Praxis's "Subro-Profitability Top 5 List"

Over the years, we’ve identified five areas we encourage CFOs to take into consideration when reviewing their subrogation department’s profitability. The items that made our Subro-Profitability Top 5 all have two things in common: they cost time and money.

Other adjuster priorities.

Other adjuster priorities.
Adjusters have many responsibilities during the claims cycle: determining coverage, investigating facts of loss, assessing liability, calculating damages, negotiating settlement, setting reserves, and issuing payment. In light of these important adjuster functions, subrogation frequently takes a back seat or is an afterthought.

Stake in Subrogation Results

Claims people may not have a stake in subrogation results.
Claims adjusters often have a lack of subrogation objectives, and tend to focus on more heavily weighted competencies, which can negatively affect subrogation results.

Turnover in claims

Turnover in claims.
Adjuster turnover leads to missed referrals, which in turn, negatively affect subrogation results. Additional training and time must be devoted to new employees, causing momentum to stall.

Overconfidence in internal processes

Overconfidence in internal processes.
Most companies measure and track subrogation performance internally, whereas they should be using industry benchmarks to compare their claim recovery performance to that of their peers.

Politics in the workplace

Politics in the workplace.
Independent reviews of missed opportunities are often met with resistance due to fear that results may reflect poorly on the company’s performance.

Still, in spite of all these limitations, many companies continue to handle their own recovery efforts rather than outsource them, due to the perceived difficulty of transition, limited access to IT resources, fear of sharing proprietary information, and an unclear understanding of the benefits of outsourcing or partnering with an outside service provider. Praxis Consulting’s goal is to dispel these fears, one at a time.