EXPERT AREAS
Business Interruption & Loss of Profit
When an insured event brings operations to a halt, the physical damage is only part of the loss. The financial consequences — lost revenue, continuing fixed costs, increased expenditure to maintain output — accumulate from day one and continue throughout the recovery period.
Business interruption is the largest component of most major insurance claims. It is also the most disputed. The insured’s financial position must be reconstructed with precision: what the business would have earned had the loss not occurred, what costs were genuinely saved and what additional expenditure was reasonably incurred in mitigation.
BINOCLE provides independent business interruption assessments for Insurers and Reinsurers worldwide. Our role is to determine the correct indemnity — methodically, impartially and with the rigour that complex claims demand.
What We Quantify
Loss of revenue, gross profit, specified standing charges or other type of interest insured
We establish the financial performance the business would have achieved during the indemnity period had the insured event not occurred. This requires detailed analysis of historical trading, market conditions, seasonal trends and the specific trajectory of the business at the time of loss. We account for the trend of the business — upward or downward — rather than applying a mechanical average.
The indemnity period
We assess the time required for the business to return to the position it would have been in absent the loss. Depending on the policy wording, this might not simply be the period of physical repair. It includes the ramp-up to full production, the recovery of lost customers or market position and any residual financial impact beyond the restoration of physical assets.
Saved variable costs
We identify and quantify the costs that the business genuinely avoided as a result of the interruption — raw materials not consumed, variable labour not deployed, utilities not used. This requires a thorough understanding of the business’s cost structure, not a broad-brush application of standard ratios.
Increased cost of working
We assess the additional expenditure incurred by the insured to maintain operations, limit the interruption or accelerate recovery. We determine whether such expenditure was reasonable, effective and within the policy’s coverage parameters.
Uninsured working expenses and policy deductions
We apply the policy wording rigorously, including any turnover-based deductions, franchise or waiting period provisions and co-insurance conditions. Our reports are structured to align directly with the indemnity mechanism of the specific policy.
OUR EXPERIENCE
Business interruption quantification is the foundation of BINOCLE’s practice.
It is what we do and it is what we have done across some of the most complex and high-value claims in the international insurance market. Our track record in BI spans a wide range of industries and loss scenarios, including:
- Industrial fires and explosions at major manufacturing facilities
- Natural catastrophe events — floods, earthquakes, hurricanes and windstorms
- Machinery breakdown and equipment failure at process-critical installations
- Contingent BI and other non-damage BI
- Supply chain disruption and denial of access losses
- Cyber incidents resulting in operational shutdown
- Product contamination and recall events
We have quantified BI losses for Insurers and Reinsurers on claims governed by London market wordings, international policy forms and a range of local market conditions across multiple jurisdictions.
WHY BINOCLE
Why Business Interruption Quantification Requires Independence
The Insured and the Insurer are not adversaries — but their positions on the quantum of a BI claim are rarely identical at the outset. The insured’s management accounts, projections and internal forecasts are a starting point, not a conclusion.
An independent forensic accountant’s role is to test those figures against the evidence: the financial records, the trading history, the market context, the operational reality of the loss period. Where the insured’s calculations are robust, we confirm them. Where they are not, we identify the discrepancies and establish the correct position.
HOW WE DO IT
Our Approach
Early appointment
BI losses begin accumulating from the moment of the insured event. The earlier a forensic accountant is involved, the earlier the key financial issues can be identified, the methodology agreed with the insured, and the claims process structured to avoid delays. We recommend appointment at notification stage.
Direct engagement with the insured's financial team
We work directly with the insured’s finance function — their CFO, finance director or external accountants — to obtain the financial records required for our assessment. This direct engagement reduces delays, surfaces issues early and ensures that our analysis is based on primary documentation rather than summaries.
Methodical, evidence-based analysis
Continuous reporting
We keep the instructing party informed throughout the process. As our analysis develops, we communicate interim findings, flag issues as they arise and provide regular updates on progress. We do not produce a single report at the end of a lengthy process. We support the settlement from beginning to final agreement.
Reports built for resolution
Our reports are written to be used — in claims negotiations, in mediation and, if necessary, as expert evidence in arbitration or litigation. They are structured, clearly reasoned, and written to withstand challenge from the insured’s own accountants or opposing experts.
Need an independent assessment of a business interruption loss?
WHY BINOCLE
Frequently Asked Questions
What does a forensic accountant do in a business interruption claim?
A forensic accountant independently quantifies the financial loss suffered by a business as a result of an insured event. This involves reconstructing the revenue and gross profit the business would have generated during the indemnity period, assessing increased costs of working, deducting saved fixed costs and applying the specific terms of the policy. BINOCLE provides this assessment exclusively for Insurers and Reinsurers.
How is loss of profit calculated in a business interruption claim?
Loss of gross profit is calculated by establishing the revenue the business would have achieved during the indemnity period had the loss not occurred — adjusted for the trend of the business and any special circumstances — and deducting the costs that were genuinely saved as a result of the interruption. The calculation must reflect the specific indemnity basis set out in the policy wording, which varies between forms.
What is the difference between a forensic accountant and a loss adjuster in a BI claim?
When should a forensic accountant be appointed on a business interruption claim?
As early as possible — ideally at the point of loss notification or when it becomes clear that a significant BI loss is likely. Early appointment allows the forensic accountant to engage with the insured’s financial team, identify the key accounting issues and establish an agreed methodology before positions become fixed. Late appointment frequently leads to delays, disputes over methodology and longer resolution timelines.
What financial records are needed to quantify a business interruption loss?
How long does a business interruption assessment take?
This depends on the complexity of the claim, the size of the loss, the availability of financial records and the degree of alignment between the parties on methodology. Straightforward BI claims can be resolved within weeks. Complex, multi-jurisdictional or contested claims may take considerably longer. BINOCLE provides realistic timelines on instruction and reports continuously throughout the process.