Business interruption claims in Ireland: working with an independent loss assessor

Who is who: loss assessor, loss adjuster and forensic accountant

In Ireland the professional who works for the insured business is usually called a loss assessor or public loss assessor. The loss adjuster, by contrast, is appointed and paid by the insurer to investigate and value the claim on its behalf. Both may be highly competent, but they are not on the same side of the table.

Loss assessors operating in Ireland are expected to be authorised by the Central Bank of Ireland as insurance intermediaries, so a business owner can ask any firm for its authorisation details before signing. On larger business interruption claims, the assessor frequently brings in a forensic accountant to rebuild the trading figures, while the insurer's adjuster often does the same on the other side.

Reading the cover before the numbers

Business interruption, sometimes called consequential loss, is normally only triggered when there is insured physical damage at the premises, or at a location named in an extension such as a supplier, customer or denial-of-access clause. The first job of the assessor is therefore to confirm that the underlying damage is covered under the material damage section.

The policy will then define what is insured: gross profit, gross revenue, increased cost of working, or a combination. It also sets the indemnity period, often 12, 18 or 24 months, which is the maximum time over which lost profit can be claimed. Many disputes start because the business assumed it was covered until full recovery, when the wording stops the clock earlier.

• Basis of cover: gross profit, revenue or increased cost of working only
• Length of the maximum indemnity period and when it starts
• Sum insured for business interruption and any average (underinsurance) clause
• Extensions: suppliers, customers, public authority closure, utilities, loss of attraction
• Exclusions and time excess, for example the first days of interruption

Building the claim: from turnover shortfall to insured loss

The core calculation compares what the business would have earned had the incident not happened with what it actually earned during the interruption. The 'standard turnover' from the equivalent period in previous years is adjusted for trends, seasonality and special circumstances, such as a new contract signed just before the loss or a planned expansion.

From the shortfall, savings are deducted: costs that stopped because the business was closed, such as purchases of stock, some utilities or temporary staff not engaged. The assessor then adds increased costs of working, for example renting temporary premises, overtime, hiring equipment or marketing to win customers back, provided these costs reduced the overall loss.

Evidence an Irish business should assemble

Insurers and their adjusters will want to see figures that are consistent with records already submitted to Revenue and to the bank. Gaps or contradictions slow the claim more than anything else.

• Audited or certified accounts for at least two to three years
• Monthly management accounts and VAT returns before and after the incident
• Booking systems, order books, EPOS reports or footfall data
• Payroll records showing staff retained, laid off or paid overtime
• Invoices for every extra cost incurred to keep trading
• Correspondence with customers who cancelled or moved to competitors

How the process usually unfolds

Notification should be made to the insurer or broker as soon as possible; most policies require prompt notice and some specify a period within which a detailed claim must follow. The loss adjuster will visit, and the loss assessor, if appointed early, attends the same meetings so that facts about the damage and the reopening plan are agreed from the start.

Because the indemnity period may run for many months, the claim is often settled in stages. The assessor can request interim payments based on losses already documented, which helps cash flow while repairs continue. A final figure is negotiated once trading has recovered or the indemnity period has ended.

Typical points of disagreement

Insurers commonly challenge the trend adjustment, arguing that turnover would have fallen anyway because of the wider economy or local competition. They may also question whether the business did enough to mitigate, or whether part of the shortfall falls outside the indemnity period.

Underinsurance is another flashpoint. If the declared gross profit was lower than the true figure, an average clause can reduce the payment proportionally. The assessor's role is to test the insurer's calculation, present alternative evidence and, where the wording is ambiguous, argue for the interpretation most favourable to the policyholder.

Timing, interim payments and staying solvent

A business interruption claim can take a year or more for a medium-sized enterprise. Keeping lenders, landlords and key suppliers informed matters, and documented interim payments make those conversations easier. The assessor should keep a running schedule of the loss so that each month's figures can be submitted promptly rather than in one large bundle at the end.

If agreement cannot be reached

Commercial policies often contain an arbitration clause for disputes on the amount of the loss. Smaller businesses, depending on turnover thresholds, may be able to bring a complaint to the Financial Services and Pensions Ombudsman (FSPO) once the insurer's internal complaints process has been exhausted. Court proceedings remain an option for larger or point-of-principle disputes, as shown by the Irish litigation over pandemic-related business interruption cover.

Before escalating, a well-argued written submission from the loss assessor, supported by the accountant's report, often unlocks a negotiated settlement.

A business interruption claim rewards preparation: clear accounts, a documented recovery plan and an early reading of the indemnity period. expertdassure.com recommends checking the policy wording before the first meeting with the insurer's adjuster.