Case Study: Contents

Challenge

After Hurricane Ida, a family-owned athletic wear business claimed a complete loss of all inventory due to looting, and Sedgwick was brought in to manage the claim and assess the loss. The site showed clear signs of break-in and theft, but the insured had no point-of-sale system, only a manual cash register and a handwritten inventory ledger. Poor documentation and a lack of cooperation by the insured immediately created challenges with the claim adjustment. Additionally, some of the documentation Sedgwick received were found to be potentially fabricated.

Solution

Due to documentation challenges and the size of the claim, a desk adjustment was deemed insufficient, and the case was escalated to a field assignment. A field adjuster visited the site and also had a negative interaction with the insured. Efforts to measure the loss and validate the claim continued with the involvement of contents adjusting, forensic accounting and the special investigations unit (SIU).

A contents field adjuster was then assigned and our contents team went on site and estimated the inventory value of a fully re-stocked store at half of the claim amount. Statements made on site to the contents field adjuster along with onsite findings and photographs further contradicted prior information provided by the insured. The special investigations unit (SIU) also found multiple past claims with similar patterns from other family-owned stores of the insured. Forensic accounting analyzed financial documents, including historical purchase invoices, and concluded that they could not be reconciled to the claim. Tax returns indicated that historical inventory values reported by the insured were substantially less than the claim amount, and police photos showed merchandise still in the store post-looting. Our forensic accountant pieced together this information to prove that the claim was significantly overstated. Because of the large difference between the claimed and calculated amount, the insured elected to bring this dispute to arbitration in Louisiana, a venue that is typically very favorable to insureds.

Results

Our forensic accountant was able to articulate the issues at hand, weave together the facts gathered from the various involved parties and present his conclusions to the arbitration panel, while contents solutions provided compelling testimony to create doubt to the validity of the claim, further corroborating the opinions of the forensic accounting expert. This collaborative approach was a huge success. The final arbitration award was a small fraction of the claimed amount — saving our client money. By working together and utilizing their unique insights and skillsets, the content solutions and forensic accounting teams were able to create and present a unified case. This case a great example of how multiple Sedgwick teams working together enhances their effectiveness and creates better outcomes for our customers.

Licensed

field and desk adjusters

Specialised

expertise of business personal property

Trusted

forensic accounting services to quantify losses

Credible

expert witness testimony