Helping business navigate the insurance claims process
Tuesday, 25 January 2011 — Ernst & Young Australia is bringing in extra insurance claims professionals from Ernst & Young’s US and UK firms – including advisers who worked with businesses in the aftermath of Hurricane Katrina – to help flood-affected companies manage insurance recovery claims, freeing them up to focus on the enormous task of rebuilding their businesses.
Paul Fontanot, Oceania Leader, Fraud Investigation & Dispute Services, says that insurance recovery can be overwhelming for many businesses, especially when they have lost property, been forced to evacuate, or shut down voluntarily due to safety concerns.
“Companies are now looking to see what losses might be recoverable under their insurance policies. And in many cases, they are not only looking to get what is due to them from their insurer but are also very keen to get their business operating as soon as possible,” he says
“Insurance recovery is more than just an accounting exercise. The losses resulting from an insured incident may impact a business in ways that do not become apparent until well after the loss, or until the right questions are asked. Many times these losses go undetected due to inexperience or a lack of understanding of the coverage”
Insurance recovery involves preparing, understanding and resolving complex property damage, business interruption, and extra expense insurance claims. To manage this process effectively, Ernst & Young advises companies to:
- inform their insurer as soon as possible of their proposed claim so that the insurer can reserve accordingly and have its agents inspect the damage promptly
- ask that their insurer waive any requirement that the finalised claim be lodged within an allotted period of time, as claims with business interruption elements can be complicated and quantum figures often can’t be finalised for a number of months
- focus on lodging a property damage claim before the business interruption claim. Business needs to secure sufficient cash-flow to fund repairs and finance the business during shutdown. Property damage insurance claims are usually simpler to resolve than business interruption claims and represent the best opportunity to obtain funds from the insurer promptly
- consider negotiating an interim payment from their insurer (usually in respect of the non-contentious items), ensuring that they reserve their right to make further claims and/or adjust existing claims at a later date
Mr Fontanot says that every business will have its customised insurance arrangements; although there are many similarities, each insurance policy will be different.
“ We advise businesses to check with their broker or insurer regarding what losses are covered and in what amount. Losses that may be covered under an Industrial Special Risks policy might include property damage repair or replacement, and business interruption.”
“It is also worth knowing that an insurer will generally pay additional costs incurred to restore the business to normal operations, but not if those additional costs are more expensive than leaving the business shutdown.”
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