There are a variety of technological advancements insurers can engage to enhance the customer experience, streamline internal practices and drive successful outcomes. Most insurers have embraced the use of technology to some extent to improve policy administration and other internal processes in actuarial, underwriting and claims departments. For example, predictive analytics, a process where data which describes past results is used to predict future outcomes, is used to improve underwriting operations by analyzing the probability of loss, targeting low risk clients and developing competitive pricing relevant to each risk.
In claims, predictive analytics is used to forecast claim outcomes and identify fraud. In addition, many insurers use claims software programs to appraise damages resulting from property losses and automobile accidents. However, there is one process that could greatly benefit from further use of technology. It seems the subrogation process may have been overlooked by insurers and very often company assets are left behind unrecovered. Yet it is a well-known fact that successful subrogation programs are critical to customer satisfaction and the financial strength of the insurer.
In the lifecycle of a claim, the subrogation process is very often the weakest link for a variety of factors. For a long time the process suffered from a lack of automation and had been handled manually by claims adjusters with competing priorities and a lack of training in a variety of subrogation concepts.
There are two key elements that lead to a successful subrogation program: identification and pursuit. Timely identification of a recovery opportunity is critical to successful recovery and the best results occur when the subrogation potential is recognized within days of the first notice of the claim. Millions of dollars are left unclaimed each year as claim files are closed with no attempt to pursue reimbursement from the negligent party.
Once a claim has been banished to storage (whether physically or electronically) only a Closed File Review will re-awaken the file and capture a missed subro opportunity. These reviews, when conducted by the insurer, are often time-consuming and tedious tasks. One of the challenges for the carrier is in choosing the most appropriate personnel for the task. The best persons, however qualified, may also be needed to manage the day-to-day loss adjustment process inclusive of investigating, negotiating and settling claims, monitoring and overseeing cases on trial.
Technology can greatly facilitate the identification of recovery opportunities with programming that captures loss data and produces a regressive analysis of subro likely cases that dramatically lightens the burden and drudgery of reviewing every closed claim looking for a recovery opportunity. This technology is widely employed by progressive subrogation recovery vendors using data analytics, document image processing and data parsing to enhance the process.
The right analytical tools can also assist in managing the subrogation process and minimizing the amount of clerical tasks performed by subro specialists. In some instances automation can facilitate the assembly of the demand letter and support package. With just the touch of a key the subro specialist can quickly send the package off to the adverse party or insurance carrier for review, enabling the specialist to focus on negotiating and settling claims.
The use of technology can help an insurer select the claims with the greatest recovery potential. Once sorted, the files can be assigned to internal specialists or outside vendors based on jurisdiction, skill level, claim value and likelihood of recovery. Automation can make it easy for the subro manager to evenly spread the workload across internal team members and external resources, capitalizing on available skills, knowledge and time management.
A good subrogation platform should be able to address these issues:
Help identify recovery opportunities and rate the likelihood of success.
Improve the subro management process and track the workload of subro specialists.
Reduce the amount of clerical tasks.
Offer customization to incorporate internal best practices.
Assist in monitoring and scoring the performance of external vendors.
Kathleen Smith, CSRP, is the managing director for Spartan Recoveries LLC. Donna Geraghty is the business development manager. For more information visit spartanrecoveries.com.