Rate of Gross Profit, Trends & Adjustments
The rate of gross profit (ROGP) is derived from the relationship between defined gross profit and turnover in the reference period. Experts stress-test the ratio for seasonality, growth trends, one-off transactions, and post-loss accounting policy changes that would misstate the comparator.
Where insurers allege overstated baselines, transparent sensitivity tables show how alternative trend assumptions move quantum - a discipline courts expect under CPR Part 35 and Ikarian Reefer duties.
| Adjustment theme | Expert analysis | Typical disclosure |
|---|---|---|
| Seasonality | Compare like-for-like calendar periods | Monthly P&L, VAT quarters |
| Growth / decline | Separate structural trend from insured peril | Board forecasts, KPI packs |
| One-off sales | Exclude non-recurring turnover | Contract register, IFRS notes |
| ROGP recompilation | Recompute after adjustments | Updated ROGP working paper |
Frequently asked questions
What is the rate of gross profit (ROGP)?
ROGP is the ratio of policy-defined gross profit to turnover in the reference period. It is applied to any shortfall in standard turnover during the indemnity period to translate lost turnover into lost gross profit.
When do insurers dispute the ROGP baseline?
Disputes often arise where pre-loss accounts include one-off sales, acquisitions, accounting policy changes, or atypical seasons that inflate or deflate the comparator. Experts stress-test alternative trend lines and disclose sensitivities.
How are seasonality and growth trends handled?
Experts compare like-for-like calendar periods, separate structural growth from peril-driven shortfalls, and exclude non-recurring turnover before recomputing ROGP - with transparent tables suitable for joint expert meetings.
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