One marker of a successful insurance company claims operation is the effectiveness of its subrogation process. Over the years, a variety of benchmarking studies have shown that the best-performing insurers recover about twice as much through subrogation as the average insurer. And by one estimate, companies miss $15 billion a year in opportunities to recover from the responsible parties — often including their competitors. (For a summary of some of the studies, see this 2011 blog by Christopher Tidball.)
Why haven’t property/casualty carriers invested more in subrogation?
The primary challenge has been technology — or the lack of it. Without automated resources to help claims adjusters identify claims with subrogation potential and refer them to the subrogation unit for assignment, opportunities fall through the cracks. Many good referrals for subrogation come from adjusters with the experience to recognize conditional liability, but those adjusters suffer under increasing workloads and the continued pressure to attain closure rates of 100 percent. For junior adjusters, their lack of experience makes them likely to miss some opportunities.
Current volume-oriented goals to improve the number of referrals compound the problem. If adjusters must increase the number of claims they refer to the subrogation unit — they will. However, some of those claims may have no subrogation opportunity. More referrals may merely overload the subrogation department and be counterproductive: Missed opportunities become inevitable if the applicable statute of limitations passes on claims with legitimate subrogation potential.
ISO Claims Outcome Advisor® (COA™) has the answer to the property/casualty industry’s $15 billion question: How can we get more out of subrogation? Our new tool, ISO Subrogation Advisor™, offers an integrated approach to recapturing claims paid through subrogation. With a few mouse clicks, adjusters can identify and refer cases for subrogation. And because ISO Subrogation Advisor is easy to use, the increase in referrals comes without a significant increase in adjusters’ workloads.
Simply put: The right people see the right claims sooner, leading to increased recoveries and lower loss ratios.