The 2nd edition of Business Interruption: Coverage, Claims and Recovery, by Daniel T. Torpey, Daniel G. Lentz & Allen Melton, will be released by the end of this month and I have already pre-ordered my copy. Dan Torpey’s recent interview with Claims Magazine gives us a sneak peek of the topics explored in the book which will help risk managers, claims professionals and attorneys address today’s uncharted issues in business interruption claims.
Here are a few of the issues about which we can anticipate reading:
Q. I noted this is the second edition to Business Interruption: Coverage, Claims, and Recovery. What prompted you to write another edition? What’s new?
A. This second edition of Business Interruption: Coverage, Claims, and Recovery contains expanded chapters, as well as new chapters to address the emerging issues. For instance, Chapter 10 discusses Federal Emergency Management Agency (FEMA) claims and the Public Assistance Act claims process, as well as the increasingly prominent and important role that FEMA plays in U.S.-based disasters and recovery. This past decade has also shown a continued increase in the globalization of today’s Fortune 1000 companies, the changing workforce, and the ever-increasing need for companies to do more with less. An earthquake in Chile, a volcanic eruption in Iceland, or a civil uprising in Egypt are no longer considered non-issues for U.S. companies; they now impact their supply chains or customer bases. Those concerns, combined with an economic need to recover all losses have provided us with a wealth of material for an updated edition of the book. Even at the present moment we see that the earthquake and tsunami in Japan will impact the U.S. and worldwide markets.
Q. What about the best use of technology in a business interruption claim?
A. The book provides policyholders with guidance to enable them to use technology to present data in a manner that tells a holistic story of loss from summary to detail. Custom accounting reports and their corresponding supporting data for review by the insurers are typically ineffective without a summary of the entire claim that tells the story of the loss to the organization. The organization should use spreadsheet tools to assimilate the large quantity of supporting data into a set of claim schedules that build up, almost pyramid-like, into summary schedules by primary claim categories that insurers and their representatives can review easily. These spreadsheets can be prepared by the policyholder or by a qualified claims accounting professional, but they should provide a step-by-step explanation of the claim being made, from the executive summary to the lowest level of detail. Effective use of technology and claim schedules can expedite review of the claim by insurer and help to keep the claims process for the modern corporation on track.
Albert Einstein once said “The only source of knowledge is experience.” Daniel Torpey humbly follows this adage and encourages young claims professionals to:
Get as much experience as you can about a diverse type of claims and industries. Always read the policy and background on the company before you walk into your first meeting. I have always enjoyed the breadth of experiences of learning about different industries and working with different people. Every time you think you have seen it all, a totally new situation comes into your lap. I was involved with the appraisal recently on a $3 billion claim, and one of the final open claims from the World Trade Center. I was exposed to issues relating to the rebuilding of a train station, valuing art work, calculating the re-work of detailed engineering drawings, and getting into the engineering of how the World Trade Center was actually designed and constructed in the 1960s and completed in the early 1970s.