Insurance & Business Interruption Accounting Expert
Business interruption insurance indemnifies the policyholder for loss of profit and increased costs arising from insured material damage or specified non-damage extensions. When insurers and policyholders disagree on quantum or coverage, dispute accountants quantify the loss in accordance with the policy wording, typically applying the gross profit basis, increased cost of working provisions, and the indemnity period defined in the schedule.
Loss of profit calculations require establishing what turnover the business would have achieved during the indemnity period but for the insured event, comparing it to actual turnover, and applying the rate of gross profit specified in the policy (or derived from historical accounts). Adjustments address trends, seasonality, and special circumstances, such as pandemic-related market changes, where the policy and case law permit. Increased costs of working are analysed for reasonableness and necessity, with savings from reduced expenditure credited against the claim.
Coverage disputes often overlap with quantum: whether the event triggered the policy, whether supplier or customer extensions apply, and whether the indemnity period was correctly selected. Accountants work alongside coverage counsel, reviewing loss adjusters' calculations, challenging unsupported assumptions, and preparing independent schedules for negotiation, mediation, or court proceedings under the Insurance Act 2015 and FCA regulatory context where applicable.
Frequently Asked Questions
When does an insurance claim need a dispute accountant?
A dispute accountant is instructed when the policyholder and insurer cannot agree on the BI loss figure, when the loss adjuster's methodology is challenged, or when the claim is large and complex enough to justify independent analysis, for example, multi-site operations, long indemnity periods, or disputes over trends and adjustments. Accountants are also used in coverage-led litigation where quantum must be quantified on alternative scenarios, and in broker professional negligence claims arising from under-insurance. Instruction before final rejection of the claim can support without-prejudice negotiation and ADR.
What is the BI formula and how do dispute accountants apply it?
The standard gross profit basis BI formula is: Adjusted Loss = (Standard Turnover − Actual Turnover) × Rate of Gross Profit + Increased Cost of Working − Savings. Standard turnover is what the business would have earned during the indemnity period but for the insured event, often derived from the same period in the prior year with adjustments for trend and known circumstances. Actual turnover is what was achieved. The rate of gross profit is the policy percentage or the ratio of gross profit to turnover from the financial statements. Increased cost of working covers reasonable additional expenditure to mitigate loss, and savings credit reduced variable costs during the interruption. The dispute accountant reconciles each element to accounting records and challenges unsupported adjustments by the insurer or policyholder.
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