How a Destination Resort Recovered From a Devastating Flood

Background & Challenges

A major hotel resort, casino, and golf destination suffered significant damage following a 500-year flood event. The hotel owner originally hired a public adjusting firm to guide them through the claim process. Throughout the claims process, the relationships between the public adjusters and the insurance adjusting team began to deteriorate and a lack of trust developed. The claim was headed towards litigation and the client turned to BDO to step in and right the ship.

Approach

At the time BDO was engaged, there was a $60 million difference in the submitted claim and the insurance company’s valuation. The insurance company was not budging and felt very strong about their positions. BDO methodically went through the property damage, extra expense, and business interruption claim amounts and developed positions on each. For the business interruption measurement, the entire analysis performed by the prior firm had to be reworked and organized into a valuation that could withstand the scrutiny from the insurance company’s forensic accountants.

Client Impact

After being presented with a detailed, fully supported financial model of the claim, the Insurance Company increased their settlement offer by nearly $40 million. Based on BDO’s reputation in the market and relationships with the Insurance Company’s representatives that had been cultivated over several years on other matters, the BDO team was able to convince the Insurance Company that their positions were not as strong as they had originally thought. The matter was able to be settled without protracted litigation that would have taken several years. The client was thrilled with the result and has since hired BDO on several other matters as their preferred firm for their forensic accounting needs.