January 24, 2023

When Insurance Carriers Cut Corners, Policyholders Pay The Price

In March of 2022, Michelle Canniff joined SMW as head of Forensic Accounting. In her role, she’s leading the SMW teams focusing on commercial losses, business interruption, extra expense and time element claims. This gives her a unique perspective on the insurance industry based on her past experience and her new perspective from the public adjuster’s side of the table.

We checked in with Michelle recently to get her sense of developing trends. One area she immediately flagged should put policyholders on red alert. It involves the increasing tendency of insurance companies to cut corners in their use of experts to calculate losses on claims. More and more, Michelle explains, carriers are avoiding the use of external experts – forensic accountants, for example, or construction engineers.

Instead, insurance companies are calculating costs by relying on internal team members. These non-expert team members are often, at best, merely generalists who can’t fully grasp the complexities involved in calculating a difficult property loss. This trend can be detrimental to policyholders.

Michelle saw some of these cost-cutting moves in her pre-SMW role when she worked for carriers. Now that she is representing the policyholder, she sees it more than ever. Why? Michelle points out that even though insurance companies have the funds, they are reducing their “expert fee” budgets as a cost-cutting measure. The logic is obvious – why pay an outside expert when internal employees of the carrier might be able to do a comparable job?

These decisions to skimp result in sloppy claims calculations and inadequate payment offers to policyholders. You can’t just pump numbers into a system and expect it to spit out a calculation that reflects the reality of a policyholder’s business expenses. Accurately calculating this type of insurance claim requires years of experience and industry perspective. After all, every business is different. This means you must look at monthly sales and costs and what’s driving the monthly increases and decreases. It’s critical to meet with the policyholder and ask the important questions to understand their business. Forget the formulaic ‘loss of income’ spreadsheet – you have to look at data and industry trends to formulate a truly accurate measurement.

The real head-scratcher is that this short-sighted cost-cutting will probably cost insurance companies more in the long run because they are making mistakes and misusing their in-house team members.

Michelle emphasizes the value of relationships, and her work on both sides of the claims process reminds her how experienced the experts are who are available to the insurance companies. The carriers need to remember that policyholders are clients and should be treated with the respect they deserve.


Michelle Canniff

Michelle is head of Forensic Accounting at SMW, bringing more than 25 years of experience in the field of investigative and forensic accounting. Her expertise includes analyzing and measuring commercial insurance claims consisting of business interruption, extra expense, property damage, inventory, and fidelity losses from small to complex matters.
If you’ve had a fire, flood or other property loss resulting in an insurance claim, and need a public insurance adjuster in Massachusetts, New Hampshire, Rhode Island, New England or anywhere in the U.S. or Caribbean, call Swerling Milton Winnick. We are the oldest and largest public adjusting firm in New England, and our team of experts will give you personalized, 24/7 attention to successfully resolve your residential or business insurance claim.