Subjectivity of claims numbers 12 November 2015 Presented by: Joe Aldous – Director STRICTLY CONFIDENTIAL
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Overview 1 The role of forensic accountants 2 Examples of things going well (and not so well) 3 Ways to help things go well Page 3 STRICTLY CONFIDENTIAL
1 The role of forensic accountants Page 4 STRICTLY CONFIDENTIAL
Where we fit in the process Lawyer 4 3 2 Co-insurer Co-Insurer Insurer 10 6 5 8 Industry Quantity Engineer Reclamation Expert surveyor 11 7 9 Forensic Forensic Loss Adjuster Accountant Scientist Page 5 STRICTLY CONFIDENTIAL
Forensic Accountants – common misconceptions Acting on behalf of Insurers to reduce the numbers “ Us ” verses “Them” approach Out to find mistakes Over complicate matters / delay the process Excessive and unnecessary document requests Page 6 STRICTLY CONFIDENTIAL
Forensic Accountants – the reality Facilitate the loss adjustment process Working with the Insured to get to the right number Able to simplify complex loss scenarios to Insurers Recognise the commercial considerations Commercial relationship between Insured & Insurer Preparation of loss scenarios to assist Insurers in negotiations Assist the Insurer’s recovery from Co - and Re-Insurers Page 7 STRICTLY CONFIDENTIAL
The challenge Page 8 STRICTLY CONFIDENTIAL
Quantum -v- Advocacy Page 9 STRICTLY CONFIDENTIAL
Quantum -v- Advocacy Civil Procedure Rules - Part 35 35.3: Experts – overriding duty to the court (1) It is the duty of experts to help the court on matters within their expertise. (2) This duty overrides any obligation to the person from whom experts have received instructions or by whom they are paid. Page 10 STRICTLY CONFIDENTIAL
Quantum Page 11 STRICTLY CONFIDENTIAL
2 Examples Page 12 STRICTLY CONFIDENTIAL
Aluminium smelter Page 13 STRICTLY CONFIDENTIAL
We didn’t agree on everything Page 14 STRICTLY CONFIDENTIAL
Rubber o-ring manufacturer Page 15 STRICTLY CONFIDENTIAL
Issue: Cause & Effect SALES 750,000 700,000 650,000 600,000 550,000 500,000 450,000 400,000 Date of incident 350,000 300,000 Apr-01 May-01 Jun-01 Jul-01 Aug-01 Sep-01 Oct-01 Nov-01 Dec-01 Jan-02 Feb-02 Mar-02 Apr-02 May-02 Jun-02 Jul-02 Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03 Apr-03 May-03 Actual sales Budget sales Page 16 STRICTLY CONFIDENTIAL
Cement manufacturer Page 17 STRICTLY CONFIDENTIAL
Issue: Clinker Page 18 STRICTLY CONFIDENTIAL
Issue: Clinker STOCK OF CLINKER CLINKER PRODUCTION CEMENT PRODUCTION Daily Operational Capacity Daily Operational Capacity = 8,000 Tonnes = 12,000 Tonnes Spare cement capacity per day = 4,000 Tonnes Page 19 STRICTLY CONFIDENTIAL
CCGT power station Page 20 STRICTLY CONFIDENTIAL
Issue: Flow of information Page 21 STRICTLY CONFIDENTIAL
3 Helping things to go well Page 22 STRICTLY CONFIDENTIAL
Document request lists Concise Relevant Prioritised Explain why each item is needed Work with information prepared in normal course of business wherever possible Page 23 STRICTLY CONFIDENTIAL
Understand the Insured’s business Page 24 STRICTLY CONFIDENTIAL
Joint models Agree joint model to use (logic, accuracy, arithmetic etc) Debate the underlying assumptions Agree the value of differences in opinion/assumptions Page 25 STRICTLY CONFIDENTIAL
Narrow areas of disagreement Fact -v- opinion Fact – agree what information is required to conclude the issue Opinion – try and agree the value of differences Page 26 STRICTLY CONFIDENTIAL
Good communication Page 27 STRICTLY CONFIDENTIAL
Avoid surprises Page 28 STRICTLY CONFIDENTIAL
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