Why subrogation is often a missed opportunity
The topic of claims leakage continues to rise up the agenda
Why is the subrogation process sometimes seen as the weakest link in the lifecycle of a claim?
Recent studies have shown that up to 15 percent of general insurance claims are closed with a missed subrogation opportunity. There’s a whole host of complex, often historical reasons, why the subrogation and recovery models haven’t worked, but largely it’s because they are too often an afterthought and disjointed from the first-party claim.
How did Crawford redesign its recovery operating model?
We’ve moved the identification to the front end of the claims process, highlighting first-party claims where there is likely to be third-party involvement. These claims are automatically highlighted and referred to our Subrogation & Recovery Unit and our bespoke lawyer-led workflows.
Most importantly, we ensure that recovery opportunities are not missed. When the adjuster is dealing with the first-party claim, he or she cannot pass it through the system without identifying potential recovery opportunities. Insurers and risk managers benefit from early identification and engagement of the “at fault” third party.
How does improved subrogation benefit the policyholder?
We’re recovering for both the insurers and policyholders, and work on behalf of a growing number of corporate clients, where they are self insured or have a large deductible. They are instructing us directly to do exactly the same thing – to recover the losses or uninsured losses at below deductible level.
We’ve been able to really drive success in the subrogation process when it comes to certain perils that result in accidental damage. A substantial number of thirdparty claims should result in a recovery. This includes escape of water, escape of oil and fire.
We know that at least a third of escape of water claims should now involve a recovery. And there are at least four or five different perils where the client is sitting on huge potential leakage if recovery is not proactively pursued.