The first thing to do in any claim is to understand the business structure and activities. The size and scale of the business is the next step so that a high level value call in relation to the impact of the disability on the business can be made. Is the insured still or likely to be working and to what extent is extremely important as some policies allow the insured to work a maximum of 10 hour per week and still claim total disability benefits. Yes, our job gets easier with product innovations. Products used to be designed to put a person back in the same position they were if it was not for the sickness or accident and those days are long gone.
Depending on the complexity of the business structure, business diagrams should be prepared. Often an insured’s accountant or financial planner have these on hand, however, these would be simplistic in nature but would do the job for a quick snapshot. I always take the concept of the business structure diagram to another level for the following reasons:
- All relevant information is detailed in the diagram.
- The diagram can be forwarded to an insured and/or their advisors for confirmation. Engagement is key to good relationships and diagrams are a great tool
- It is a handy tool to go to in understanding an insured’s business structure and activities when the claim has not been looked at for a long time or can be taken to a meeting.
- It reduces professional time.
- When forwarded to an insured and/or their advisors it shows them that you understand their business, you are well organised and on top of your game.
The relevant information I see is as follows:
- Incorporation and deregistration dates.
- Australian Business Number (ABN) and Goods and Services Tax (GST) registration and cancellation dates.
- All directors including their appointment and resignation dates.
- List of shareholders, their shareholding/percentages held over periods.
- List of principal places of business and the periods.
- Details of any administrations and liquidations.
- Any PPSR information.
- List of trading names and periods.
With complex structures, this high level view assists in understanding what has happened over a period of time and assist in ensuring all information required to be obtained is requested. The business structure diagram illustrates an example diagram
In the old days, when paper files were in existence, these were usually located somewhere in the file and possibly tagged in chronological order. I would suggest that the business structure diagram is as important as the policy rules and should be located at the front of the file.
These days, with the digital age, from what I have seen the documents information is being stored in chronological order. Unfortunately there are no tags. Flint Forensics is fully digitised and all documents can be viewed in chronological order but can be also viewed under folders, such as ‘Business Structure’. With our ‘CliNet’ Portal, information is at your fingertips and we just make your life easier.
If there are multiple third party directors there may be multiple shareholders and if there are multiply subsidiaries, then understanding what profit attribution percentage should be applied is important. For example and the above diagram;
Currently Mr Grahame Flint has disclosed the following interest to 22 July 2013:
50 per cent of Billtop Investment Holdings Pty Ltd.
25 per cent of Zanith Trust.
50 per cent of Quality Questionable Plumbing Pty Ltd.
If another entity, is added, that is Wang Industries Pty Ltd who which Zanith Trust owns 50 per cent and Kieren Curley owns the remaining 50 per cent then Mr Grahame Flint’s profit attribution percentage would be 12.5 per cent. The calculation as follows:
(25 per cent of Zanith Trust x 50 per cent of Wang Industries Pty Ltd)
The calculation worksheet would look something like this:
|Billtop Investments Holdings Pty Ltd||Zanith Trust||Quality Questionable Plumbing Pty Ltd||Wang Industries Pty Ltd|
|Net Adjusted Earnings||100,000||200,000||300,000||400,000|
|Profit Attribution Percentage||50%||25%||50%||12.5%|
It is all about making things easier as the premium pools increase through new business so do claims and productivity gains need to be made.
Just remember, when it’s all about the money ® Flint Forensics Pty Ltd can provide profitable solutions to make things happen.
Forensic Accountant at
CA, CFE, A Graduate Certificate of Forensics Studies majoring in Accounting (Monash University) and holds a Private Inquiry Licence 409418787.
Over 19 years of hands-on experience in the accounting profession. Consulting history includes: Financial Controller for private and publicly listed companies, business start-ups, restructures and ongoing management of those companies. I was the author of the first report to NSW Parliament on the Sydney Water North Side Storage Tunnel. Since 2001, I have consulted on Workers Compensation matters, worked for all but one Australian life insurer and one in New Zealand.
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