Subrogation is derived from the Latin word subrogare and is the substitution of one person or group by another in respect to an insurance claim, accompanied by the transfer of any associated rights and duties.
For those of us immersed in the world of claims, subrogation is just part of the vernacular, but even then, a fair bit of subrogation gets missed each year, in particular when ReverseSubrogation™ comes into play. While statistics would indicated that roughly 15% of all subrogation is missed by insurers, that figure is closer to 100% when it comes to ReverseSubrogation™.
Many carriers and vendors, including SecondLook, have developed advanced analytics and algorithms to ID subrogation. In many cases, that is all that is needed, in particular on less complex claims. But analytics will only get your so far, as demonstrated in the chart, which is what led us to the creation of Chameleon where we step beyond a tech only solution and incorporate over 600 years of claims expertise.
ReverseSubrogation™ can come into play in a variety of situations. For the purposes of this post, we will just discuss a couple of the more frequent scenarios involving PIP, construction and Amazon related claims. While the various PIP states have different limits and subrogation nuances, one that we frequently see in New York are underweight vehicles.
Let’s consider the scenario where a van owned by Joe’s Plumbing rear-ends another vehicle. The other vehicle carrier pays the injured party PIP and then subrogates because the gross vehicle weight (GVW) is over 6500 lbs. per a tag check. Herein lies the problem, and the challenge. This payment was not owed because the unladened weight of the vehicle was only 5200 pounds. But getting to this level of detail can be challenging in a world where adjusters are tasked with doing more with less, which is why this type of functionality is built into the SecondLook Chameleon process. The success of our process was proven in a tertiary audit where SecondLook went in behind both the adjuster and the subrogation vendor and recovered $2 million dollars that both had missed on PIP losses.
Now lets consider the construction claim where a home was being remodeled by ABC Contracting. During the remodel, Manny’s Electric was hired to install a new electrical panel. Due to improper wiring, there was an ensuing fire. A claim was made against ABC which was honored by the carrier. However, it was closed prematurely as the contract between ABC and Manny’s had an indemnification clause which was identified in the Chameleon process and pursued, resulting in successful recovery by the carrier for ABC against Manny’s carrier.
Even in the world of Amazon related claims, there have been a myriad of decisions that vary from state to state. In Texas, the courts have held that Amazon is not liable in instances where they do not hold title to a product. In California, and some other states, the results of been quite the opposite. Building this level of sophistication into a subrogation process is ever evolving and one where utilizing a closed file audit could yield substantial missed subrogation opportunities.
Subrogation can be challenging, and often beyond the capability of solely technology, which is why Chameleon has modeled over 600 years of collective claims knowledge. By understanding the individual environments of different jurisdictions and complexities of laws and coverages, we are able to provide carriers with a substantial lift with our no cost closed file reviews that routinely identify missed subrogation which results in a big lift for your subrogation results.
Chris Tidball is an Executive Claims Consultant for SecondLook, a leading provider of subrogation services. He spent more than 20 years in adjusting, management and leadership positions with multiple Top 10 carriers and has authored multiple books, including Re-Adjusted: Taking Your Claims Organization From Ordinary To Extraordinary! He can be reached at firstname.lastname@example.org.