Forensic Firms Move Into New Business Lines

After Hurricane Katrina, several forensic engineering firms popped up in the New Orleans area to serve an insurance industry overwhelmed with thousands of damage claims. Since the storm, the companies that remain in New Orleans have had to find new sources to grow their businesses.

Madsen, Kneppers & Associates, Rimkus Consulting Group and U.S. Forensics are three of the last large forensic engineering firms that still maintain a foothold in the region.

Starting in late 2005, the Poydras Street office of Madsen, Kneppers and Associates swarmed with engineers from all over the country that the company had flown in to handle the abundance of work.

MKA, based in Walnut Creek, Calif., with 20 branches across the U.S. and Canada, deploys dozens of employees from its different locations to one spot when a disaster hits.

“After the events happen, the phones are ringing off the hook,” President Jozef Kneppers said.

When a property damage claim is filed, insurance companies hire engineers to inspect the damage to make sure the property owner’s policy covers it and to recover losses from a third party, such as a contractor, when applicable.

With damage claims from Hurricane Katrina handled, MKA is finding new ways to make money. Its New Orleans office began inspecting builder’s risk insurance claims and construction defects. General contractors and developers are required to hold builder’s risk policies to cover damage during construction.

Ongoing construction projects in New Orleans, much of it tied to Katrina recovery dollars, will provide a steady stream of building defects, said David Stieffel, regional manager of Madsen’s New Orleans office.

MKA clients include several big names in the insurance industry, including American International Group Inc., Zurich Insurance Co. and Travelers. The company also performs inspections for several New Orleans-area school districts and the U.S. Justice Department.

“A few years ago.I don’t think we would have gotten these calls,” Stieffel said.

MKA works only for insurance companies investigating claims, rather than the parties filing claims, to avoid conflicts of interest.

Gary Bell, Bill Janowski and Michael DeHarde started U.S. Forensic of Metairie in 2006. Now with 22 offices across the nation, they expect the company to reach $16 million in revenue this year.

U.S. Forensic works for insurance companies and parties filing claims. The company divides its work among residential, commercial and government properties. Its clients include General Electric, Schindler Elevator and Honda.

U.S. Forensic’s New Orleans office ranks second only to Miami in revenue. The amount of work for forensic engineering firms in a market often depends on the amount of litigation that happens, Bell explained. His impression is that Miami and New Orleans have more insurance claim-based lawsuits than the company’s other locations.

The forensic engineering market is stable right now for the companies that stayed in New Orleans since Katrina, Bell said. Much of U.S. Forensic’s local competition comes from national firms sent to the city after disasters, as well as roof experts, retired firefighters or ex-police officers who inspect roof failures and fires.

“The level of jobs out there is pretty flat right now,” Bell said.

Rimkus Consulting Group of Houston also maintains an office in Metairie but declined to comment for this article.

In addition to the larger companies, new forensic engineering businesses have established themselves in New Orleans. Arthur Zatarain opened Artzat Consulting, an engineering consulting business, in 2008 after serving as vice president of engineering for Test Automation and Controls Inc. of Harvey. His clients include BP America, the U.S. Army Corps of Engineers and Key Energy of Oklahoma City.

Having spent more than 30 years as a forensic engineer in New Orleans, Zatarain said business in the area “was pretty quiet until Katrina,” noting that many of the firms that opened locations in New Orleans after the hurricane have since left.

He considers himself a specialist in his field, especially with competition waning.

“I don’t know anyone in town who does what I do,” he said.