Audit, Compliance and Risk Blog

Recent storms on the US east coast have once again highlighted the importance of having at least some understanding of insurance law, in particular the procedures for making an insurance claim in the aftermath of a catastrophic event.

A picture may be worth a thousand words. But words – or lack thereof – can be worth millions. Never more so than when courts are deciding the level of coverage and the amount of payout policyholders are entitled to from insurance companies. So, when it comes to understanding insurance law you need to make sure you understand rule number one: words rule.

While the standard setter for accounting principles in the United States is the Financial Accounting Standards Board (FASB), many countries outside the United States follow accounting standards set by the International Accounting Standards Board (IASB). For the past several years, the FASB and the IASB have been working hard to unite or “converge” their accounting principles such that, effectively, only one set of rules exists. Until recently, the process has worked reasonably well, but now, in the process of developing the standards for insurance contract accounting, the efforts toward conformity have hit a snag—maybe temporarily, maybe not. This snag, together with other developments mentioned below, appears to be slowing down the convergence of accounting standards.

If a person fires bullets at a car and unintentionally kills someone seated inside, does that constitute an 'occurrence’ for the purpose of insurance coverage? One Mississippi case follows the thread of that question. This year an appeals court was asked to determine whether a shooting that caused the “accidental death” of a person is an “occurrence” as defined in a home insurance policy, and/or whether an illegal act exclusion should apply. Here is a brief summary of the case.

Situations can arise whereby an insurance policy holder is accused of abuse. But policies that stipulate there is no insurance coverage for abuse can still be subject to challenges—and where a child is involved, the stakes are high. The following case was heard in the Wisconsin appeals court that tested the clarity of the abuse exclusion in a home insurance policy.

When two parties in a claim cannot agree, appraisal is often the quickest and fairest method of determining loss value.  But if the appraisers are not able to agree on the value they can choose an umpire to help resolve the dispute, after which an award can be paid out.  But in innumerable cases the parties refuse to accept a win, and insist on moving for a new trial to appeal the case.

STP author Barry Zalma is featured in a new series on the Web-based television news network World Risk and Insurance News (WRIN.tv). The series, launched in January, is called Who Got Caught? It focuses on the apprehension of perpetrators of fraud, from healthcare and workers’ compensation fraud, to murder for life insurance, arson for profit, and more.