CLIENT SUBROGATION PORTAL

We are three short weeks into the new year and the insurance industry is facing the same issues we were looking at in the last half of 2008 - a soft market and lower or stagnant investment income. Our clients share with us the freezing of budgets and how employees are not being replaced as they attrition out. Doesn't sound very promising, but I refuse to believe we only need to look at the bleak side of the situation when it comes to driving revenue for an organization. Although the soft market and premiums are not as good as we would like to see, I'd like to argue the third leg of the three legged stool is not being maximized as it should - the use of an effective subrogation strategy to enhance the bottom line.

I believe we would agree, in handling your personal checkbook, that if someone owed you a large sum of money that you would be aggressive in pursuing the money. Why should it be different for a company to treat those dollars, paid on behalf of their policyholders, to be handled differently? Claim payments obviously have a direct impact on the profitability of the company and the off-setting recovery of the dollars has an equal importance on improving profitability. Most organizations have some form of subrogation process, but that doesn't mean the process is being maximized, especially if the subrogation is being handled by the front-line claims staff. This is in no way to be derogatory to the those hard working individuals taking extraordinary care of settling claims for their policyholders, but I've been there - BI claims, total losses, and the myriad of other pressing claims keeps the adjuster from concentrating on the "closed file in the drawer" which needs a recovery. I'm not saying the file won't get handled, but time is money. Therefore, unless a staff person's full time job is to handle (and become an expert in) subrogation claims, recoveries won't be maximized. I also challenge each CEO, CFO, VP of Claims, or others familiar with the calculation of a combined loss ratio to determine how many policies would have to be sold in order to realize an increase of 10% (substitute any number here). Whether or not a company is handling their subrogation internally in a centralized manner or if they are outsourcing the subrogation function, subrogation recoveries should be considered a prime source of revenue. People aren't going to quit having claims. Not much that can be done about that. However, you can still maintain profitability through your effective subrogation strategy.

Feel free to contact me if you would like to receive a list of key measurement questions to determine the effectiveness of your subrogation process - kevin.may@acclaimresource.com.