An alternative way to handle Business Interruption claims

These processes have historically developed separately within geographic markets such as the UK, US, Central Europe/Germany and Japan, and fit to their local requirements. However, with markets overlapping as multinationals produce globally, a claim might be handled differently depending on the country it occurs in. With this in mind current claims handling processes may need to be challenged to test whether they are fit for future market requirements. Market commentary suggests that the key future requirements will be a timely, transparent, cost efficient and cooperative process thus making the overall operation more efficient. Besides aspects such as increased digitization and revised policy wording, the claims process used can also drive to those results. Two typical examples are discussed below.

Under the typical UK BI claims' approach, an insurer appoints an independent loss adjuster, who then appoints a team of technical and commercial experts including engineers and forensic accountants. On the other side, the insured, in coordination with its broker, usually involves another forensic accountant as the BI loss preparer, plus other technical experts. The loss preparer establishes and coordinates the data to present a claim for the BI case, which might take some time, before being reviewed with the forensic accountant. Further questions and clarifications are raised and the process continues until sufficient confidence is reached that the claim is proven and all policy issues have been addressed. At the end of this process, a settlement is normally reached between the contractual parties. If an agreement cannot be reached, the case goes to arbitration or to Court, resulting in lawyers often being involved in the process.

As an alternative, the Central European based "joint expert" approach is built around a single collaborative claims team of insurers, the insured, brokers and wider shared specialist experts i.e. only one expert each is appointed for areas such as the forensic accountant, engineer and architect. The appointment is made by the insurer with the full agreement of the insured and broker. The experts work directly with the functional teams of the insured and are held to determine a transparent and realistic result within their area of expertise.

Interim statuses and open issues are shared with the contractual parties, while policy and legal issues are referred to them for resolution. In the end, each expert issues their expert report to explain and quantify their findings. The claim is usually settled and agreed in full based on this report. However, the contractual parties can, and may find an earlier or different settlement at any time should they so choose. In the case of larger companies, the experts usually have worked on their claims before, leading to reduced investigations and resource involvement for the insured. As there is transparency and involvement at all stages, the joint expert process usually leads comparatively quick and cooperative settlements with very few cases going to court.

We understand that both processes work within their respective market and often lead to agreeable results that satisfy the contractual parties. However, it may be time to consider how each process, or components of these, fit to future claims processes considering established global requirements. This should include how to optimize the review work for different sized insureds and increase their understanding of what can be expected from the claims process.