Power of the Subrogation Dollar
Subrogation dollars and investment income have historically challenged each other for the second largest income stream for insurance companies. Premium dollars are number one. Personal auto collision payments total about $40 Billion annually. Using the recovery to paid loss benchmark, it is estimated that annual subrogation recoveries total $7.5 Billion. Add in No-Fault, Property, Worker’s Compensation and all other lines of business and the overall subrogation potential is dramatically increased.
The magic of subrogation is that it is an unencumbered dollar, other than the cost of collection. The below chart illustrates, with some realistic assumptions, that the subrogation dollar yields 18 times a premium dollar. Said another way; to provide the same bottom line value as $1 Million in subrogation, $18 Million in premium would need to be earned.
Is your company taking full advantage of the Power of the Subrogation dollar?