Accountants Have Increasing Role in Assisting with Settling Claims

by Chris Campos and Bruno Graizzaro

While it is generally well-known in the insurance that accountants are available to assist in the handling of claims, it appears that their importance is continuing to expand. Over the past few decades the role of the accountant has evolved so that his or her use is common in commercial property losses. Accountants have been particularly helpful in time-element losses, as well as being involved in large property claims. Accountants engaged to do this work are the investigative auditors generally used by the industry, not the typical tax accountant.

In today's insurance industry, many more claims are arising out of areas which previously were not at the forefront. One of the newest areas of concern is environmental or pollution claims. In addition, in the current litigious atmosphere of society, many more disputes are occurring which ultimately end up being decided by arbitration or a court of law.

Finally the area of third-party claims has become commonplace. The potential role of an accountant in assisting in the handling of these claims is not always readily apparent. However, the basis for all of these claims lies in a common area--the measurement of damages. Except for reference to a policy of insurance in commercial property claims, the measurement of damages is similar in all cases. For example, in the case of environmental claims, an accountant would be helpful in obtaining and analyzing financial data, probably over a very long period of time. The assumptions made by the accountant regarding the losses in these cases would, however, be similar to those made in a typical property loss.

Measurement of damages

In the case of third-party claims where the measurement of damages is of major concern, an accountant may be particularly helpful. The assistance given by the accountant may be as simple as a phone call from a claims person or as complicated as a full financial impact study. However, the measurement of the damages should not be overlooked, even when the issue of liability appears in the insurer's favor. In the event of a liability judgment against the company, it would be important to know if the claimed damages are accurate. If you do not believe this to be true, consider the Texaco-Pennzoil decision.

Accountants are experienced not only in obtaining the financial information from a claimant, but also in being aware of sources for additional business information relative to a particular company. By comparing the information submitted in connection with a claim to other sources of information (e.g. 10-K reports, published financial statements), and to industry statistics, the accountant will be able to attest to the reasonableness of a claim.

It is important to consider an accountant or any consultant at the start of the claims process so that their assistance will be more effective. The consideration of a consultant early in the process will enable the adjuster to make an informed decision regarding the assistance needed on a claim. There are a few feelings worse than realizing, after it is too late (i.e. the end of the discovery period), that someone should have been consulted.

Check with accountant

While it is not always immediately clear if the use of an accountant would be required on a particular claim, it may be helpful to solicit an opinion as to how the accountant believes his assistance would be beneficial. The method would be extremely cost-effective and would give the person handling the claim some comfort in knowing that the assistance of a consultant was not overlooked. Although it is obvious that the advice of an accountant is not required in every situation, claims personnel should not overlook any of the tools available to them in the settlement of their claims. Only then will the companies be certain they are paying their losses at amounts which are reasonable both to them and the insured.

As Campos & Stratis is a worldwide firm involved in all aspects of investigative auditing, the firm is well-suited to handle the changing needs of the insurance community. In addition, as our clients are insured or insurance-elated companies, conflicts of interest with an insured rarely occur.

[Reprinted by permission by Claims Magazine, issue June, 1989]

Chris Campos is the senior partner of the multinational certified public accounting firm of Campos & Stratis, headquartered in Teaneck, New Jersey. He has over thirty years of diversified international business and accounting experience, and in investigative accounting matters.

Bruno Graizzaro is the resident partner of the Boston, Massachusetts office of Campos & Stratis. His entire professional career has consisted of analyzing commercial insurance claims along with providing litigation support in a variety of circumstances.

Return to Top of Page | Back to Archives