Archive for December, 2012

Subrogation Workload: How much is too much?

An often debated question among claims executives is how to properly staff an organization.   Arguably, one of the most challenging of the positions to properly staff is that of subrogation adjuster.  Given the varying degrees of complexities involving recovery operations, this can pose quite an organizational challenge.    So what should a claims organization do?

The simple answer to the question is that it depends;  but the first answer is never base staffing on pending.  It is a self fulfilling prophecy as there is little incentive to close files.   “Hey, if I get to 500 then I won’t get any new.”  Rather focus on new with an emphasis on disposition and quality. 

Other critical questions that need to be answered are:

  • What type of subrogation is being pursued? Auto, Property and workers’ compensation will have different models.  
  • What is the average tenure of the adjuster? 
  • What is the complexity of the claims?
  • What percentage is insured versus uninsured?
  • What is the average time of referral from date of claim payment?

These are just a few of the factors that play into effectively staffing an organization.   In my experience managing claims organizations, and now working with a variety of insurance carriers, the best results are obtained with the following 9 box model and several critical questions.

 

1. Staff subrogation adjusters obtain the best results when limited to claims where insurance has been identified and the claimant carrier is a member of inter-company   arbitration.   In this subset, claims with no dispute should be placed into a Fast Track unit where at least 10/day should be no problem.  

2. Claims with disputes should be placed into a more tenured unit, such as an arbitration unit, so that attempts to settle can be made and if unsuccessful the arbitration contentions can be filed.  Typically, these cases are more complex and assignments may be half of what Fast Track can effectively handle.

3.  Claims identified as uninsured, or as non Arbitration Forums members, are often best handled by business partners with an expertise in tougher collections who have the resources to effectively recover in this challenging environment.  During my tenure as a claims manager I found that keeping tougher collections in house simply doesn’t work as they are recognized by adjusters as impediments to other goals and often find their way off diary or to the bottom of the workbasket.   Getting these claims out the door on day one increases recovery exponentially and actually is cheaper for the carrier than handling them in house. 

4.  Push for a 100 percent disposition ratio without sacrificing quality and pending doesn’t become an issue.  If you get 100 new, then you should close 100.  Provide rewards and incentives for better results.  A properly calibrated organization will increase both disposition and quality. 

5.  Measure closed with no recovery to balance out disposition metrics, which when taken alone,  can drive bad behavior.   In post mortem audits it is not uncommon to find 15 to 20% of files closed prematurely and with a missed opportunity.  

6.  Focus on quality over quantity.   Yes, production is important but it is equally important to have staff in place that can effectively investigate and aggressively negotiate settlements.  By having a solid QA process in your organization you are assured of substantially increasing your bottom line and the QA results should definitely be part of the annual PE, with each stakeholder being held accountable for results. 

7. Don’t forget missed subrogation!  It is estimated that 15% of claim files are closed with a missed subrogation opportunity.   Identifying these files can be a financial windfall for organizations who implement processes to identify the claim files where a missed recovery opportunity exists.   Of course, the best policy is to not miss the subrogation in the first place, but let’s face it, that’s a pretty high bar.  

*****

Christopher Tidball is a claims consultant and the author of Re-Adjusted: 20 Essential Rules To Take Your Claims Organization From Ordinary To Extraordinary as well as his newly released book: Blocking & Tackling: The Playbook for the Winning Claims Organization.   He spent more than than twenty years in various claims, process and executive roles with multiple leading insurance carriers, including Progressive, AIG and 21st Century.  His proven success combines dynamic experience with Six Sigma methodologies to identify opportunities, optimize workflows, gain efficiencies and boost results.  To learn  more, please visit www.christidball.com.

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December 6, 2012 at 8:28 am Leave a comment


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Chris Tidball is a claims and revenue management consultant and author of the "20 Essential Rules" series of self and organizational improvement books. You can ask him a question at chris@christidball.com

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