How we help you
Strong internal controls are essential for compliance, efficiency and protecting your business. When controls are managed effectively, insurers can help ensure their reputation and assets stay secure while driving value.
Navigate Model Audit Rule compliance.
Streamline SOX requirements.
Develop a tailored internal audit plan.
Implement effective, secure IT controls.
Delivering value with strong internal controls
Wipfli’s internal controls advisory for insurance helps you build a more risk-aware culture and gain insights into how to manage controls effectively.
Explore our internal controls services
Wipfli can help your organization navigate the complex requirements and resource-intensive processes involved in Model Audit Rule internal control compliance. Engage our industry-experienced team for support in:
- Evaluating and managing compliance.
- Financial reporting.
- Internal controls testing.
Wipfli can help you streamline SOX requirements with a seamless process. We start by identifying and testing your key controls over financial reporting and business processes. We then turn your SOX program data into insights, helping deepen your internal control knowledge and providing resources to help you fill technical and capacity resource gaps.
Develop an internal audit plan tailored to your specific goals and industry needs with Wipfli. Our internal audit team combines practical guidance and industry experience to help you choose the approaches and solutions that best fit your company. We can also work alongside your current internal audit team to augment their capacity or provide quality assurance reviews.
Wipfli’s IT general and application controls review can help ensure your organization’s IT controls operate effectively. Our team works with you to identify risks and provide actionable feedback so that you can be confident in your security.
Insights and resources
PODCAST
Podcast: Maximize tech and talent with smarter insurance filing
Insurance companies face significant challenges in keeping up with changes in statutory requirements amid intensifying workforce pressures. In this episode of Bank on Wipfli, we explore how insurers are adapting to major shifts in statutory financial reporting and annual statement filings. Wipfli Partner Robert Zondag talks with Burch LaPrade, CEO of Gain Compliance , about evolving issues with insurance filings, including: The growing talent gap in statutory accounting, driven by retirements and limited new entrants to the field. The constant evolution of NAIC regulations, including seismic changes like the principle-based bond definition and expanded Schedule P history. How insurers are being asked to do more with less, including off-cycle reporting and modeling what-if scenarios. The role of technology in streamlining workflows , improving collaboration and delivering contextual guidance for complex filings. Why successful filings require more than software — how support and education are critical to reducing stress and improving outcomes. Gain more insights: How insurance firms can approach AI like today’s digital leaders Podcast: Breaking the security-convenience seesaw The Amazon of insurance: Who will emerge as the industry leader? Listen on Apple Podcast Listen on Spotify
CASE STUDY
Cross Insurance TPA, Inc.
Ensuring business continuity: Wipfli’s advice helped Cross Insurance switch to remote work — and maintain business continuity during vulnerable times.
ARTICLE
How Discount Rates, Inflation and Uncertainty Factor Into Economic Damage Calculations
Interest rate considerations figure into almost every litigation project. Any situation involving pecuniary damages requires a thorough analysis of the expected timing of lost cash flows as well as an understanding of “time value of money” and risk inherent in the litigated financial transaction. Time value of money is a widely accepted tenet in litigation support The concept refers to the fact that a dollar received today is worth more than a dollar received in the future. The presence of damages accumulating over a past period generally requires an examination of interest accruing to the plaintiff. A plaintiff who sustains monetary damages cannot be made whole without considering interest on the funds they lost due to a defendant’s wrongful conduct. Damages accruing over a period of time represent financial opportunities lost, or interest, in its purest economic sense. The presence of damages projected over a future time period likewise warrants an examination of time value of money and a resultant calculation of present value. The obvious place to start any time value of money calculation is with interest rates. Money can be invested, which means any current award of future or past financial damages should take into consideration the applicable interest rates. The choice of a proper interest rate is influenced by the type of litigation project, the time period of the loss and an assessment of risk inherent in the proposed loss calculation. Interest rates, however, are only a part of the puzzle in many litigation contexts, as real-life factors such as case-specific considerations, inflation, the state of the economy, industry expectations and wage growth rates influence the magnitude of but-for cash flows. Developing a reliable discount rate should consider: Expected cash flow or income stream (taking into account the risk of achievement). The degree of penalty for risk of variability in the return. The timing of cash flows or income stream. Risk-free rate of return. 1 In certain situations, such as a personal injury or wrongful death calculation, examining risk-free interest rates may prove to be a sufficient basis for a present value calculation. In others, reference to state-specific statutes establishes the guidelines for interest rate computations. Every lawsuit is different, however, and case-specific as well as jurisdictional considerations influence a financial specialist’s approach to establishing a supportable discount and/or interest rate. Two of the most common litigation contexts and related interest rate considerations are discussed below. Personal Injury, Wrongful Death and Wrongful Termination Cases Personal injury types of cases typically necessitate projecting an individual’s earnings over a future time period. The time period involved must be supported with statistical data, research and pertinent publications. Although relevant case law must be examined in each litigation project, it is generally accepted that a risk-free rate should be used in such calculations. As stated in the “Discount Rates, Risk, and Uncertainty in Economic Damage Calculations” publication by the American Institute of Certified Public Accountants (AICPA): It is generally accepted that the discount rate to be applied in these matters [personal injury, wrongful death and wrongful termination cases], after consideration of earnings growth, should not submit the plaintiffs to undue risk considerations, which has often resulted in the use of risk-free discount rates. The justification of such rate is that this rate will permit the plaintiff to replicate the lost earnings stream by reinvesting the amount paid in a judgment in the “best and safest investments.” 1 The litigation support specialist in personal injury cases has the responsibility of choosing a supportable risk-free rate based on the timeframe of the damage period. They should give additional consideration to the relationship between the chosen discount rate and the wage growth rate, as well as inflation expectations inherent in a lost wage calculation. Certain types of cases may require a separate calculation for medical costs. As they require a deeper examination of the relationship between interest rates and medical costs inflation, future medical costs computations add an extra layer of complexity to a financial specialist’s report. Medical service costs have historically increased at rates unseen in other industries, and medical inflation must be scrutinized in order to obtain a viable conclusion of the present value of future medical expenditures. Lost Profits Lost profits cases present unique issues in computing discount rates. Although consideration of risk-free rates is to be expected in a lost-profits scenario, the risk inherent in a business venture may be greater than a historical risk-free rate. In order to determine the appropriate interest rate, a specialist must examine the reliability of the projected cash flows as well industry and market conditions under which a given business operates. The variability of outcomes in a business projection may be implicitly or explicitly considered in a lost profits calculation.1 An interest rate that explicitly takes into consideration the business risks inherent in a particular transaction may be appropriate under certain circumstances. As an alternative, use of multiple models or scenarios may be justified where significant uncertainty as to projected amounts exists. As you can see, the breadth of litigation-related economic calculations is hard to overstate. Leveraging a witness who specializes in litigation support calculations provides a supportable opinion as to the amount of damages, the appropriate time period for the calculation and a viable interest rate. Such service is certain to have a meaningful and positive impact on the outcome of a litigated monetary award. If you want to learn more about interest rate considerations or engage a specialist for litigation support, contact Wipfli. [1] “Forensic & Valuation Services Practice Aid: Discount Rates, Risk, and Uncertainty in Economic Damages Calculations,” AICPA, 2013
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