How to Use the Correlation Coefficient in a Business Interruption Calculation

by John March 11, 2010

When preparing a business interruption calculation for an insurance claim, one of the most common statistical tools I use when evaluating continuing and non-continuing business expenses is the correlation coefficient. The correlation coefficient can be found using analysis tools found in spreadsheet software, using specialized statistics software, or by calculating the values with a [...]

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Gratitude & Business Interruption Loss: Do These Two Things Go Together?

by John March 8, 2010

Every February 24th, without exception, my phone rings, and without fail the phone call catches me by surprise. This year, I was in the middle of sorting through a pile of debris on my desk, when the voice on the other end of the phone said, “No matter how bad things in your life [...]

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Business Interruption Claim Presentation: The Three Column Approach

by John March 5, 2010

There are many ways to format a business interruption calculation for an insurance claim. Each method is unique and there isn’t a “one size fits all” method that works for every business income loss.  However, there is one method that I use repeatedly,  which is referred to as the “Three Column Approach.”  In the [...]

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Is It Worth It To Hire A Forensic Accountant To Prepare Your Business Interruption Insurance Claim, Regardless of Fee Coverage?

by John March 3, 2010

I am often asked by potential clients if my forensic accounting fees to prepare a business interruption insurance claim will be reimbursed by the insurance company.
This question is completely valid because professionals who are experts in business interruption claims are not cheap, and risk managers, corporate officers, and business owners want to clearly understand what [...]

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Don’t Skimp on the Graphics for a Soft Cost Insurance Claim

by John March 1, 2010

In the wake of a major accident or delay on a construction project, don’t start pinching pennies when it comes to the graphics needed to submit a soft cost insurance claim. Every soft cost insurance claim should contain two critical graphics.
The first is the “Extent of Damage” graphic.  This graphic is a general schematic of [...]

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The Fraud Triangle: Rationalization

by John February 25, 2010
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Criminologist Donald R. Cressey identified three traits that are commonly present when people perpetrate fraud. Cressey created an hypothesis known as the ‘fraud triangle.’ The three sides of the fraud triangle are:

Rationalization – Since the majority of individuals who commit serious occupation fraud are not career criminals, they feel a strong need [...]

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Why Do You Need a Forensic Accountant Hired Gun?

by Bob Trompeter February 23, 2010
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In the 1960 movie The Magnificent Seven, Steve McQueen and Yul Brynner were hired to protect a small Mexican town from outlaw Banditos.  The Mexican villagers realized they needed to fight fire with fire by employing their own hired guns.
When adjusting a business interruption loss the insurance company often hires an outside forensic accountant to [...]

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Buyer Beware: Why Your Forensic Accountant Needs the Right Creds

by John February 21, 2010

The forensic accountant is a strange animal. Did you know that there are no ‘official’ credentials required for an individual to claim he is an ‘expert’ in the field of preparing a business interruption insurance claim?  I have seen some experts with undergraduate degrees in accounting, economics, finance, engineering, computer science, mathematics, even philosophy.  I [...]

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Professional Services Firms Need the Right Extra Expense Coverage and a Rock Solid Business Continuity Plan

by John February 19, 2010

I am often asked to assist professional services firms, such as attorneys, accountants, engineers, and doctors, with estimating their business income values at risk.  My advice to professional services firms is often the same:  assume you will collect nothing for your lost business income.  I know that this advice sounds harsh and may seem shocking. [...]

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Schools: Beware the “Loss Of Market” Exclusion When Submitting a Business Interruption Insurance Claim

by John February 17, 2010

Following Hurricane Katrina, I was retained to help a private school quantify its business interruption loss.  I valued the business interruption loss related to the period of restoration as well as the extended period of indemnity.
The first hurdle was getting the adjuster to understand that a school doesn’t make widgets.  What I mean is that [...]

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