When a New York franchise owner experienced a catastrophic loss that could have cost in excess of $3 million for the care of a worker injured on the job, it could have nearly bankrupted the business. Then, the matter was referred for subrogation.
A Broadspire subrogation manager reviewed state worker compensation statutes and discovered a claim could be filed with an adverse insurance carrier. They filed a claim and reduced the overall exposure by 85%.
The recovery literally saved the franchisee’s business.
Subrogation is the process of legally pursuing the recovery of funds from the party who is ultimately responsible for a loss or injury. Though known to risk managers, carriers and others responsible for an insured’s financial well-being, subrogation among some is a little-known or -used practice that can drive additional financial recoveries from active or even closed claims.
Seeing a critical need in the market, Broadspire launched its subrogation department in 2018 with a single adjuster and manager. Today, the team is led by a vice president, an assistant vice president, a team manager and seven highly-trained specialists. Since its opening, the department has recovered some $49 million in claims; for one client, the team was able to recover $7 million.
Never has the need for subrogation been more important. As inflation and recessionary pressures drive up wages and other costs of business, the ability to recover claims dollars has become an increasing priority.
Costs of the service vary. Some providers charge as much as 25% of the amount recovered. The Broadspire base rate is 20%, with client-specific pricing negotiated from there.
How much is collected or paid depends on the subrogation vendor, their process and commitment. Some subrogation contractors seek the fastest resolution possible. Quick turnarounds can drive down recovery amounts, without concern for the claimant’s needs. A deliberate, client-focused process can bring more positive outcomes.
A strategic approach to subrogation
A strategic approach to the subrogation process can help increase recovery and improve overall claims outcomes. Traditional subrogation providers rely on antiquated methods to identify claims. Leading subrogation providers use the latest technology in the hands of skilled professionals to identify claims and improve results.
Incoming files are routinely reviewed as part of a three-step process to identify possible subrogation targets. These include predictive modeling, data mining, artificial intelligence and machine learning and adjusters who use a “Line of Business Checklist” on each file.
Technology optimizes the data capture and file notation and automatically coordinates the involvement of the subrogation unit. Predictive modeling looks at claim type, cause code, key phrases, such as “slip and fall,” in addition to other phrases. The process isn’t run solely on incident-only claims, but predictive modeling is run on all other claim types, flagging claims with a high recovery probability more efficiently and more accurately than human reviewers.
Once automatically engaged, the subrogation team may dispatch claims examiners across the country. Together, they further investigate the claim, and then prepare a lien ledger and demand package. A reporting suite of custom and standard, automated reports overseen by claims advocates ensure clients are kept informed throughout the claim process.
Such technology-human collaboration is key. Since subrogation laws and regulations vary by state, subrogation teams are versed in state-specific rules governing claims. What’s more, while many adjusters are well-equipped to identify obvious subrogation claims, the human element used alone may result in cost leakage of up to 20%. Executed in a streamlined process, this data-driven solution captures more subrogation opportunities and drives greater recoveries in a shorter time.
Subrogation teams bring compassion to each claim. The injured worker or business owner often continues to suffer physical pain or emotional trauma. It’s incumbent upon the claims professional to be sympathetic to their needs, while delivering the best possible outcome.
While turnaround times depend on the line of business, routine subrogation claims can be turned around within 14 days; complex cases can take years. Fewer than 1% involve an attorney.
How to help a subrogation claim
Statutes of limitation could negatively impact any claim, so timeliness is a priority with any matter. If you believe a claim might benefit from subrogation, gather and preserve as much evidence of the incident as possible. This can include surveillance or dashcam video, witness statements and contact information, incident or police reports, or the claimant’s own statements.
With predictive analytics, leading-edge technology and a team of skilled adjusters and claims advocates, today’s subrogation providers are delivering greater returns than ever - ensuring claimants receive the care and resources needed to return to work and life.
To learn more, download Broadspire's subrogation brochure.