Business Interruption Introductory session - Establishing Insurable Gross Profit

Establishing Insurable Gross Profit

The case of Infinity Alliance v Heath Crawford [decided in 2023] highlighted a gap in understanding, which was not exclusive to the defendant firm, that of establishing a firm’s insurable gross profit. An increasing reliance upon standardised cover has probably reduced those skills necessary to correctly establish an applicant firm’s gross profit and to overcome some of the issues that this process can highlight

Objectives

• Understand the nature of insurable gross profit is and how it differs from the accountant’s definition

• Appreciate the nature of fixed costs and why insurance for these is required

• Be able to explain the application of the economic limit to claims settled on the basis of increased costs of working

Content and Learning

• Explaining the finding in Infinity v Heath Crawford

• Defining insurable gross profit and how this differs from the accountant’s definition

• Consideration of the potential pitfalls in calculating a firm’s gross profit.

• Explain how the rate of gross profit assists in calculating the ‘economic limit’ applicable to ICOW claims

• Those situations in which AICOW settlements may be justified