Centralize Subrogation

Centralized subrogation reduces the days to recovery by an average of 27.4%. These numbers are substantial and can directly affect increases in both customer retention and profit. Praxis’s subrogation specialists are trained to think like plaintiffs who must pursue claims to ultimate recovery on behalf of the carrier. They possess the skills and characteristics necessary to efficiently and cost-effectively recover payment. Centralizing your subrogation efforts with Praxis not only takes superfluous workload off of claims adjusters’ desks; it allows the people who are best trained in the position to achieve optimal results.
  • If the front line claim adjusters have different duties with different priorities, subrogation can take a backseat. For example, review coverage, set reserves, negotiate settlements, control indemnity, and close claims are all likely high priority and very important adjuster objectives. Consider the use of metrics to evaluate results and performance. If results and performance do not meet published industry benchmarks, consider centralizing subrogation.
  • If your company utilizes front line claim adjusters to handle subrogation, conduct a closed file audit to examine the number of your missed subrogation opportunities. If that number is high, consider refining your subrogation process.
  • If the claims department is missing opportunities to refer claims to subrogation, department heads should explore ways to facilitate communication and highlight causation. If the problem is not easily solved, consider centralized subrogation.

Measure Subrogation Performance

In order to track our subrogation performance and measure our productivity against industry benchmarks and best practices, our quality review program measures a minimum of nine pertinent factors.
Percentage of claims referred for subrogation;
Total percentage of subrogation collected to paid loss, by claim type;
Percentage of subrogation dollars collected to paid loss on those
subrogation claims, by claim type;
Cycle days from date reported to date referred;
Cycle days from date referred to date collected;
Subrogation dollars recovered by adjuster;
Subrogation expenses as a percent
to total subrogation collected;
Subrogation closed with no recovery; and
Aged pending.

The 7 Dimensions

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    Dimension 1: The Quality of the Initial Investigation

    Members of your claims staff are the first line of defense in your subrogation recovery efforts.

    We examine their methods of reporting a new loss, their liability investigation and assessment capabilities, and their damages evaluation and support.

    For more details and best practices, click here.

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    Dimension 2: Systems Support

    If your systems are set up to handle claims, but not subrogation routing, your company is overlooking a potential profit center.

    In systems support, we evaluate your number of internal systems, workflows, reporting capabilities and the availability of IT resources to fulfill system requests.

    For more details and best practices, click here.

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    Dimension 3: Documentation

    Simple mistakes in documentation can result in missed opportunities.

    We test the thoroughness of your documentation and its ability to support liability and damage assessments, the quality and timeliness of file notes entry, and the thoroughness and ease with which knowledge can be transferred from claims to subrogation.

    For more details and best practices, click here.

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    Dimension 4: Claim Handling Velocity

    Handling a claim quickly and efficiently can mean the difference between keeping and losing a customer.

    We assess the aged pending status of claims, your company’s awareness of statue sensitive claim handling, the file tempo of claim handling and the time it takes for your staff to notify the responsible party of the claim.

    For more details and best practices, click here.

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    Dimension 5: Organizational Structure

    Streamlined company processes, well-trained employees and adherence to best practices can help your company reach its subrogation potential.

    We gauge your company’s established chain of command, current subrogation system, quality of employee training and timelines for subrogation claims.

    For more details and best practices, click here.

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    Dimension 6: Recovery Results

    Measuring your company’s recovery results against industry benchmarks to evaluate your success.

    We rate the amount of money your company has recovered through adjusters and subrogation staff, the cost of collection per dollar of recovery and the length of each report-to-recovery cycle.

    For more details and best practices, click here.

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    Dimension 7: Management Controls

    Company management plays a crucial role in efficient claims handling & subrogation results.

    We analyze the quality of your company’s review programs and arbitration contentions, performance management and missed subrogation opportunities program.

    For more details and best practices, click here.

Praxis’s 7 Dimensions of Subrogation Assessment is the rubric we use to measure insurance carriers’ subrogation performance relative to industry benchmarks and widely-accepted best practices. Measuring clients’ internal process in seven primary areas, we’re able to map out actionable steps to improve their subrogation programs, and maximize recovery and revenue.

Eliminate Missed Subrogation Opportunities

Missed files happen. In fact, an average of 1 - 5% of the claims that should go to subrogation, don’t. Depending on the size of a carrier, these missed files can translate into hundreds of thousands to millions of dollars. For a carrier with $100 million in potential subrogation files, this could mean an additional $1 million to $5 million in subrogation recoveries. Following are four most common factors that Praxis has identified as contributing to missed subrogation opportunities by internal subrogation departments. Missed files don’t always result from deficiencies in a carrier’s process, but rather from:

A carrier's reliance on its internal process
No one likes to look for cracks in their own system, but synching up to industry benchmarks and measuring performance against industry averages are good ways to keep everyone on the same page. Internal performance tracking is not enough, especially when the system already allows for missed subrogation opportunities.
Current Management Metrics
Some companies measure their subrogation success in terms of hard metrics — such as “the number of closed files with or without recovery per month” — rather than by the thoroughness of their recovery efforts. When this happens, claims adjusters begin thinking in terms of meeting quotas and, as an effect, are more likely to close files prematurely or compromise the settlement and overlook subrogation when this quota has been met.
Unitentional Human Error
Adjusters have many responsibilities during the claims cycle — from determining coverage to calculating damages — and subrogation can sometimes take a backseat to these important functions. Also, when carriers don’t establish subrogation objectives for their claims adjusters, the adjusters will, understandably, tend to focus on more heavily-weighted competencies.
Turnover in the Department
When turnover is the cause of missed files, the effect is two-fold: Subrogation opportunities are missed entirely, and resources (time, experience and money) are lost to the training of new employees. This domino effect increases the likelihood of even more mistakes in the future.

Industry Partners

Praxis has built a name for itself by providing highly successful subrogation services in the Property & Casualty Insurance arena. Praxis operates throughout the U.S., servicing a wide variety of insurance companies, in addition to reinsurers, self-insured companies, TPAs and state and governmental entities. The following associations are integral to the Praxis process.