The lost profit and earning capacity commercial claims arising from the BP oil spill are not easy calculations. BP should not hire liability and casualty adjusters to determine these claims, as they are now doing. In my experience, the vast majority of these adjusters do not know what they are doing when it comes to determining lost profits following business interruption. Many of my attorney colleagues advertising for these cases in a "sign them up and we’ll figure it out later mentality" have quite a bit of learning to do as well. Merely asking clients and claimants to send in financial documents and then analyzing them will not determine the amount of the lost profits and earning capacity caused by the BP oil spill.
Many can learn what to do by attending the Oil in the Gulf: Litigation & Insurance Coverage Conference on June 24 in Atlanta. Just before Robert Kennedy, Jr., gives the highlight keynote presentation with plenty of media fanfare, I will give a much more practical presentation– dear to the hearts of all claimants– regarding how the valuation of oil spill claims should be made. My co-presenter is an experienced Exxon Valdez valuation expert, John Kilpatrick, PhD, the Chief Executive Officer of Greenfield Advisors. His paper, The Aftermath of Katrina: Recommendations for Real Estate Research, should be considered by those representing BP oil spill claimants to provide some ideas as to the long term lost profit implications following this catastrophe.
The BP oil spill claim process for private claimants is currently a publicity stunt. Even President Obama noted this concern in a Bloomberg Businessweek article, Obama Doesn’t Want BP ‘Nickel and Diming’ Victims.
"President Barack Obama said he doesn’t want BP Plc “nickel and diming” fishermen and small businesses and that the company has a “moral and legal obligation” to compensate those affected by the oil spill in the Gulf of Mexico."
The truth is that unless BP is forced to hire a legion of accountants, economists, and scientific researchers right now, nickels and dimes are all oil spill claimants will be paid because the casualty adjusters BP has hired simply do not have the experience, knowledge and creativity to properly forecast and calculate lost profits and lost earning capacity. The insurance industry has substantially outsourced its obligation to adjust lost income and business interruption losses to specialized accounting firms. Claims adjusters no longer have the ability to handle lost profit claims. Unless a sufficient number of those specialized firms and other accountants are retained, along with transparent economic forecasts, claimants will probably not collect or realize the full extent of the damage caused by the oil spill.
BP currently pays a part of the damage, says it "will" pay for all legitimate claims,” and then intentionally fails to retain a sufficient number of motivated experts who can determine the full extent of the damage. BP is not spending the money required to compensate those whose lives and livelihoods have been devastated by this disaster. Yet, BP maintains the appearance of trying to fairly compensate those harmed. It seems as if BP has read the playbook of many insurance companies when it comes to prompt and full payment of business loss claims.
