Research Develops Allocation Tool for Current and Future Adjustments
CFO’s struggle with how to allocate current insurance costs across divisions, let alone fund for insurance-related liability claims that arise many years after policies expire. Years ago, a McGriff client divested an operating division and the liabilities associated with the divested assets. Five years later, the client received an insurance invoice for policies placed with a previous broker that comingled liabilities between the retained and divested liabilities. Our client asked for our assistance in developing an allocation method and supporting documentation so that the divested company would pay their fair share of the unfunded cost. McGriff surveyed old insurance policies, invoices and claims detail to develop an allocation tool for current and future adjustments. Our work product allowed the client to secure a $275,000 payment from the new owner to cover their share of the allocated liabilities.