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Business interruption insurance typically covers losses sustained by a business due to disaster-related damages (including the COVID-19 pandemic) that affect the entity’s ability to continue operating in the manner it had before the event.
The relevant business interruption insurance policy should define the actual coverage, loss calculation methods, limits of coverage for claims and procedures for filing a claim.
Forensic accountants have the expertise and understanding to prepare business interruption claims and can evaluate potential fraud risks surrounding them. Whether working with the insured in preparing a claim or the insurer in reviewing, there are several key areas that may be susceptible to fraud, including:
Forensic accountants may uncover any of these red flags as part of the discovery process with adjustors or vendors, in reviewing claims history, receiving tips from an employee hotline, or through an analytical review of the claimant’s financial statements.
Based on their initial review of the claim, the client or insurance carrier should determine whether further investigation is warranted. An investigation by the insurance carrier’s own investigation team, or in tandem with outside forensic accountants, provides the expertise necessary to assess the potential red flags of fraud.
Schneider Downs Accounting Advisory Services offers a variety of technical accounting advisory services as well as outsourced accounting and financial advisory services for every type of organization. To learn more, visit our Accounting Advisory Services page.