[Editor's Note: The following content is sponsored by Fleet Response, Spartan Recoveries, and Subro IQ.]
How can common subrogation mistakes be avoided? Is technology being effectively utilized to improve recovery opportunities? And what trends will shape the industry's future?
WHAT ARE SOME OF THE MOST COMMON MISTAKES MADE THAT LEAD TO UNSUCCESSFUL SUBROGATION ATTEMPTS, AND HOW CAN THEY BE AVOIDED?
MEGAN ALOISI, FLEET RESPONSE: Accurate and timely determination of the party responsible is key to successful recovery. Identifying all potential parties and properly placing them on notice of a potential claim can help ensure the best possible outcome in subrogation. In my experience, the speed in which a party is placed on notice and the investigation can begin has a direct link to the success of the recovery. This is particularly important when dealing with claims involving multiple parties or uninsured motorists, which require more time to properly investigate. Having a best practice to report claims directly to all potential responsible parties shortly after the loss can alleviate this subrogation pitfall.
TROY DANIELS, SUBRO IQ: One of the most common areas for a missed opportunity or unsuccessful subrogation occurs in the “changing of hands” between front line and subrogation adjusters. Often, system limitations or business rules will close a file or diary, which leads to a missed opportunity. Beyond systems issues, knowledge sharing between the subrogation team and the front lines is another common leakage area. Front-line adjusters in companies with poor subrogation results are not incentivized or trained properly to identify claims with subrogation potential.
DONNA GERAGHTY, SPARTAN RECOVERIES: The failure to timely identify recovery opportunities is the biggest mistake made in the subrogation process. This is often the result of a failure to initially conduct a thorough claims investigation. There can be no recovery if subrogation potential is overlooked. However, proper subrogation-focused claims handling and documentation—coupled with advanced technology to identify subrogation potential—can greatly improve results.
The failure to preserve evidence in property losses is the second biggest mistake. Evidence is very often discarded or destroyed shortly after a loss and the insured begins renovations. This problem can be greatly reduced by instructing the insured to retain the suspected evidence when the loss is initially reported and by having the claims professional pick up the evidence for proper storage until the investigation is completed and a final determination as to the cause of loss is made.
WHAT ARE SOME OF THE LATEST WAYS IN WHICH SUBROGATION PROFESSIONALS ARE LEVERAGING TECHNOLOGY, ANALYTICS, AND DATA; AND HOW IS THAT AIDING SUBROGATION EFFORTS?
TROY DANIELS, SUBRO IQ: Many carriers are now using analytics in multiple stages of a claim’s lifecycle. From the mobile applications that policyholders use to take photos and record details of a loss, to the various data points collected in a carrier claims system that flag causation or potential, the inputs are always increasing. Honing this data and modeling it to find and prioritize subrogation recovery opportunities can be a challenge for carriers, though. Determining how to analyze and then make use of the captured data can be the difference between a team hitting its goal and falling short. Often, a vendor that specializes in data manipulation and recovery will be more cost effective for carriers that don’t already have a strong subrogation analytics program in place.
DONNA GERAGHTY, SPARTAN RECOVERIES: Technology is being leveraged to identify recovery potential on claims with less than 100% liability. The creation of algorithms for predictive analytics, and OCR tools are essential to get a jump on identifying and protecting subrogation dollars. Engaging various database searches (ISO/Carrier Discovery/E-Courts/Pro Quote) to gather needed data faster and directly, rather than relying on clients to provide the information, streamlines efforts to confirm adverse parties and carrier information, thus reducing cycle time.
By enhancing our Identification Workspace (IDW), which now combines our algorithms for identification and failure reasons with state-specific statutory laws, negligence rules and statutes of limitations, statutes of repose, and contractual statutes, Spartan has improved our ability to conduct forensic reviews in less time. We don’t work for technology; technology works for us. With that said, we believe that human intervention is essential to conducting reviews to identify missed recovery opportunities.
HOW HAVE THE EVENTS OF THE PAST YEAR—PARTICULARLY THE PANDEMIC’S EFFECT ON COURTROOMS—IMPACTED THE SUBROGATION LANDSCAPE, AND HOW HAVE SUBROGATION TEAMS ADAPTED?
DONNA GERAGHTY, SPARTAN RECOVERIES: Obviously, the pandemic has slowed down the litigation process, but it has also opened up the opportunity for more effective negotiations to resolve cases that may have previously reached an impasse. Subrogation teams have sharpened their negotiation skills, using the time lag as a tool in their arsenal of settlement strategies, rather than relying on the litigation process, which just lengthens settlement time and costs overall.
The pandemic has also impacted the property claims investigation process. Due to restricted access to damaged premises, both commercial and personal, a thorough claims investigation that would identify the cause and origin of a loss has been hampered. Access to some premises was repeatedly delayed to the point where, in some instances, the renovation was started, and crucial evidence was spoliated or disposed of before a responsible party could be identified. While the delays were understandable and unavoidable, the result was the loss of our ability to control the process, protect and preserve valuable evidence, and, of course, pursue the responsible party.
TROY DANIELS, SUBRO IQ: Recovery cycle times have certainly increased, beyond just the courtrooms. It is all too common to submit a subrogation demand to an adverse carrier and receive a response of “current processing time is a minimum of 45 days to review our demand.” This has made goal-tracking and department recovery goals a moving target.
WHAT DO YOU BELIEVE ARE THE BIGGEST SUBROGATION TRENDS TODAY AND HOW WILL THEY SHAPE THE SUBROGATION LANDSCAPE OF TOMORROW?
MEGAN ALOISI, FLEET RESPONSE: The future of subrogation is going to be exciting but also challenging. With the advancement of vehicle and safety technologies, the opportunity to clearly identify mitigating factors that may have contributed to a loss has never been easier. Supply chain and staffing shortages have caused repair delays due to part supplier limitations as well as increases in values. The slowing of new vehicle production has driven the prices of both salvage and used vehicles to a premium. Consumers and insurers are now considering repairing vehicles that would have been totaled previously. The need for greater loss of use or diminishment of value due to limited supplies, longer repair times, and lack of replacement vehicles in certain markets is becoming a reality. These trends have a direct impact on subrogation recovery and its success. Subrogation professionals will need to meet these challenges head on by defending the higher prices and pursuing the reasonable damages sustained. The definition of “reasonable” is being re-written as we continue to navigate through this new recovery world.
TROY DANIELS, SUBRO IQ: As an increasing number of data input become available at every stage of the claims lifecycle, technology advances in artificial intelligence and automation will be perfected to not only better recognize potential, but also service the cycle of demand preparation and recovery follow up that are a very manual process for subrogation professionals today.
DONNA GERAGHTY, SPARTAN RECOVERIES: While technology has certainly enhanced the subrogation identification process with data collection, there is still a human element that must be involved in properly inputting and updating keywords as an investigation evolves; thoroughly reviewing the claims facts and identifying a liable party; and effectively negotiating a settlement. Marrying advanced technology with superior claims training and strong subrogation processes will greatly impact the success of a subrogation program and deliver future desired results.
Megan Aloisi, CSRP, is subrogation manager at Fleet Response. maloisi@fleetresponse.com
Troy Daniels is vice president, subrogation, for Subro IQ. troy.daniels@subroiq.com
Donna Geraghty is vice president, sales and client services, at Spartan Recoveries. dgeraghty@spartanrecoveries.com