In a recent posting we discussed missed subrogation revenue waiting to be discovered in your closed claim files. Hopefully you have begun to implement some of the practices suggested, such as forensic file reviews and subro awareness training which will ultimately lead to the early identification of claims with recovery potential. The prospect of a good night’s sleep seems possible, but the proper identification of recovery opportunities is only one step in the subrogation process. We must now address how you might best recaptureyour paid claim dollars.
The successful pursuit of subrogation monies can best be accomplished through the development of a strong subrogation program to aggressively pursue the responsible parties. In many insurance companies the claims adjuster who investigated and paid the claim is the same person charged with this task. However the subrogation strategy and required skills in subrogation pursuit are very different than those required in the defense of claims. Well trained claims adjusters are adept at completing a claims investigation, assessing damages, determining negligence and negotiating a settlement, most often from a defensive position. The subrogation posture is as an aggressor, on the hunt to identify a responsible party and make a compelling demand for payment together with convincing arguments to get it paid.
The recovery of paid claims dollars can often be a tedious process requiring in-depth knowledge of jurisdictional rights of recovery and the ability to successfully argue the theory of liability. More often than not claims adjusters are faced with competing priorities such as tending to newly assigned losses requiring prompt contact and investigation to excellently service their policyholders. Workers Comp Adjusters are focused on determining injury severity, making timely payments, arranging for attendance at WCB Hearings and quite frankly, getting the injured worker back to work as quickly as possible to mitigate both medical and indemnity payouts. During this rather arduous process little thought is given to looking for the Mr. Somebody who may have caused the loss, much less pursuing them for recovery. And we can all see that little to no attention is paid to claims that can be considered “closed” once that final claim payment has been issued.
The most successful subrogation programs usually involve a dedicated subrogation unit with the sole function of reclaiming monies paid. While this may seem like the obvious solution, the claims executive is often faced with the daunting decision of where to invest sometimes scant corporate resources-should they be allocated to the investigation and defense of claims or to the potential recovery of monies paid.
Fortunately, there are alternative solutions which may include the development of a partnership with a subrogation services provider. In addition to full outsourcing, a reputable subro partner will offer customized solutions to support your internal program. They may include First Notice of Loss, Overflow and Subro Sweep Programs and special projects such as Arbitration filings, all designed to support and enhance the productivity of the internal subro team. A good partner understands your recovery objective and becomes a member of your team.
Many subrogation firms utilize a contingency pricing model which encourages tenacity in their operations and is in alignment with your financial goals. They have developed strong relationships with engineering experts who can support allegations of a faulty product and subrogation law firms to litigate claims that cannot be successfully negotiated. The best firms have employees who have successfully worked in a claims environment, having a deep understanding of liability issues and strong negotiation skills.
When exploring potential partners for your subro program be sure to ask for industry references, reporting practices and frequency of net recovery distribution. You should also inquire about their internal security measures and the strength of their technology.
It’s no surprise a successful subrogation program can make a significant contribution to the financial stability of an organization. The development of the right subrogation program for your organization will not occur overnight. Start by establishing an annual recovery goal communicated to executive management as well as internal and external team members. With a strong focus on your goal and the engagement of the best resources available your success and a good night’s sleep are achievable, and well-deserved!