Loss of Gross Profit Quantification
Baseline analysis establishes the insured’s standard turnover and policy-defined gross profit using reconciled management and statutory accounts. Experts identify uninsured working expenses, insured standing charges, and any accounting policy changes that distort comparability before any shortfall is measured.
Shortfall modelling compares but-for turnover to actual results across the indemnity period, incorporating one-off events disclosed in contemporaneous records. Saved variable expenses are credited consistently with the policy definition before reporting a CPR Part 35 compliant loss position.
| Phase | What We Do | Deliverable |
|---|---|---|
| Baseline Review | Analyse 12-month pre-loss accounts | Standard Turnover figure |
| Shortfall Calculation | Project but-for turnover vs actual | Gross profit shortfall |
| Adjustments | Reconcile policy definitions to ledger lines | Adjusted loss figure |
| Report | Expert witness report with workings | CPR Part 35 compliant report |
Frequently asked questions
What is loss of gross profit in a UK BI policy?
It is the policy-defined gross profit the insured would have earned during the indemnity period but for the interruption, usually measured by applying the rate of gross profit to any shortfall in standard turnover, then adjusting for ICW and savings on insured standing charges.
How do experts calculate gross profit shortfall?
Experts reconcile management accounts to the policy definition, establish standard turnover and the rate of gross profit from the reference period, compare but-for turnover to actual results across the indemnity period, and document adjustments in a CPR Part 35 compliant workbook.
What documents support gross profit quantification?
Typical packs include statutory and management accounts, VAT returns, EPOS or billing data, payroll, board forecasts, and loss adjuster or engineering reports that anchor the interruption timeline.
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