Loss events, no matter the type, are disruptive, complicated and burdensome for any company in any industry. In the aftermath of a catastrophic event like a fire, cyber-attack or major weather event, businesses need to focus on mitigating the impact of the loss, resuming operations, serving customers and supporting employees — not draining resources managing a claim.
Working with an insurance brokerage that has an integrated forensic accounting affiliate can be a game changer. While the role of the forensic accountant varies based on the claim and business needs, a forensic accountant working together with an experienced claim advocacy team eases the disruption and burden on the company, so it can focus on the business while the integrated claim team handles the complexities and maximizes the claim recovery.
Forensic accountants are involved in quantifying the full impact of an event — including analyzing the cost of repairs/replacements, business income/lost profits, and increased or extra expense. This is a complex process requiring an investigative and analytical mindset to accurately analyze, evaluate and project losses. Working hand in hand with claim advocacy consultants, forensic accountants analyze documentation and information, prepare financial modeling to develop a loss projection, and prepare comprehensive reports to provide an in-depth understanding of the business and loss impacts to the insurance carrier. Forensic accountants also aid in responding to complex requests for information, analyzing and evaluating calculations prepared by the insurance company’s accountants, and in some cases, serving as expert witnesses.
Every business and loss event is different, so there is no one-size-fits-all approach. Calculating and documenting a claim is not a simple fact gathering exercise. It is a process that requires in-depth understanding of financial information, complicated financial analyses and modeling, effective communication, creativity and strategy.
Critical to this process is the ability to understand and analyze the financial impacts of the loss and articulate the story behind the numbers. In addition to preparing financial analyses, forensic accountants use their investigative skill set to gain an understanding of the business, market and the industry in which the business operates to present a holistic picture to the insurance carrier. For example, knowing the company was planning to add a new division, launch a new product or acquire a new location might not be reflected in the historical financial data, but this information is incredibly relevant to accurately quantify business income and other financial losses.
Forensic accountants, in partnership with seasoned claim advocates, go beyond the numbers, using their expertise and experience to marry the story of a business with its financial numbers. In large property and other types of claims, the forensic accountant’s skills validate the process and lend credibility to the numbers. This can make a significant, positive impact on the claim outcome.
Real estate is an industry where catastrophic losses are common, due in part to large portfolios with geographic footprints that span the country and include catastrophe-prone areas. For a national real estate development and management company, the claim advocacy team at Conner Strong & Buckelew and the forensic accounting team at J.A. Montgomery worked together to drive a successful claim outcome.
One of the company’s properties, located in New Jersey, experienced severe damage in 2021 from Hurricane Ida — a devastating category 4 hurricane that caused $75 billion in damage across 22 states. From day one, the forensic accounting and claim advocacy teams worked together to manage the property damage, business interruption and extra expense components of the claim. This included managing submission of the building spend package and preparing business income and extra expense claim calculations.
The forensic accountants addressed several complications during the process. On the building spend side, the ongoing building spend required numerous updates and reconciliation along with the review of thousands of invoices and an allocation process that required intensive document review and client discussion.
On the business income front, the increased demand for apartments in New Jersey due to the COVID-19 pandemic added complexity to an already challenging calculation. This required performing an in-depth review of the market to validate the significant increases in rental costs that was not captured in the company’s historical data. The forensic accounting team was able to bring that market analysis forward in the narrative and calculated losses submitted to the carrier.
Our integrated claim advocacy and forensic accounting approach yielded a favorable $10 million+ claim settlement for the company. This included claims for recoverable depreciation and business income totaling $3.5 million, which were complex, challenging to document and subject to thorough review and analysis by the insurance company. As a result of the integrated forensic accounting and claim advocacy approach, the claim settlement was approximately 25% higher than it would have been with a standard claim submission and processing approach.
Catastrophic losses can hit at any time and can impact companies in different ways. Working with a brokerage that fully integrates forensic accounting with claim advocacy from end-to-end can translate to a more favorable claim outcome to help your company get back to business.
At Conner Strong & Buckelew, we provide a holistic claims strategy that starts from day one and doesn’t end until the claim is resolved. By partnering with our owned forensic accounting affiliate, J.A. Montgomery, whenever possible, we’re better able to tell your full story and maximize your claim settlement.
Contact a member of our team today to see how our holistic approach to claim management can help you be prepared when a loss occurs.
Monica Attanasi, AIC
Partner, National Property Claim Advocacy & Consulting Leader
Colleen Vallen, CPA, CFF
Partner, Forensic Services Practice Leader
