Overcoming the challenges of adverse subrogation

The demand for payment arrives and where does it go?  If you are like a lot of insurers, it makes its way to the handling adjuster and takes a backseat to other more pressing priorities.   During my tenure as Recovery Process Leader for a large multi-national insurer, that is precisely what hamstrung our ability to effectively respond to subrogation demands. 

To effectively address such process opportunities, there are a number of steps that can be taken to ensure that:

1)      Demands are reviewed promptly

2)      Estimates are reviewed for accuracy

3)      Historical alternative used parts availability has been verified

4)      Effective negotiations are utilized to compress cycle time and limit arbitration filings. 

In reviewing some common practices, there are two that stand out as being commonly applied.    In the first, the handling adjuster is tasked with responding to inbound subrogation demands.   In this situation the following questions should be asked to ensure that this is this process is maximizing returns:

1)      Is the adjuster sufficient trained in material damage to review the estimate for accuracy and estimatics compliance?

2)      Does the adjuster have the ability to access historical alternative parts availability?

3)      When shared fault applies, is the adjuster effectively identifying duties owed and breached so as to formulate a viable comparative negligence scenario?

4)      Does the adjuster have sufficient time to ensure that subrogation demands are reviewed and evaluated within 48 hours of receipt? 

Another common iteration of this inbound process entails utilizing a material damage team to assist in the evaluation process.  While this can be effective in estimate compliance, some critical questions are:

1)      Does the reviewer have access to historical alternative parts availability? 

2)      Could the time spent reviewing, or in some cases, rekeying an estimate be more effectively spent in other capacities?

3)      If the reviewer is not negotiating the settlement, does the handling adjuster have enough knowledge of material damage to effectively apply the reductions during negotiations? 

4)     What is the actual paid amount compared to the reviewed and reduced amount?  

The challenges of any subrogation response process arise across the P&C industry, where other priorities such as contacts, inspections and disposition often take precedence.    To determine the right solution for any organization takes a critical review of the entire end to end claims process.  

By looking for organizational workflow and process gaps, the solutions often become evident.   It is also critical to consider unintended consequences, such as increased arbitration filings, rising expenses or cycle time delays.   When these arise there is often a correlating deterioration in average severity and comparative negligence assessment. 

Often the most effective solution involves leveraging claims technology to assist in the process, freeing up internal resources for more productive redeployment while increasing accuracy in ultimate settlements.  

Christopher Tidball is a claims consultant, specializing in process,  workflow and is the author of Re-Adjusted: 20 Essential Rules To Take Your Organization From Ordinary To Extraordinary.   To learn more, please visit www.christidball.com or e-mail chris@christidball.com. 

Advertisement