CASE STUDY

BUSINESS INTERRUPTION:
Service Industries

Situation:
An insured accounting firm was closed eight working days as a result of a major hurricane. However, the insured was able to receive telephone calls forwarded to another office. Some employees were able to work on files in their possession.

Our Analysis:
The insured submitted a Business Interruption Claim based on each employee's average daily billable hours prorated over the lost eight days.

The loss occurred during the summer which is usually the slow time of the year for accounting firms. Some accounting jobs may normally take days, weeks or even months to complete. Our immediate concern was how much work was postponed rather than lost; we also had to consider if there was a demand for service immediately following this major catastrophe.

Part of our analysis was to review billable hours subsequent to the loss period. An increase in hours or revenues could indicate a make up of postponed work and result in no loss. Conversely, any additional overtime or extra expense incurred to reduce or avoid a loss would be an insured item. The insured was unable to document any specific jobs lost as a direct result of its business interruption. Based on the information provided, no loss was proven.

General Observation:
When a service industry has lost time, it is important to consider whether sales are lost or merely postponed. Several factors affecting this are the length of down time and the normal service turnaround time.

This case study is a reprint from a previous Reboul & Henderson, Inc. Insurance Accounting Newsletter. We have several past articles concerning unique characteristics of catastrophe claims. We will publish another from our past series next month. Past case studies will remain online for reference purposes. However, these case studies are not intended as legal advice or policy interpretation. The purpose of these articles is to stimulate discussions relevant to negotiating reasonable settlements.

You can contact the editor at: editor@ReboulHenderson.com

Transitions

...The old

The year 2003 marked a new phase for Reboul & Henderson, Inc. personnel as the original founders departed and our transition to a new generation began.

In the late spring of 2003, Bob Reboul, president, announced his retirement. Bob died unexpectedly soon in September of 2003 of a rare, internal melanoma. He was a loving family man, a gentleman without fail, an activist for social justice and an eternal optimist. We miss him.

Doug Henderson and Bob Reboul had been friends since 1966. Bob joined Doug in the investigative accounting field in 1974, and in 1987, Doug joined Bob to begin the company called Reboul, Johnson & Henderson, Inc.

Doug officially announced his retirement in August of 2004 at the 25th Annual Hackers Open, an industry-wide golf invitational he sponsored with other insurance industry friends. He continues his community work locally with NOAH and internationally as Commissioner of Clan Henderson. He is renowned as a fierce competitor at the bridge tables of Cleveland.

Don Machovina, who practiced in Reboul & Henderson, Inc.'s western Cleveland office for many years, now has a practice restricted to taxes and investments located in Westlake, Ohio. For those who remember Don's son, Brett, he flew Air Force One for several years and is now teaching at his alma mater, the Air Force Academy.

We are proud of every single one of our younger generation; we look at their accomplishments with pride and we look forward with great confidence. We anticipate that Reboul & Henderson, Inc.'s new management team will successfully continue an old tradition of service and quality.

...and the new

Joel Chenevey, who has been with R&H since 1991, has taken on Cleveland's supervisory and review responsibilities for several years and now manages our Cleveland office. Joel has been involved with insurance claims support most of his career both as an accountant for a public adjusting company and as an investigative accountant.

Kristin Reboul, who had worked with Bob since 1995, became the corporate administrator when Bob retired.

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