As we roll into 2022, this is the year to recover more subrogation than ever! The best way to accomplish this is through a great audit process, which can be done internally or in partnership with someone such as SecondLook. But just as no two claims organizations are the same, no two audits are the same either. Depending upon your claims structure, there are different approaches.
For many carriers, there remains reliance upon the adjuster to identify recovery opportunities. Arguably this can be the single best method as nobody knows their claims better than the professionals working them. The challenge is that many companies have put quantity over quality. When an adjuster is getting an optimal workload there is time for an optimal investigation. But when volume and disposition take precedence, something has to give and that is usually quality and in particular subro recognition.
More sophisticated companies have taken steps to augment the adjuster ID process with analytics. This is a great approach but is not foolproof. Analytics are a critical part of the claims process but lose effectiveness as claims get more complex. For basic auto claims, analytics will get you about 80% of the way there. Add in no fault and that number decreases dramatically. For property claims the results are even worse. For extremely complex claims, such as those we see with cargo and inland marine, analytics do not provide much quantifiable lift.
From an auditing perspective I always focused on getting everything over to subro. Our adjusters were very busy and disposition was arguably the most important metric. The challenge in the above two types of workflows is that files get closed by adjusters before subro even has a chance to review them. In our proprietary SecondLook process we typically review multiple years of closed files to ID those which should have gone to subro. Had they gone to subro, recovery results would have been much higher.
The process I used while overseeing subro was multi-pronged. Adjusters had the capability of identifying subro in the claim system. But when files were closed, a run was sent to management and subro teams to further review for opportunities. But this wasn’t foolproof. When we utilized SecondLook they also found several million dollars in missed opportunities that everyone else had missed.
Add into this the vendor relationships and it becomes even more complex. By and large vendors do a good job of identifying most subrogation. Many use the aforementioned analytics to assist in the ID process. The value that SecondLook brings to the table is taking that process a step further by modeling over 600 years of collective claims experience. For those familiar with tools such as ClaimIQ, L-Nav or Colossus, you understand the importance of modeling best practices. While those are liability and injury tools, we created Chameleon in a similar manner, specifically to drive the subrogation process, which is how our clients are achieving superior results.
Having multiple eyes on claims is not a bad thing. The more times a claim gets reviewed, the higher the probability of recovery potential ID. We have even seen great success going in as the third set of eyes. In a recent audit of 100,000 New York PIP files we went in behind the adjuster and their vendor. We recovered $2 million dollars that both had missed. Extrapolating that across the industry amounts to a lot of leakage; and that is only one line of coverage!
Our value is in helping your subrogation department recover record numbers of dollars. As former claims executives, managers and adjusters, we understand your challenges and can tailor a solution that is right for you. Best of all, our audit process costs nothing. If we don’t find money, we don’t get paid. It is a great win, win for everyone and hopefully something you may see as beneficial in 2022!
Chris Tidball is an Executive Claims Consultant with SecondLook, Inc. He spent more than twenty years in adjuster, management and executive roles with multiple leading property and casualty insurers. He is the author of Re-Adjusted: Taking Your Claims Organization From Ordinary To Extraordinary and a number of other fiction and non-fiction books, articles and screenplays. He can be reached at firstname.lastname@example.org.