Many insurers overlook the subrogation process, which often leads to financial loss. Not only are successful subrogation programs critical to the insurer’s financial strength, but to the overall customer satisfaction.
What Leads To A Successful Subrogation Program?
In most instances, subrogation programs are managed in-house, but they can be outsourced partially or fully. Each company has to choose the most efficient and cost effective model for their organization as there is really no blanket program that is right for everyone. With subrogation, the real value is to find the right person to handle the process in order to get quality results.
Two important elements are needed for a subrogation program to be successful, the identification and the pursuit. Identification has to be timely for a recovery opportunity to succeed. The best results usually occur when a subrogation potential is identified within days of the claim’s first notice. Companies lose millions each year because they close claim files without attempting to pursue compensation from negligent parties.
In this day and age, the use of technology can help significantly with identifying recovery opportunities through programming that can capture loss data and produce a regressive subro analysis. Progressive recover vendors use this technology with data analytics, data parsing, and document image processing to improve the subrogation process.
When it comes to taking subrogation action, the right analytical tools will also be important to help with managing the process and reducing the clerical tasks which the subro specialists perform. Automation is used in some instances to facilitate the gathering of demand letters and support packages. The subro specialist would quickly send packages to insurance carriers or adverse parties for review with just a single key touch, and then have more time to concentrate on negotiating as well as settling claims.
Technology can also help insurers to choose the claims with the highest recovery potential. With automation, it would be easier for subro managers to spread workloads evenly across the internal team members and outside resources, thus capitalizing on the available knowledge, time management, and skills.
Once a good platform is in place for subrogation, certain issues can be addressed. This includes helping with the identification of recovery opportunities and the rate of success; minimizing clerical tasks; improving subro management processes and the tracking of subro specialists workload; assisting with monitoring and grading the external vendors performances, and offering customization to include internal best practices.
At this point, it is worth mentioning a term that is overlooked by many, which is the waiver of subrogation. This is often found in commercial contracts, such as lease and construction, which are made between parties and not the insurer. This waiver provision can prevent an insurance company (that comes in for the insured when a loss is paid) from suing other party(s) to the contract.
Overall, a successful subrogation program could contribute greatly to a company’s bottom-line performance. Through subrogation, revenue can be derived from investments which are performing poorly and premiums which are not growing.