Business Interruption Measurement Considerations in a COVID-19 World

  • Date13 October, 2020
  • Author Jeff Williams
  • Location USA

Although hurricane season doesn’t normally conclude until November 30th, we have already exhausted the modern English alphabet in terms of named hurricanes. In the last year, we’ve also seen an ever increasing number of wildfires, explosions and tropical storms.

While each event is certainly different in terms of impact, this year there is one common element to them all: COVID-19. As forensic accountants, one of our roles is to ensure we’ve accurately considered all scenarios and the impact they may or may not have had on the loss in question.

With this in mind, below are three key issues we believe are crucial to understand when assessing a business interruption claim in the wake of the Coronavirus.


Nearly every aspect of the world economy came to a sudden halt as various governments issued stay-in-place orders to help slow the virus’ spread. As we work with our clients to help quantify claims, we’ve seen a wide variety of issues across all industries, some of which are noted below[ii].

BI Measurement Considerations

Considerations for Saved & Increased Costs

Individual expenses are frequently evaluated to determine the degree to which certain expenses continue, diminish or cease during a given period of indemnity. Because of COVID-19, it’s crucial to understand that certain expenses may not behave as anticipated.

For example, if a loss occurred sometime after March 2020, labor could be less than in years prior with no relation to a given loss because the insured may have issued layoffs and/or furloughs. Conversely, other expenses may have increased such as freight and materials costs as a result of the impact on the global supply chain. Thus, it is imperative that we understand the nature of all expenses and how they may or may not affect the loss.

Period of Indemnity

Traditionally, understanding the revenue trends before, during and after the loss helps ensure that the measurement accurately encompasses the true nature of the damage while still accounting for changing market conditions.

In some cases, particularly with policies that afford coverage for an extended period of indemnity, revenues will return to pre-loss, “normal,” levels subsequent to reinstatement. In a way, we might expect the revenue trends to follow the repair schedules.

However, these scenarios may not be the case with COVID-19. Regardless of the repair completion date, revenues may still appear off-trend when compared to pre-loss levels.

While certain industries have undoubtedly benefitted from the effects of COVID-19 (e.g.  internet retailers, virtual conferencing companies, paper mills and delivery services to name a few), the typical experience we have noticed at MDD is an overall lack of comparability between pre-COVID-19 revenue experience and the experience of an entity during this pandemic.

To combat this, forensic accountants must take great care to understand a business’ opportunities and challenges when evaluating expected earnings but for an insured loss during these unique times.

Since the World Health Organization declared COVID-19 a global pandemic on March 11, 2020[iii], MDD has been retained to assist in quantifying thousands of losses. The insight we have gained from these events has been invaluable. We will continue to use this knowledge to ensure everyone understands the nuanced nature of the current market and help the insured get back to business as usual.

By Jeff Williams, CPA, CGMA, MAFF, Partner

The statements or comments contained within this article are based on the author’s own knowledge and experience and do not necessarily represent those of the firm, other partners, our clients, or other business partners.

[i] Source for Bullet #2 in Global Air Travel –

[ii] Source for Bullet #4 in Food & Beverage Industry –