DENVER, April 24, 2011 /PRNewswire/ -- The international forensic accounting and consulting firm RGL Forensics announced today tips related to Contingent Time Element insurance coverage associated with the catastrophes in Japan.
According to several recent sources, including the Wall Street Journal and National Public Radio, the earthquake and tsunami in Japan is one of the most expensive disasters for insurers since Hurricane Katrina with an estimated $20-$30 billion in insured damages. Globally, businesses are suffering economic losses as a result of disruptions to Japan based suppliers or customers.
"Generally in catastrophes, claims adjusters receive large volumes of both business and personal insurance claims," said RGL Forensics Partner, Paul Sutphen. "When this event first occurred, many of the insurers understandably said humanitarian efforts were the priority, and attention to commercial property claims temporarily took a back seat while the personal claims were addressed. We are now six weeks from the earthquake and tsunami disasters. The insurers I have recently spoken with said that commercial property claims are now beginning to trickle in. I expect that the industry will see a surge in the reported commercial property claims over the next six months originating from all over the world."
There are many potential issues associated with an insured making a Contingent Time Element insurance claim. Here are some tips associated with these types of claims:
First Things First: Does the company have Contingent Time Element insurance? This insurance is typically a coverage extension of the standard business insurance but comes at an added premium cost. The need to purchase Contingent Time Element insurance is often based upon the recognition that business continuity is heavily reliant upon a certain supply line or a particular customer or group of customers.
Contingent Time Element: Time is key here. These types of claims trigger an investigation of the cause of loss to supplier/customer companies, an assessment of insurance coverage, review of supplier contracts, evaluation of alternatives to mitigate damages, and analysis of anticipated business volumes. Starting these investigations early ensures a much higher probability that relevant and timely information will be obtained to make the most accurate evaluation possible.
Flood Insurance for a Company in the Desert? For Contingent Time Element coverage to be applicable, the type of loss in question has to be included as a covered cause of loss for the policy holder. For example, if an earthquake impacted a key supplier or customer, which in turn negatively impacts the insured's business, among other conditions, the insured must have earthquake coverage on its own policy. With a similar issue, if business disruption to a key supplier or customer was caused by a tsunami, the policy holder must have flood coverage or else the Contingent Time Element coverage will not be applicable.
Contracts and Expected Future Revenues: Insurance companies hire outside consultants with specialized expertise to assist in the evaluation of the insured's business relationship with the affected supplier or customer, analyze financial data, and prepare models to estimate future revenues and costs. Addressing these complex issues when working with a Contingent Time Element insurance claim are an area of expertise of RGL Forensics.
RGL's mission is to provide expert forensic accounting services to the commercial property insurance industry. Due to the magnitude of the crisis in Japan, RGL's correspondent Tokyo office, Okamoto & Company, with fifty accountants, will be supported by the presence of worldwide Partners and Directors for an indefinite period. The Global Partners currently present in the Tokyo office are Paul Sutphen and Justin Crick.
About RGL Forensics
RGL Forensics is an international firm of accounting, consulting and valuation professionals who are specially trained in discovering and defining financial value. The firm establishes relevant facts and reliable figures for insurance, legal, corporate and public sector clients and has done so for over 30 years from 22 offices around the globe. For more information about RGL Forensics, please visit www.rgl.com.
SOURCE RGL Forensics