Visualize: Insights that power innovation

Visualize: Insights that power innovation

Maximizing recoveries: Boost customer satisfaction through better subrogation

By Kevin May  |  October 23, 2020

Customer service is the core function of claims organizations. It’s the time insurers are called on to fulfill the promise of the policy and make customers whole again after a loss. In today’s customer-centric environment, that means paying the claim as quickly and efficiently as possible.

While many insurers are focusing on streamlining claim settlements, there’s an often-overlooked area of claims operations that can be the key differentiator in customer experience—subrogation. When carriers maximize recoveries, it also can enhance policyholder satisfaction in several ways.

Customer service doesn’t stop at claim payment

The claims process doesn’t end after the claim is paid. Every claim has an associated deductible, and until that deductible is returned, the policyholder isn’t made whole. And a deductible reimbursement can be a long and frustrating process that negatively affects customer satisfaction.

Consider this: 77 percent of auto insurance customers in the U.S. are actively shopping for another carrier because of poor service. In fact, policyholders who experience poor service are eight times more likely to switch carriers. But it’s not only the negative experience of waiting for deductible recovery that drives customers away, it’s also the financial hardship of the out-of-pocket costs.

COVID-19 has had a major financial impact on individuals, with one-third of people in the U.S. losing 10-25 percent of their income early in the pandemic, and 13 percent losing all of their income. With some deductibles at $1,000 or more, it’s critical for insurers to quickly return those payments to ease financial burdens. Improving the recovery process can do just that.

Better recovery leads to right-priced premiums

The recovery process also affects policy underwriting. Actuaries use total paid claims to help determine policy premiums. If a carrier isn’t maximizing recoveries against at-fault parties, those unrecovered dollars remain on the carrier’s books, potentially driving up premiums.

For example, if a carrier leaves $1 million in recoveries on the table, actuaries will see that in the total claims paid and calculate that into the premium structure. Each dollar a carrier recovers offsets the claim payment, and consequently, keeps premiums low. And that ultimately improves policyholder satisfaction and retention.

Finding faulty products through subrogation

An effective subrogation operation is built on data and analysis. One key data point subrogation professionals should track is products that have a propensity to have losses. Subrogation data can be fed back into the claims process to support investigations and recognize potential product issues.

For example, this type of data can uncover trends such as a particular vehicle part that tends to malfunction and cause accidents or heavy equipment that easily sparks fires. This information can lead manufacturers to either improve products or issue warnings. Insurers themselves could issue safety bulletins to their policyholders and position themselves as consumer advocates.

Enhancing efficiency with data and automation

Maximizing recoveries can go a long way in improving customer service and differentiating your company from the competition. But carriers will need tools that remove inefficiencies from the process to make it happen.

Insurers need access to data and insights at critical points in the claim process to help subrogation professionals improve decision-making and increase efficiencies. Automation technology can prove to be valuable in this process. Advanced analytics can identify subrogation potential early in the claim process and automatically refer claims to subrogation. From there, key data points can augment investigation and negotiation, and ultimately lead to fast, automated deductible returns.

It’s time for insurers to think outside of the box when it comes to customer service. The claims process doesn’t end at claim payment. Recoveries are critical to the policyholder experience. Carriers who embrace innovative subrogation will reap the rewards of a loyal and satisfied customer base.


Kevin May, CPCU, CSRP, is vice president of product innovation, subrogation at ISO Claims Solutions, a Verisk business. You can contact him at kevin.may@verisk.com.