Catastrophic events, such as natural disasters, fires, cyber incidents, or large-scale equipment failures, often lead to complex financial losses that require careful analysis. In these situations, forensic accountants play a vital role in quantifying insured losses and supporting the claims process with objective, evidence-based financial assessments and strong documentation.

Organizations may face not only physical damage to property or assets but also indirect losses such as business interruption, extra expenses, and supply chain disruptions. Insurers, policyholders, and their advisors rely on forensic accountants to help quantify these losses accurately and in accordance with the applicable insurance policy terms.

When preparing insurance claims, one of the primary responsibilities of forensic accountants is to calculate business interruption loss. This involves estimating the revenue the insured would have earned had no loss occurred and comparing it to actual performance during the loss period. The analysis typically requires a detailed understanding of the business’s operations, historical financial data, market conditions, and any mitigating actions taken to reduce the impact of the loss.

Forensic accountants often assist with evaluating property and inventory losses. While loss adjusters or engineers may assess physical damage, forensic accountants help establish the financial value of lost or damaged inventory, raw materials, or work in progress. This work frequently involves reconciling accounting records, production logs, and other operational data to support the quantification. Calculations can be complex and losses may need to be tracked through the entirety of the loss period on a monthly basis.

So, how can they help add value to a claim?

Forensic accountants ensure that all financial analyses are thoroughly documented, traceable, and clearly linked to source records. This is essential for claim substantiation and helps reduce delays or disputes during the insurance adjustment process. They may also be involved in the claims resolution process, particularly when there are disagreements about the calculation of losses or expenses incurred. Their role is to provide independent, objective analysis that can support fair and efficient resolution.

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This blog is for informational purposes only and does not constitute legal, financial, or insurance advice. Cara Solutions DBA VALIONT makes no representations or warranties as to the completeness or accuracy of the information provided. Always consult your legal, insurance, or financial experts before making decisions.