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Forensic Accountants and the claims process


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Title: Forensic Accountants and the claims process

Forensic Accountants and the claims process
  • Tony Levitt RGL Forensic Accountants and
  • 6 October 2005

Forensic Accountants and the claims process
  • What is a Forensic accountant?
  • Where do they fit in the claims process?
  • What do they add?
  • Case study typical claim
  • What can be learnt from the claim
  • Risk management

What is a Forensic Accountant?
  • Forensic relating to or denoting the
    application of scientific methods and techniques
    to the investigation relating to the courts
  • Not just fraud
  • Quantify claims
  • How much
  • Not how and why
  • Specialist areas
  • Stock
  • Business interruption
  • Fidelity

RGL Experience
  • Worldwide
  • Varied situations
  • Wide industry experience
  • Mining (and downstream processing)
  • gold / platinum / iron / coal / copper
  • Power generation
  • Manufacturing
  • Hotels/Restaurants
  • Packaging plants
  • Telecommunications
  • Extensive experience in Africa / South Africa

Where do Forensic Accountants fit in the claims
  • Team approach
  • Insurer AIG
  • Loss adjusters
  • Technical experts (engineers, process experts,
  • Forensic accountants
  • Insured
  • Brokers
  • Other experts
  • Work together towards settlement

When to use Forensic Accountants
  • Large losses
  • Complex claims
  • Early settlement
  • Claim methodologies (Policy wording)
  • Gross profit
  • Gross earnings
  • Output
  • Reconstruction of records - FTech

What do Forensic Accountants add?
  • Years of experience in the quantification of
    business interruption loss
  • On site A.S.A.P.
  • Quantum investigation run concurrently with
    liability investigations - once liability is
    established minimal time lag for settlement
  • Early establishment of a meaningful reserve
  • Timely processing of loss calculations to enable
    early payments on account
  • Loss mitigation calculations
  • Quantification of an early cash settlement

Case study complex claims
  • Based on our experiences on actual losses in
    South Africa
  • Rebuild period of 8 months
  • Took the opportunity to upgrade the production
    facility 6 months earlier than it would have done

Issues in claim
  • Liability
  • Cause of loss
  • Consider pre-existing damage
  • Not like-with-like reinstatement
  • Quantum
  • Standard output daily rate reduced just prior
    to the loss
  • Output alternative whether it was applicable
  • Make-up resulting from additional capacity which
    was brought forward as a result of the loss

Case study - positives
  • Local loss adjuster on site day after the
  • Forensic accountant on site shortly afterwards
  • Established accurate reserve during the 1st
  • Purchase of product from overseas to help
    maintain the Insureds customers
  • Established early on that the output alternative
    was applicable
  • Worked together with the Insured to quantify and
    agree building blocks of BI

Case study - negatives
  • Company was going through restructuring
  • Agreed figures changed different people
  • Divergence of opinions
  • Personality clash between members of team
  • Feedback to Board
  • Both sides became entrenched in their respective
  • Long drawn out claim settlement could have been
  • BI did not move substantially for a year prior to
  • This does not help any of the parties
    (Insurers/Insured/loss adjusters and other

What can be learnt from the claim
  • Responsibility for claims - in advance of the
    claim Insurance policy knowledge
  • Manage expectations do not report unrealistic
    figures to the Board / Shareholders
  • Work together - share information
  • Do not get entrenched

Risk management
  • Prepare for claims
  • Insured / Broker / Risk manager
  • Ensure that adequate coverage is in place
  • Sum insured
  • Indemnity period
  • Policy extensions
  • Disaster plan keep up to date
  • Retain accounting/management information

  • Prepare for claims they are going to happen
  • Resolve issues as they arise
  • Work as a team
  • Fair settlement under the policy

About RGL
  • RGL is an international firm of Forensic
    Accountants and Consultants.We quantify claims in
    insurance and litigation, determine value and
    advise on related issues.What makes us special as
    forensic accountants and consultants is the
    combination of three core skills
  • Forensic and investigative accounting
    uncovering the facts
  • Economic loss calculation getting behind the
  • Financial valuation determining business
  • Forensic technology - analysing the digital
  • We establish the true facts and the correct
    figures, wherever they are hidden and whatever is
    being claimed.
  • Offices
  • Atlanta, Boston, Charlotte, Chicago, Cologne,
    Denver, Dublin, Indianapolis, Las Vegas, London,
    Los Angeles, New York, Orange County, Perth,
    Philadelphia, Phoenix, Portland, Sacramento, St
    Louis, Salt Lake City, San Diego, San Francisco,
    Seattle, Sydney, Tokyo