Let Me Make This Clear…

Correspondence
By
R.M.Bissell
Business Correspondence, from Fire Insurance Lectures delivered before the 
Insurance Institute of Hartford, Inc. season of 1916
 
Formerly a large and well-known book-store in Chicago had painted on its window shades, which were always decorously pulled down on Sundays, the following text: ”Words are the only things that live forever.” Sometimes it seems as though this text had especial reference to those occasional letters which tactlessly written or stupidly expressed steal quietly out from the home office of an insurance company and lead indefinitely thereafter harmful and malevolent lives in the minds of their receivers. 
Now, let us consider some of the more obvious qualifications of good business correspondence. In their order of merit and importance it seems to me these most essential characteristics could be listed as follows:

 

 
1. Clarity
2. Discretion
3. Courtesy
4. Form, i.e., proper use of the English Language
Of these the first is naturally of by far the greatest importance, even though it is true that a letter may be very clear and at the same time very objectionable. But clearness we must have at any cost. A good many things are involved in this matter of clearness. In the first place, clear thinking is necessary for clarity in writing. If you do not have a definite understanding of a proposition in your own mind you can hardly hope to give a correct idea of it to another. Indeed, I am inclined to believe that lack of clearness proceeds more often from a correspondent’s muddiness of thought than from any other one cause, although another factor, namely: ignorance of and lack of training in the meaning and use of words, prevents many intelligent men from writing good letters.

 

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Raiders of the Lost Profits – Part Five: Reporting to HQ

Dispatch: This is what we know so far…

 

Scenario 1:

 

  • The structure suffered minimal damage from the storm in the form of wind driven rain through openings in the door
  • The proprietor shut down the market for a period of eight days due to water damage and lack of customers due to the area wide evacuation requested by the mayor forty eight hours before the storm made landfall
  • I observed no physical damage in the area around the market that would prevent ingress or egress to the building or prohibit access to the business
  • The market was without power for five days – power supplier information and billing information has been requested to determine if the power failure was from a peril covered under the policy.
Scenario 2:

 

  • Heavy winds damaged the roof over the leased market space causing water intrusion and damage to the covered business personal property
  • Although our client does not insure the leased space or the roof, the damage to same was from wind which is a covered peril under the insurance policy
  • I have spoken with the landlord’s contractor and found that the estimated repair time for the roof and interior structural damage is three months
  • After adjustment time is factored in, the replacement of the BPP should reasonably take thirty days
Note that in both scenarios, cause of loss (covered or not) and periods of either suspension or restoration are addressed even if not completely resolved.
Determining coverage for Business Interruption can be a tricky road to navigate. Reporting all the known facts and observations at the time of inspection will assist in the triage process and will help to confirm whether coverage exists or not, applicable limits, restrictions, exclusions, deductibles, and most important: actuation of coverage (or lack thereof). The Report Writing guidelines in your adjuster on-boarding package will provide a more detailed outline of the information required when making your first report so you can complete your mission and move on to your primary mission – completing the damage estimate.

And, as always, the Business Interruption office at Provencher HQ is just a phone call away! If we don’t know the answer immediately, we’ll find it for you!


******

Introduction: Introduction to Inspection for BI
Part One: The Secrets of Daily Loss Inspection
Part Two: Adventures in CAT Inspections
Part Three: Search for the Grail: Covered Cause of Loss vs. Actual Cause of Loss
Part Four: Pit of Snakes: Establishing Period of Restoration
Part Five: Reporting to HQ: Here’s What We Know So Far

Raiders of the Lost Profits – Part Three: Search for the Grail

 
He chose poorly…
 
Covered Cause of Loss vs. Actual Cause of Loss
 
Or better yet, Covered Cause of Loss vs. Actual Cause of Loss vs. Perceived Cause of Loss.  This is what our adjuster must help us decipher.  The ‘covered’ causes of loss possible for business interruption/loss of income can range from slightly different to radically different than for your property assignment. That said, the business interruption/loss of income coverage is not necessarily actuated by the ‘covered’ cause of loss.  So…documenting both the covered and actual cause of loss is essential during the property adjuster’s inspection:
 
  • Take photos of ALL the physical damage – including that which is ‘not’ damaged and that which is ‘not’ covered property 
    • Business Interruption coverage can be actuated by a ‘covered’ cause of loss to the business space even if the structure itself is not covered under the insured’s policy
    • Conversely, if only BPP was damaged and there was no damage to the business space, coverage may be actuated only to the extent that of physical damage to BPP from a covered cause
  • Get the contact information for the landlord, and/or a lease
  • Note the use of the structure
  • Note any power outage, whether it is on or off-premises and inquire if the cause of the outage is known at the time of inspection – get the name of the insured’s power supplier
  • Note damage in the area.  Is damage widespread or confined to the insured’s specific area?  Was there a mandatory evacuation order in force during the interruption in business operation.  If so, inquire if a copy of the order is available
  • Note the existence of any multiple entities
  • For losses involving commercial or habitation rental properties, note units vacant at the time of the loss as well as any relocation activity for the tenants and make sure the unit designations reported as damaged match the insured’s unit reference
  • ASK THE INSURED WHY THEY BELIEVE THE BUSINESS IS SHUT DOWN
Observation and documentation of the business activity at the time of your inspection and inquiry about the activity between the loss date and your inspection will go a long way in making the Business Interruption process easier for us at the Business Interruption office, as well as easier for our client and for the insured.
 
 
******

 

Raiders of the Lost Profit series:
Part Three: Search for the Grail:Covered Cause of Loss vs. Actual Cause of Loss
Part Four: Pit of Snakes:  Establishing Period of Restoration
Part Five: Reporting to HQ:  Here’s What We Know So Far


Written & Contributed by:

 

Raiders of the Lost Profits – Part Two: Introduction to Inspection for BI – Adventures in CAT Inspection

Introduction to Inspection for BI:
Adventures in CAT Inspection

 

The issues we deal with in every storm, with respect to Business Interruption, are Civil Authority, Off-Premises Power Outage and Spoilage, all of which sound innocuous but can get mired down in other issues such as wind vs. flood and covered cause of loss vs. actual cause of loss.

 

But it’s the storms with large scale devastation that sometimes finds us shouting, “CATs!  I hate CATs!”

Some of the additional issues we faced in both Katrina and Sandy were:

•Issues with insured type:  high profile attorney firms, CPA’s, plastic surgeons, bed & breakfasts, multi-location damage, multi-unit, multi-complex and multi-use habitation losses
•Other convoluting issues such as:  high profile agents, public adjusters, total loss of financial documentation
•Issues resulting from lack of communication with insured to manage expectations with respect to: Covered Cause of Loss, Period of Restoration, Extra Expense, Time Deductibles, and Coinsurance
•And finally, issues resulting from inadequate inspection and reporting

Yes, there are a lot of reasons to hate CATs, but BI doesn’t have to be one of them!!  And that begins with inspection of the loss.  Slightly different than inspection for daily claims, inspection for BI after a catastrophe is simultaneously focused on both physical and non-physical damage, actual causes of what might be multiple factors that shut down (either fully or partially) a business and what actuates coverage.

 

To help you complete your mission and move on to other important missions, we have developed a simple worksheet that can provide the basis for your reporting on Business Interruption and a tool we at the Business Interruption office can use to pick up the claim complete our part of the claim mission.
 
******
 
 
 
****** 

 

Raiders of the Lost Profit series:
Part Two: Adventures in CAT Inspections
Part Three: Search for the Grail:Covered Cause of Loss vs. Actual Cause of Loss
Part Four: Pit of Snakes:  Establishing Period of Restoration
Part Five: Reporting to HQ:  Here’s What We Know So Far
 
 
Written & Contributed by:

Raiders of the Lost Profits – Part One: Secrets of Daily Loss Inspection

 
 
Introduction to Inspection for BI:  
Secrets of Daily Loss Inspection
 
 

 

Official mission documents arrive at your office via the W5 connection, loaded with code books and rolled up maps.  Being a cautious guy or gal, you peruse all the secret documents and determine that you will take the assignment.
 
Arriving at the marketplace, your first observation is that there is activity, people buying and selling in all the stalls but the one you’ve been sent to check out.  You approach the building and find the proprietor sweeping mud out of the front door.  Time for the rubber boots.
 
Wading through the water, the proprietor leads you to the back of the building to show you a hole in the roof you could throw a camel through.  Prepared, as always, you (yes, Our Hero) begin your inspection, which includes, of course, recording everything you can observe that might have an impact on the business that is normally conducted in that establishment.

 

******
 
To assist you with the inspection of daily losses, we at the Business Interruption office have devised a list of some of the things that you should be observing and of which note should be taken in the course of your inspection. The Checklist for Daily Inspection is attached to this correspondence. Remember, whether the proprietor is covered for Business Income or not, you should always observe and make note of the information on the list because you (of course, Our Hero) are out first opportunity to obtain the initial information. Note that we have included a second page on the Checklist for listing units for rental property.

 

 
******
 
Raiders of the Lost Profit series:
Part One: The Secrets of Daily Loss Inspection
Part Two: Adventures in CAT Inspections
Part Three: Search for the Grail:Covered Cause of Loss vs. Actual Cause of Loss
Part Four: Pit of Snakes:  Establishing Period of Restoration
Part Five: Reporting to HQ:  Here’s What We Know So Far
Written & Contributed by:
******

Raiders of the Lost Profits Introduction: Introduction to Inspection for BI

 
Introduction to Inspection for BI
Don’t get caught in front of the rolling stone!
 
Arriving, on time, at the destination marked with an ‘X’ on the map included in the courier packet for the ‘very special assignment’, Our Hero (that’s you), fedora suavely tilted and measuring tape ready to be un-holstered, surveys the devastation in the marketplace.  
 
You (Our Hero) hand the head honcho your card (with aplomb, of course), then proceed to inspect the site.
 
Camera clicks fill the air, making a historical record of the front and the back of the risk.  You grab your trusty ladder and climb onto the roof, camera again clicking away.  Following the head honcho around you (for the last time – Our Hero) take the rubber band off an overstuffed and well-worn notebook, whip out your trusty pencil and start jotting down notes and measurements (okay, so you type it into your phone – go with me on this).  You dig up answers to questions about age of equipment, replacement opportunities, and ordering time for new trinkets and treasures to fill restock the marketplace.  
 
You, of course, make no commitment for coverage.
 
All your digging done, with tape measure re-holstered and notebook safely tucked in your belt, you prepare to depart.  But wait!  Something is amiss. This is a commercial loss.  There was nothing in the assignment packet that indicated any loss of commerce.  But what if there is no coverage?
 
******

DOESN’T MATTER!  Our heroes (that’s YOU’all), should always inspect commercial risks with consideration for BUSINESS INCOME LOSS, whether the risk is covered or not, or whether the insured has made a claim for loss of income or not.
 
In this series, we will explore some of the simple steps to assuring the successful inspection of commercial risks that will be an invaluable service to Provencher clients and your Provencher Business Interruption Unit.
 
Our Business Interruption Unit (BIU) will handle all the heavy lifting after your initial inspection, such as:
 
•BI/LOI interview with insured to assist in document request and adjustment
•Provide insured with educational material about their coverage and instructional material about the process
•Maintain the physical and electronic files
•Maintain consistent contact with the insured and the client
•Request, collect, identify, process and qualify financial documentation from the insured, including qualification of Extra Expense
•Perform the financial analysis
•Adjust and determine the loss
•Report to the client
•Review analyses and determination with the insured, providing basis and instruction on interpretation of schedules
•Negotiate settlement.
•Provide support for appraisal and litigation
 
But, there are a few items that only our stalwart and heroic adjusters can determine and are responsible for:
•You must assess and document the ‘Covered’ Cause(s) of Loss
•You must establish the Period of Restoration (POR) and provide the basis by elements.  
•You must differentiate between POR and POS (Period of Suspension)  
•You are the first line of defense in the Control of Extra Expense
 
Attachments:
(you must click to advance after the first slide)
 
 
Raiders of the Lost Profit Series:
Introduction: Introduction to Inspection for BI
Part One: The Secrets of Daily Loss Inspection
Part Two: Adventures in CAT Inspections
Part Three: Search for the Grail:Covered Cause of Loss vs. Actual Cause of Loss
Part Four: Pit of Snakes:  Establishing Period of Restoration
Part Five: Reporting to HQ:  Here’s What We Know So Far
 
 
Written & Contributed by:
 
 

Report Writing the Provencher Way: Part 4 – Report Captions Continued

In our ongoing effort to maintain and continuously improve our business, we have taken the time to document proper report writing specifics to Provencher & Company.  The intent of this post is to describe a standardized content look for a Provencher & Company captioned report.  Below, you will see that we have defined the purpose/meaning of each caption and provided an example of the report writing style and expected technical writing level of the content.

As this is such an important topic; one that requires great attention and detail, the Report Captions section of this series has been divided into three parts.

Report Captions Continued:

Adjustment:
In this caption, you need to state in a clear concise manner, the facts associated with the loss adjustment. While this caption needs to contain the story of the loss, do not, under any circumstances, write in such a fashion that it appears to be folksy, conversational, repetitive, or opinionated.  Additionally, do not, under any circumstances, attempt to restate anything prepared by an expert you or the client has employed.  Refer the client to the expert’s report, along with a comment regarding the summary finding.
 
Example of Adjustment Caption Verbiage:
We are enclosing sample photographs of the damage.  We are also attaching our estimate on the remaining repairs.  Our estimate will detail the scope of damage found during our inspection.  Sixteen offices, two baths, a kitchen and a long hallway were damaged by water.
 
Our damage estimate totals $25,188.14 and is based on normal and reasonable unit prices for this area.  We believe that the cost for repairs and painting will probably not exceed this amount.  Our contact, Mr. McClay, advised that he has an estimate in process for the repairs but has not as yet forwarded it to us.  You should note that our estimate is conservative for painting all surfaces and does not include any allowances for moving and/or protecting furnishings.  We believe that the insured will get the painting done on only the effected walls and may not expend the entire amount in our estimate.
 
We Clean Systems, Inc. was used for water extraction and drying.  We have a copy of the work authorization but no estimate or invoice has been received to date.  We have requested the information from your insured and hope to get it shortly.
 
Kittleburger Plumbing made repairs to the plumbing and we have their invoice for the repairs.  The cost for the repairs was $102.50. Lock Technology was contacted to replace a broken lock cylinder on the front door and rekey another cylinder to match the one on the front door that was broken to gain emergency entry in off hours.   The cost was $417.19.
 
Barclay Electric was used to replace a phone jack and blocked off some floor boxes to prevent additional damage.  No invoice has been provided.
 
Business Interruption:
At Provencher & Company, we have a separate Business Interruption division, which includes a Forensic Accounting expert that is responsible for managing and reporting on all losses with a BI exposure.  That office will work in concert with you, the field adjuster.   While the BI staff will conduct a comprehensive interview with the insured and request all financial documentation, we need you in the field to determine the Covered Cause(s) of Loss, establish the Period of Restoration (POR), and initial control of Extra Expense (EE).  If there is no suspension of the insured’s business, that should be documented in your report and why.  That can be accomplished all in one caption entitled Business Interruption.
 
Example of Business Interruption Caption Verbiage (no loss of income claimed): 
While the insured risk did sustain wind damage to the roof, allowing water to enter into the premises damaging walls and floors, the insured is not filing claim for loss of income. They were able to open immediately and resumed operations working around the affected areas.
 
If you are assigned a claim that has a BI exposure, please insert the following captions into your report template:
 
(Refer to the Business Interruption – Interface with the Property Adjuster document for details on workflow)
 
Cause of loss – Business Income:
For all commercial losses that have BI coverage and either a partial or complete suspension of their business operation has occurred, you must identify and document what cause(s) actuates the coverage.   Be brief, clear and factual. Note that most policies require direct physical damage to the insured’s business space, even if not covered property, caused by a Covered Cause of Loss. Even if only the BPP is covered property under the policy, the physical damage to the building will guide both the actuation of the coverage and the period of restoration as long as it was from a covered cause.  Note that even if BI/EE coverage may not be apparent, a claim by the insured may be submitted.  Therefore, we prefer to be proactive in identifying if a covered cause of loss exists should coverage be found.
 
Examples of Cause of Loss for BI Caption Verbiage:
The roof of the building, occupied by the insured business, was severely damaged by wind.  As a result, the insured’s business suffered extensive water damage to the interior of their space resulting in a complete suspension of their business operations.
 
Another Example
While the insured did sustain direct physical damage to their space from wind damage to the roof, the physical damage to the insured’s space is not sufficient to shut down operations.   The reason the insured could not operate was due to off-premises power outage which is not covered by this policy.
 
Another Example
The insured’s operations were suspended due to wind driven rain, a non-covered cause of loss, which entered the building through an open window.
Period of Restoration – Business Income:
The ‘period of restoration’ is the reasonable length of time necessary to restore full business operations due to the covered cause of loss that actuates the BI coverage.  This is very important as you may have an area damaged by a covered cause of loss and other areas damaged by non- covered causes of loss – this needs to be clearly identified as the POR is only established for covered cause(s) of loss.
 
If the insured is a tenant in the building, we still need to know the extent of damage to the building and length of time anticipated to affect repairs due to the covered cause of loss.  This is critical as that will be the governing factor in determining in the length of time for which a business income claim will be considered for payment – not just the time required to affect repairs to the insured’s covered property. The POR is not simply established based on the amount of time the insured is out of operation.
 
Examples of Period of Restoration for BI Caption Verbiage:
The period of restoration for repairs is three months.   However, the insured should be able to utilize the undamaged portion of the building to continue operations, in full or in part, while the repairs are being undertaken.
 
Another Example
The period of restoration is six months.  Due to the nature of the insured’s business, temporary relocation is not feasible.
 
Another Example
The period of restoration is six months, but the insured may be able to relocate the operation to temporary facilities.
 
Another Example
While it is anticipated the insured’s operations will be completely suspended for a total of six months, we are only establishing a period of restoration of three months as this is the anticipated length of time necessary to complete repairs resulting from the covered cause of loss.  The flood damage to the building is a non-covered cause of loss which is the contributing factor to the extended period of time the insured’s operations have been suspended.
 
Extra Expense – Business Income:
With the exception of the CP 0050 (specific to EE coverage), most policies that include this coverage limit the use of Extra Expenses to the amount by which it reduces the BI loss.  As such, your narrative in this caption must clearly demonstrate the need or prudence for using this coverage.
Example of Extra Expense for BI Caption Verbiage:
The insured will be able to expedite the clean-up process through the use of their employees which will require payroll in excess of normal.
Another Example
Since the period of restoration is six months, the insured will likely opt to move into temporary quarters in order to preserve their customer base.
Another Example
Because of the refitting necessary to accommodate their equipment, it is not feasible for the insured to move to temporary quarters.  However, the use of expediting expenses for the damaged equipment and replacement of inventory should reduce the period of restoration of six months to a period of suspension of four months.
To Be Done:
In this caption, you need to clearly and concisely tell the client what tasks remain outstanding in order to bring the file to a timely and successful conclusion.  If there are multiple items that still remain to be done, this may be best demonstrated in a bulleted format.
Again, you must demonstrate to the client you are in control of the adjustment and have clear direction on how and what needs to be done to bring the case to a timely and successful close. We point this out because this is often where adjusters make a huge leap of faith which can be fatal.
You feel that because you know what you’re doing and what needs to be done, the client feels the same way.  Generally speaking, that’s not true or more importantly their boss who may be reading your report may not know you at all.  Do not simply state (as we often see) “Please diary your file ahead 30 days for our next report” as that adds no value and more than likely will force the person reviewing the file to write or call you to find out your action plan or even worse, ask for the case be reassigned to expedite closure.
 
Example of the To Be Done Captioned List Verbiage:
1.   Obtain all outstanding invoices.
2.   Once all invoices are received, compare against amount allowed.
3.   Secure copy of the engineering report.
4.   Secure agreed price with insured.
Recommendations:
In this caption you will make any necessary recommendations for action on the part of the client. If you are requesting an advance payment, correspondence on their part that needs to be issued, etc. would all go under this caption.
 
Example of Recommendation Caption Verbiage:
After application of the policy deductible, final payment is recommended in the amount of $1,465.83 as follows (see attached Statement of Loss for details):
           Net claim         (Advanced)      Final Payment
           $41,465.83  $40,000.00      $1,465.83
 
Due  to  the  small  amount  of  existent  claim  payment  due,  I  would  not recommend including mortgagee or the loss payee on final check.  Loss was adjusted with Operations Manager, Mr. McClay.  Check should be issued in the name of your insured, Stevens & Sons, LLC and sent directly to:
 
          Stevens & Sons, LLC Mr. John Jasper
          Owner & General Manager
          2010 Blue St. Westlake, OH 44145
 
If your report is a final report, you want to conclude your recommendations with a professional conclusion.  Remember, this is a report, not a letter. Reports are directed to a file, not addressed like a letter, nor signed like a letter.  The pre-filled captions at the top of the report identify the file to which this report is directed.  Your name and title go at the end of the report attesting to this being your work product.
 
Example of the File Conclusion Caption Verbiage: Recommendations:
This concludes the adjustment of this loss.  We are closing our file. Thank you for the assignment.
_____________________
(Your Name) 
(Your Title)
 
(Your Provencher Email)
(Your Cell Phone)


Report Writing Tips
Now that you have the report structure guidelines ala Provencher & Company, we would like to close with a mini flashback to your grade school and middle school grammar and writing classes with a few bad habits we adults have picked up in our business writing.  Please don’t let this happen to you!
 
Basic Rules of Grammar and Structure
 
•Maximum length of a paragraph is eight lines.  If it is more than eight lines, break into two paragraphs, or re-read it and eliminate extraneous words.
 
•A paragraph should focus on one subject. A paragraph that is too long is unreadable.
 
•A paragraph consisting of only one sentence is usually improper and needs to be edited by expanding the thought, eliminating it or adding it somewhere else in the document.
 
•Use consistent spacing throughout report. Block alignment provides best overall appearance.  Make sure the selected font size is not too big or small; 11 or 12 point font works best for business writing.
 
•Try not to use the word “and” more than once in the same sentence.
 
•If you find you have a lot of commas in one sentence, consider breaking it into more than one sentence.
 
•Sentences that meander endlessly are impossible to follow.
 
•Single digit numbers are to be spelled out, “two” instead of “2”, while double digit numbers are to be displayed in numeric form, “37” rather than “thirty seven”.   Write “first” instead of 1st.  If you are beginning a sentence with a number, always spell it as a word.
 
•Don’t type over old reports because you are too lazy to start a new one.   This is how incorrect information gets transferred!
 
•Read your report aloud to see how it sounds.
 
•Use Spell Check and the on-line dictionary! Howe embarrassing 2 git to cart wit misspelled words on yur repert!  Also keep in mind Spell Check cannot pick up on misspelled words if the misspelled word is a real word, i.e., two versus too – proofing your work is critical!
 


Contributed by:
Julie Rock-Chatellier