The deteriorating economy has a direct impact on corporations and the increase of D&O and E&O claims. With corporate losses mounting, corporate scandals breaking every day, and bankruptcies on the rise, creditors and shareholders are looking to recover their losses. Insurance policies are increasingly seen as a potential source to fund financial recoveries. In recent news, the collapse of Bernard L. Madoff Investment Securities is spawning numerous law suits involving insurance companies. The losses from these suits have been estimated to range between $750 million to $3.5 billion.
The insurance industry is seeing a rise in both the number of claims and lawsuits filed. In the first quarter of 2009, securities class action lawsuits increased by approximately 20 percent. Further, increasing claim activity, combined with unique and challenging coverage issues are complicating the legal processes. This high-risk environment is resulting in tougher policy standards and increased claim scrutiny from carriers, including aggressive coverage positions and demands for more detailed claim support.
Whether submitting or evaluating a claim, supporting documentation and information is going to play an integral part in the process from a financial perspective. The focus will include analyzing the financial information for accuracy and relevance and evaluating the potential for fraud and/or misrepresentation. The complexity of the financial issues in the submitted claim requires skilled professionals to analyze, corroborate, reconstruct and evaluate the underlying financial transactions and records. As part of this process, it is necessary to have a proven capacity to analyze and assess an organization’s financial reporting processes/systems, identify areas of weakness, and investigate where the potential for fraud may exist. Often these skill sets may tip the scales between a successful and unsuccessful claims process.
The forensic accounting professionals of Parente Randolph have extensive experience in dealing with complex investigations and analysis arising from insurance claims. For more information on how we can assist, please contact:
Colleen Vallen (Philadelphia office)
215.972.2383 | cvallen@parentenet.com
David Duffus (Pittsburgh office)
412.697.6404 | dduffus@parentenet.com
Robert Gray (Dallas office)
214.658.6570 | rgray@parentenet.com
