Case Studies
In August 2020, a large amount of ammonium nitrate stored at the Port of Beirut in the capital city of Lebanon exploded. According to media reports, this caused at least 218 deaths, 7K injuries, and $15B in property damage.
We were engaged to quantify the BI at a luxury hotel that had sustained severe damage from the blast. The hotel closed for two years. However, the indemnity period was shortened due to delays in the restoration work, which insurers argued could have been quicker with due diligence and dispatch.
The valuation of the claim was further complicated by hyperinflationary economics reflecting the economic and political unrest in Lebanon at the time including the effects of the devaluation of the Lebanese pound. The explosion occurred during the COVID-19 pandemic, which would have affected the results of the business in any event.
Further, the claim did not consider the overhead expenses of the business and the extent to which these may have ceased or reduced because of the damage while the hotel was closed (e.g., payroll). There were also debatable assumptions used regarding ongoing losses assumed upon partial reopening with around half of the rooms available, while repair was undertaken on the remainder. There would potentially be no loss since the projected occupancy was less than 50%.
Based on a 13-month period, the claim was over $60M. However, we understand that a negotiated settlement was reached of around $9M. This reduction considered some of the points mentioned above, but our assessment was somewhat lower.
Daniel Thorpe
Executive Vice President
Forensic Accounting - Insurance Services
+971 56 658 3620
[email protected]
> Business Interruption / Lost Profits
We provide specialized expertise in the quantification of damages related to claims and disputes involving business interruption and lost profits. Our team combines their financial expertise and diverse backgrounds to effectively evaluate the insured's/claimant's operations and industry/market-specific factors, to quantify interruptions and lost profits.
> Forensic Accounting
Our Forensic Accounting Practice includes Certified Public Accountants, Certified Fraud Examiners, Certified Financial Forensics experts, and other financial experts who specialize in financial investigations, dispute resolution, and regulatory compliance. We deliver the truth behind the numbers in financial matters involving insurance claims and disputes, business interruption/lost profits, cyber damages, Delay in Start-Up (DSU) / soft costs, extra expense, family disputes, fraud, labor & employment disputes, personal injury damages, and bankruptcy/insolvency.