Why self-insureds need a subrogation program

Most insurance carriers have long ago recognized the importance of subrogation.  Some have developed dedicated departments staffed with highly trained specialists who may work in conjunction with the claims department to handle this function.   Others are supported by outside resources to reach their recovery goals.  But oftentimes the subrogation process is underutilized or neglected entirely by companies which are self-insured.

Self-insured companies frequently leave large quantities of revenue unrecovered each year by failing to pursue their subrogation interests.  In some instances they have assigned the tasks of both third party claims handling and subrogation recovery to  their third-party claims administrator which unfortunately may not work out as well as they might think since most TPA’s are defense oriented, meaning their focus is settling claims not pursuing recovery on paid claims. Most often the recovery efforts are left with the claims representative who handled the claim and now has new losses to review and competing priorities.   You may wonder if the subrogation claim is getting the attention it deserves.

The lines of coverage most typically recognized as having potential recovery are first party auto and property claims.  However workers compensation liens and direct action subrogation can represent a significant source of revenue, particularly when the injury was a result of an auto accident, faulty product or premises liability.

Most likely it is not feasible for a self-insured to deflect resources from their core competencies and allocate them towards a dedicated subrogation department. Fortunately, there are professional subrogation services that can achieve excellent results in recovering paid claim dollars.  Most engage contingency fee pricing where they do not charge a fee if no recovery is made. They employ trained recovery specialists adept at identifying the responsible party and expertly pursuing recovery.  They may have relationships with industry experts who can assist in determining the origin of a loss and agreements with subrogation counsel who can commence litigation on your behalf when recovery negotiations reach an impasse.  But most importantly their main focus is to positively impact your bottom line by recovering these valuable assets!

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