Eliminate Missed Subrogation Opportunities
Missed files happen. In fact, an average of 1 - 5% of the claims that should go to subrogation, don’t. Depending on the size of a carrier, these missed files can translate into hundreds of thousands to millions of dollars.
For a carrier with $100 million in potential subrogation files, this could mean an additional $1 million to $5 million in subrogation recoveries. Following are four most common factors that Praxis has identified as contributing to missed subrogation opportunities by internal subrogation departments.
Missed files don’t always result from deficiencies
in a carrier’s process, but rather from...
A carrier’s reliance in its internal process.
No one likes to look for cracks in their own system, but synching up to industry benchmarks and measuring performance against industry averages are good ways to keep everyone on the same page. Internal performance tracking is not enough, especially when the system already allows for missed subrogation opportunities.
Current Management Metrics
Some companies measure their subrogation success in terms of hard metrics — such as “the number of closed files with or without recovery per month” — rather than by the thoroughness of their recovery efforts. When this happens, claims adjusters begin thinking in terms of meeting quotas and, as an effect, are more likely to close files prematurely or compromise the settlement and overlook subrogation when this quota has been met.
Unintentional human error
Adjusters have many responsibilities during the claims cycle — from determining coverage to calculating damages — and subrogation can sometimes take
a backseat to these important functions. Also, when carriers don’t establish subrogation objectives for their claims adjusters, the adjusters will,
understandably, tend to focus on more heavily-weighted competencies.
Turnover in the department
When turnover is the cause of missed files, the effect is two-fold: Subrogation opportunities are missed entirely, and resources (time, experience and money) are lost to the training of new employees. This domino effect increases the likelihood of even more mistakes in the future.