coverage issues related to how policies defined “suppliers” left many companies without coverage.


So what does this mean to risk management?


If you concur with the survey results, then it’s a sign that you may need to examine these risk areas a little closer. You may not be able to avoid a loss, but there are steps you can take to make sure you are prepared for what could happen. If you want to be prepared, the best solution is a study we call “BI Values and Exposures”. First, we will analyze and correct the BI values that are being submitted at renewal time. In our experience, the “worksheet” provided by your property insurer rarely produces an accurate BI value. Next, Risk Management will enlist the help of management, operations, sales and purchasing to fully identify and examine your exposures based on the loss scenarios that are of major concern. Our forensic accounting experts will then analyze each loss scenarios based on the probable maximum loss (PML) and maximum foreseeable loss (MFL) as if it were an actual claim. Armed with this knowledge, you’ll be able to better manage your risks, improve your insurance program and best of all; you’ll have less risk to be concerned about.


In the words of John F. Kennedy: “The time to repair the roof is when the sun is shining.”


If you have concerns about your values and exposures, or an actual claim, send an email to jeffesper@rwhmyers.com and he will arrange a call with one of our partners.


We are always available to you as a resource and service provider, and we are experienced, independent and devoted to the policyholder.


Read more about the "Allianz Risk Barometer" on InsuranceJournal.com


Category: Insights 

Tags: BI Values 

By: Jeff Esper | December 03, 2014

Chris Hess, Pittsburgh Partner at RWH Myers, participated on the forensics panel at the 2014 Partner Day RIMS meeting in November. Partner Day consisted of various panel discussions throughout the day. Chris represented the forensic accounting service of claim preparation.


The questions posed to Chris led him to share several claim stories, best practice tips for risk managers and recommendations that could be applied immediately. During the Q&A several questions were directed at Chris. One of which was related to Professional Fees Coverage limits and another was actually a compliment on the approach Chris took on a claim in anticipation of the adjusters argument. The risk manager was impressed by the ingenuity used to resolve the claim. To Chris and the other Partners of RWH Myers, it's not out of the ordinary. In fact, it's what we expect from our team for our clients.


Watch a clip on professional fees below...

Category: News 

Tags: Presentations 

By: Christopher Hess | November 19, 2014

Property insurance claims require significant time, effort and attention from risk management, finance and operations personnel. From the moment the loss is reported, insurers will have what seems like endless requests for information, and they’ll scrutinize every figure presented. Then the insured has to put the claim together and present it to the property insurers. The amount of activity is often more than the policyholder anticipates. Insurers understand the burden this places on the policyholder, and it is the reason most insurers offer professional fees coverage. This minor endorsement can be a major difference maker both in effort and outcome.

Here’s an example of professional fees wording from a recent policy referring to the coverage for actual costs incurred by the insured: “reasonable fees payable to the insured’s: accountants, architects, auditors, engineers and other professionals; for producing and certifying any particulars or details contained in the insured’s books or documents, or such other proofs, information or evidence required by the company resulting from insured loss payable.” 

As you can see, the wording is intended to cover the additional costs associated with the claim. Here’s what’s generally not covered: 

1) “attorneys, public adjusters and loss appraisers, including any of their subsidiary, related or associated entities either partially or wholly owned by them or retained by them for the purpose of assisting them, 

2) “loss consultants who provide consultation on coverage or negotiate claims.” 

The specific wording of the endorsement will vary and should be carefully reviewed before engaging outside claim services. Some wording is broad and will cover most consultants. Other wording is more restrictive and eliminates certain classes of consultants. To determine what’s best for your business, consider the available service providers and evaluate who would best represent your interests. 

Often, policyholders don’t fully understand the nature of this coverage. Some don’t know of it. Some are unaware if they have it. Others may not know if or when to involve a specialist in their claim. 

Don’t confuse the purpose of this coverage with the “free” help that the insurance adjusters offers. The adjuster’s job is to confirm coverage and audit the claim. It is the responsibility of the insured to measure, document and present the claim. If the adjuster’s consultants offer to help measure the loss and put the claim together, it would be like having the IRS prepare your taxes. As a courtesy, you should notify the adjuster that you plan to use a claim preparation firm and disclose billing rates and proposals, but the decision is yours to hire, and if the work matches the coverage the insurance company is required to pay for it within reason. The consultant is engaged by the insured, and invoices are reimbursed by the insurance company as part of the claim. 

So who is the best choice to help you prepare your claim? Forensic accountants are the most common and appropriate service provider for claim preparation. Forensic accountants can help with: 

1. the tedious and burdensome tasks associated with the claims process 

2. expertise on the adjustment process 

3. efficient interface with policyholder data gathering resources 

4. maximizing recovery and expediting claim resolution 

5. making the formal claim presentation 

While the policyholder still needs to produce information, the claim preparers will efficiently package the information in the form of claim presentations. Some brokers have a claim preparation unit, but there could be a conflict of interest there, as well. The broker is an intermediary between the insured and the insurer. It is difficult to walk that line and truly be supportive of the insured. Most brokers accept contingent commissions based on the profitability of an engagement during the policy year, and the client executives have incentives to use their own services. While not a clear conflict, it certainly has potential to influence the position of the insured. 

The good news is there are firms that won’t come with baggage — i.e., conflicts of interest. The best solution is a third party, independent firm that has ample experience and can represent your interests with a specialized skill set. Remember, the firm must be skilled in the complexities of property damage and business interruption claims. 

It is critical to have your claim preparation team vetted ahead of a loss. Finding time to interview forensic accountants and review proposals after a loss can waste precious time and derail a claim before it even gets going. 

“Do your due diligence and find the best fit for your organization by arranging introductions to your finance/accounting leadership. It is worth the effort when you find the right partner,” says John Lafferty, manager, risk and insurance management, at Air Products & Chemicals.” 

If you have property exposure, it’s wise to have your forensic accountants in place and to have the coverage for their services. Risk managers should include professional fees coverage in their discussions with underwriters. With most carriers, it should not materially affect your premium — if at all. As the market continues to soften, many policyholders are enjoying rate reductions with improved terms, so this is the perfect market climate to explore professional fees coverage if you don’t have it. If you do have coverage, look for increased limits. A good benchmark for limits would be to 1% to 2% of your probable maximum loss. This should easily cover the costs for claim preparation from a reputable firm. 

If you apply this information and incorporate these recommendations, the next time you have a property loss with business interruption the process will be smoother and results will impress you and your executives. So find your team and get that coverage. You’ll be prepared to recover whatever loss comes your way.


Published 11-19-14: InsuranceThoughtLeadership.com

Category: Insights 

Tags: Claims 

By: Jeff Esper | October 24, 2014

Jeff Esper, the Director of Marketing, and Jerry Liberatore, CFE, presented Understanding Employee Dishonesty in the Workplace at the Great Lakes Regional RIMS conference in October 2014. This topic is relevant to everyone although the Risk Managers in the audience appreciated it most. As a part of Crime Coverage, Employee Fidelity presents a challenging risk to organizations in any industry. Though some may think of Retail employee theft, Jeff and Jerry shared a variety of theft cases from theft of parts sold as scraps to stealing funds. They discussed the most frequent offenses and the best ways to detect and prevent them. When the loss results in an insurance claim, the forensic accountants and CFE's investigate and measure the financial impact of the loss. Jerry explained the techniques they use to piece together the data even when much of it was hidden or destroyed. One of the highlights of the presentation was a clip from the cult classic film, Office Space, in which disgruntled employees launched a virus that would skim fractions of a penny and deposit them into a private account.

Category: News 

Tags: Presentations 

next>>
<<prev