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SecondLook Blog

Nov

Moneyball: The Pros and Cons of Data Analytics and Subrogation

As a big supporter of data analytics, and their use in the subrogation process, let me be the first to say that everyone should utilize them. But, you should not solely rely on them because they only get you 60-85% of the way there, depending on how good the modeling is.

The reason for this shortcoming is threefold. First, data scientists usually don’t have a claims background. Second, claims professionals usually don’t have a data science background. Third, there are a lot of claims that are simply too complex to build algorithms to identify.

I am in a unique position of seeing this from both the carrier and the vendor side. During my tenure as an executive with subrogation responsibilities for a large, global carrier, we had a great data science team. Our algorithms were outstanding, and we utilized top tier claims professionals to help build out the models. We still missed a lot of subrogation, which we learned after an engagement with SecondLook.

SecondLook provided keen insights into our process and helped us identify the best path forward. They became an invaluable partner who assisted us in achieving record amounts of recovery dollars.

From a vendor perspective, I see this on a daily basis, as we partner with insurers, self-insured’s and TPA’s, to help them find more money. In fact, we are so confident that money is being left on the table that we will do our closed file audits at no charge.

A question I get a lot is how can we find money when others missed it? This is a somewhat complex answer that will vary from client to client, but simply put there is an over-reliance on data that does a great job of identifying the low hanging fruit but misses a lot of more complex claims.

Like pretty much everyone in the industry, we also use algorithms to ID and score recovery opportunities, but unlike others we have also modeled over 600 years of collective claims experience into this process. By blending the people component with analytics, a more robust process was created which identifies a significant amount of subrogation that is otherwise missed.

As an example, SecondLook reviewed a sizeable volume of claims that were closed by the front-line claims adjuster and an external subrogation vendor. After our review of these claims we recovered over $2 million dollars that both had missed.

What our process creates is a plug and play solution that is configurable to any organization. In some instances we find clients that are doing a remarkable job on collision claims but are missing the mark to the tune of millions of dollars on PIP and Medpay. In other situations, such as workers’ compensation there is often a rush to closure and future credits are left on the table. In the world of healthcare, we see tremendous opportunities to identify potential liability claims that are currently being missed.

Finding and recovering on missed subrogation provides a tremendous lift to organizations and can provide valuable insight into why these claims are being missed in the first place. While there are a myriad of reasons why, it often comes down to training and time. Adjusters, especially young adjusters, often don’t fully understand complex subrogation scenarios and concepts. As carriers have centralized claims organizations and pulled boots off the street, the local jurisdictional knowledge that adjusters had in years past has declined. Adjusters are also under a tremendous amount of pressure to get claims closed, and as I learned as a claims leader, anything but 100% clear liability subrogation is often pushed to closure to achieve a desired disposition outcome.

Chris Tidball is an Executive Claims Consultant with SecondLook, a leading provider of subrogation services. He spent more than twenty years with multiple leading insurers as an adjuster, manager and executive. Chris is the author of Re-Adjusted: 20 Essential Rules To Take Your Claims Organization From Ordinary to Extraordinary, multiple fictional claims thrillers and the screenplay for the television series The Adjuster. He can be reached at ctidball@2ndlook.net

Oct

Subrogation Benchmarking – The Devil is in the Details

It is often said that the devil is in the details and perhaps nowhere is this truer than the insurance claims process where benchmarking and metrics define both quality and results. This is particularly evident in the subrogation arena; where upwards of 15% of all claims are closed with a missed subrogation opportunity at an annual cost of $15 billion dollars.

In my experience overseeing large organizational claims and subrogation processes, this actually strikes me as low, as it may not fully encompass cases where the adjuster settlement was based upon total liability as opposed to properly identifying comparative negligence.

When considering benchmarks, there are time bound and results oriented metrics which all have an impact on an organizational bottom line. A commonly used benchmark, which dates back to the original Ward studies in the 1990’s measures Total Dollars of Net Subrogation Recoveries as a % of Total Indemnity Paid Losses for Personal Auto Collision. While still cited, it is only as accurate as subrogation identification, which often lacks within carriers resulting in collectible files being closed with no recovery. After the original study, it was concluded that high performing carriers collect about 23.7% while the total universe is at 11.6%.

In the years since, there has been some focus by carriers on improving their subrogation process which has led to an increase in recovered dollars. Various benchmarking studies have shown net recoveries to total paid collision in the 25-28% range for standard carriers and 14-17% for nonstandard carriers.

A potential flaw with the various benchmarking methodologies is its heavy reliance on collisions. While 72% of recoveries are indeed related to collision, it is shortsighted to not consider all line coverage’s where subrogation is a viable option, in particular UM, UIM, UMPD, PIP and Medical Payment’s. In addition, there are even more overlooked opportunities for health, GL, worker’s compensation and property insurance.

Some key metrics that can be considered by carriers include the following:

Recognition percentage – dollars identified as recoverable from paid dollars by claims adjusters. The key here is having a pool of adjusters who understand the concept of subrogation, local jurisdictional knowledge and having the ability to negotiate shared liability settlements. In industry benchmarking studies, subrogation recognition generally ranges from a high of 45 files to a low of 5 for every 100 new claims. Specific to my experience, the optimal collision referral rate, while dependent upon negligence laws, should be around 35% in a pure comparative state. This figure would be less in a modified jurisdiction and even less in a contributory one.

Recovery Rate – dollars actually recovered from total paid dollars. Measure this in terms of both gross recovery as well as costs after factoring in expenses. When factoring comparative negligence and improper referrals, the recovery rate should be somewhere in the range of 85-90%. This requires adjusters properly identifying subrogation, assessing comparative negligence and pursuing only what they are entitled to.

Recovery Rate per FTE. Include in this both the gross dollars as well as net dollars and expenses incurred. There is a wide variance among adjusters, but a good target would be $1,000,000 per subrogation adjuster. Again, this is going to have a range based upon type and complexity of file.

Cycle Time- time from subrogation identification to recovery. The industry average is about 200 days, yet the average time to issue final payment is about 10 days. With the ability to fast track arbitrations and leverage technology, this could be compressed to well less than 60 days. Each day that the money sits on the table there is a quantifiable impact to the actuarial triangles.

Subrogation Allocated Loss Expenses (ALE) – file related expense dollars paid to recover subrogation dollars. It makes no sense to spend $500 dollars in overhead to recover $400. The following model exemplifies when it may make more financial sense to outsource more complex portions of recovery operations.

Subrogation Unallocated Expenses – non-file related expense dollars paid to recover subrogation.

Recovery Multiple – ratio of recovery dollars to expense dollars

Files closed with no Recovery-Percentage of files referred to subrogation that are closed with no recovery. While there can be legitimate reasons, carriers invariably tend to close files prematurely particularly in cases involving uninsured tortfeasors who tend to be a challenge for carrier subrogation adjusters.

Some benchmarks that carriers could utilize to most effectively gauge their subrogation performance could also include a formula that divides total staff into total recoveries for a recovery amount per FTE. This should be used in conjunction with disposition numbers such as total closures and cases closed with no recovery.

When looking at the percentage of files closed with no recovery, it is critical to understand the carrier’s workflow. Many carriers use internal adjusters, often with little collection experience, to pursue uninsured tortfeasors. A good barometer of how much money is being left on the table is the frequency by which second, third or even fourth looks are sent out to the open market where a vendor will review it, often at no charge. The following chart provides an overview of how the highest performing carriers, self insured’s and TPA’s are segmenting their work internally and externally.

One key aspect that is not often considered in subrogation benchmarking is that of claims. To truly understand the end to end process, the following metrics can be very beneficial in identifying opportunities to maximize recoveries.

Percentage of files referred to subrogation by line coverage.

Percentage of files where collision was paid but no PD was paid with no associated referral to subrogation.

Percentage of claims where liability was assessed at either 0% or 100% or similar moniker in claims system such as insured not at fault/insured at fault.

Referral of supplementals and rental invoices to subrogation.

Many carriers will look at just a fraction of the available metrics, often focusing on those that are easily obtainable, such as bottom line recoveries or percentage of collision referrals. This approach can have unintended consequences, such as adjusters referring to meet a number rather than doing their investigation. The challenge with any metric is to ensure that there is quality control in place, as policing adjusters is often required to make sure that they are doing the right thing.

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Chris Tidball is an Executive Claims Consultant with SecondLook, Inc., a leading provider of subrogation services and solutions. He has spent more than thirty years in claims, working with multiple top 10 carriers as an adjuster, manager and executive. He is the author of multiple books including Re-Adjusted: Taking Your Claims Organization From Ordinary To Extraordinary and is the creator of the fictional series The Adjuster, which is being adapted for television. He can be reached at ctidball@2ndlook.net

Oct

Building the Championship Subro Team

Going back to my days with responsibility for subrogation outcomes for a large global carrier, we had an established subrogation infrastructure that was a shared service across many of our domestic and global business lines. There were areas where they performed well, and areas of opportunities, which is where we focused our improvement efforts. This may sound familiar, as it is a common organizational structure, often seeing similar results.

What we identified was a direct correlation between claim complexity and recovery probability. The lower the complexity, the higher the recovery probability. By increasing the volume of lower complexity, higher yield claims internally, we saw an improvement in both productivity and dollars coming back in the door.

Our challenge was to create a world class, championship team that outperformed everyone in the industry! The realization was that we could not do this alone. We had some great team members, and some outstanding leaders. But we also had the limitations that come with any claims organization. To build out our team, we identified our three biggest areas of opportunity.

A significant number of claims were being closed with a missed subrogation opportunity by front line adjusters. This was a situation in which we utilized SecondLook to evaluate claims for missed opportunities and the result was several million dollars in new recoveries.
Complex coverage lines. Auto PIP and MedPay have some unique nuances that are often overlooked. Think of loss transfer in New York, out of state losses in New Jersey or multiple vehicle accidents involving motorcycles in Michigan. There are a significant number of claims closed with missed opportunities in just these two coverage lines. In a recent audit, SecondLook went behind both the front-line adjuster AND this carrier’s subro vendor and recovered over $2 million dollars that both had missed. Beyond PIP and MedPay, there are other coverages such as Property, Work Comp and Cargo where significant opportunities are frequently missed. By deploying a solution that can focus on these more complex areas, it frees up internal resources to focus on the highest recovery opportunities.
Arbitration is a time-consuming task. As we were looking to improve our claims processes, we focused on a couple of different aspects of arbitration. We removed responsibility for response arbitrations from the front-line adjusters and leveraged a dedicated team which dramatically increased our results. When it came to applicant arbitrations, we focused on using our internal resources to go after the highest probability recoveries, and by leveraging a partner for more complex arbitrations, we were able to increase internal productivity, as well as overall results.

There is no straight forward answer to when or what to leverage with partners. In our situation we outlined the entire recovery process from FNOL through deductible refund. By identifying deltas in existing processes we were able to land on our success model. This is an exercise that every claims organization should go through from time to time. While we know that 15% of claims are closed with a missed subrogation opportunity, the reasons why will often vary and will require specifically designed solutions.

My personal experience was that having a business partner on the outside created more flexibility on the inside. While we never outsourced the bulk of our work, we did leverage our partners in such a way to consistently review closed files for missed subro, free up staff in the event of a CAT, provide overflow during times of rapid growth or staffing issues, and to get us better results in areas that we had identified as deficient, such as arbitration. It is easy to win subro here and there. It is hard to win consistently and at far better results than the industry. Creating the world class subro team takes time, collaboration, patience and vision. As Michael Jordan once said, “Talent wins games, but teamwork and intelligence win championships.”

Sep

Show Me The Money – ReverseSubrogation™

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 SecondLook Technology 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 SecondLook Technology 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 SecondLook Technology 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 SecondLook Technology 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 ctidball@2ndlook.net.

Sep

Study Finds: Top Reasons For Missed Subrogation and What You Can Do

The premise of this study is that 15% of claims are closed with a missed subrogation opportunity. We set out to try and identify the drivers of this industry challenge and to provide some meaningful solutions.

Going back to my days of running a claims Quality Assurance team for a Top 10 insurer, missed subrogation has consistently ranked among the industry’s biggest challenges. In our case we identified solutions by first admitting that we had a problem. Money was being left on the table. Our adjuster assessment of comparative negligence was abysmal. Our metrics were focused in such a way that subrogation was not deemed a priority.

To understand what our opportunity as a major insurer looked like we partnered with SecondLook. As an industry leader in the subrogation space, they helped us to not only to understand what we were missing, but why we were missing it. Since joining the SecondLook team, I have had the benefit of seeing firsthand how an impartial partner can help so many carriers to improve their subrogation processes and results, giving them a significant competitive advantage.

It has now been over ten years since my first article The Subrogation Cash Cow was published, which outlined many of the challenges faced in the industry, yet many of those same challenges persist today. So why does the challenge of missed subrogation persist? In this article we will break it out into areas of productivity, training, hiring and quality assurance. But first, lets see what the study tells us.

Results

Over the past week, we have been reviewing files internally as well as polling our LinkedIn community. With nearly 2,500 engagements with our post, we received some very valuable insight. First and foremost, there is a consensus that subrogation frequently gets overlooked. The question we posed was why?

According to the industry professionals which included many claims adjusters, managers, executives and attorneys, the biggest reason was lack of a timely investigation.

In second place was missed third party liability, followed by missing evidence.

In the “other” category the comments generally focused on adjusters simply missing the opportunity altogether.

Based upon our internal reviews, the poll findings are very much in line. At SecondLook, we are routinely brought into insurers, self-insureds and TPA’s to find missed subrogation with our no cost closed file audits. Having seen claims practices in a variety of organizations we are in a unique position to share processes that seem to work well, and not so well.

Missed Subrogation

Let’s begin with why subrogation is missed. The reasons are often not mutually exclusive. Identification of subrogation can be super easy; or it can be extremely difficult. There are many basic situations where subrogation is not considered, such as an intersection or parking lot accident in a pure comparative jurisdiction. In more complex bailment, risk transfer, cargo and contractor situations, the investigations can take an inordinate amount of time. Whether simple or complex, liability often gets overlooked, with duties owed and breached not being thoroughly examined and spelled out in the adjuster notes.

Consider the number of files you have reviewed over the years where the liability decision was either 0% or 100%. In many carriers the percentage of claims where there is a comparative liability assessment in the file can be in the low single digits. Now consider that juries apportion liability in more than half of all cases adjudicated. This is a delta with a tremendous amount of opportunity to yield substantial subrogation dollars.

During my years in claims we faced this frequently, and ultimately implemented a tool to assist adjusters in identifying comparative situations. In some locations this worked well, in others adjusters found workarounds to “game” the system. The reality is that the best tool to assess liability remains a highly trained adjusting staff and an impartial business partner to serve as a second set of eyes.

Lack of a timely investigation was cited as the most common reason for missed subrogation giving credence to the adage that time is money. There is a quantifiable correlation between the time of subrogation ID and the recovery of dollars with a steep decline the longer a claim sits.

This becomes a challenge when adjusters are asked to do more with less, while being measured on claims disposition. When pushing claims quickly to closure becomes the main focus missed subrogation often becomes an unintended consequence.

For many of us who began our careers years ago, adjusting was a skill that was honed over time. Those adjusters who had an insatiable curiosity to get to the right outcome were the most successful. Subrogation ID was part of what we did, on every single claim. Timely investigations were critical to the ID process given the direct correlation between time compression and recovery dollars.

In the years since there have been a lot of changes in the industry, in particular specialization and consolidation into large service centers. While this structure can create economies of scale and provide certain advantages, other aspects of the claim’s process can suffer.

In my own experience of moving from generalist to specialist I had many situations arise where a front-line liability adjuster was paying 100% on claimants who clearly had some liability, making the resolution of injury claims significantly more challenging, often resulting in litigation that could have been avoided had the proper decision been made up front.

5 Key Steps To Improve Subrogation ID

Getting the right person in the right position. Not everyone is cut out to be an adjuster. Beginning with the hiring process, identify those people who have an insatiable curiosity. Some of my best adjusters had no experience in adjusting whatsoever. It is easy to teach good claims habits, it is hard to break bad ones. Focus on hiring the right people every time.
Show me the money! It is often there, sometimes in very strange places. Finding 80% of subrogation is not overly difficult. But what about the other 20%, which is often a disproportionately higher dollar amount. Successful subrogation adjusters have an insatiable curiosity and will leave no stone unturned. Giving them the tools and the time necessary to dig deeper on claims is critical to both quality and outcomes.
Early identification of subrogation should be paramount to internal processes. Many carriers are leveraging analytics to assist in this process, which can be beneficial but should not be the only solution. Analytics are outstanding at identification of simplistic scenarios, but as those scenarios become more complex they simply can’t keep up. In our own experience at SecondLook we recognize the limitations of analytics and created SecondLook Technology, a solution that embraces analytics, AI and Machine Learning but adds to it the benefit of over 600 years of collective claims experience to improve subrogation identification.
Create partnerships to help with the process. Let’s face it, the pandemic has turned a lot of claims organizations upside down, and many carriers are seeing substantial turnover. Some are re-allocating resources. Properly staffing for claims in normal times is tough enough, but with the challenges of today, it has become as difficult as I have seen in my thirty years in the business. Having a trusted business partner that can not only help to ID missed subrogation but provide desk level support for overflow, outsourcing, applicant/response arbitrations, and general overall training and consulting can be extremely beneficial.
Measure for success. By moving from disposition to quality focused metrics can have a profound impact on results. Focus on creating total file quality scores, including components for proper liability assessment, timely investigation, and recovery recognition. During my QA days we moved from disposition to a quality focused process and saw improvements in indemnity results, timely and accurate disposition of claims, subrogation recognition and referral and recovery dollars.

Missed subrogation is a challenge, but one that can be overcome with the right people, processes, and technology. I have seen tremendous improvements in a number of situations where carriers have made subrogation a key priority from the top on down. In the world of claims, subrogation provides a meaningful way to bring money back into claims organizations, while getting deductibles back to customers, driving up retention and customer satisfaction results.

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Chris Tidball is an Executive Claims Consultant with SecondLook, a national leader in subrogation solutions. He has held adjusting, management and executive positions with multiple Top 10 insurers. He is the author of several books including Re-Adjusted: 20 Rules To Take Your Claims Organization From Ordinary To Extraordinary! and the fictional thriller Deep State: A Jake McFarland Thriller which is being adapted into a television series called The Adjuster. You can reach Chris at ctidball@2ndlook.net

Aug

You’ve Been Hacked – Simple Steps To Protect Your Apps

If you are like me, you probably spend a lot of time on your phone. My mom recently asked me why? To her a phone is something that plugs into the wall that you use to call family and friends. She even has an address book and a Yellow Pages (I didn’t even know those still existed). During a recent visit, she was curious as to why I was seemingly always on this appendage.

The answer is simple. Because pretty much everything in our lives is available through an app. This is hard to explain to an eight two-year-old who has never owned an ATM card, but sometimes visualization works wonders.

Look at my apps. Personal banking. Changing insurance coverages. Ordering food. Checking Flights. Even dispatching the Uber to take us to dinner. You wouldn’t think 26 years between mom and son would make that much of a difference, but in the world of technology, it does.

For many of us Gen Xers and beyond the phone is our go-to. It is the economy of now that gets us through the day. A lot has changed and our dependency, be it good or bad, on “big tech” is very real…and very different than even 20 or 30 years ago.

We live in a mobile world where billions of people possess app driven technology. The app economy deepens customer engagement, improves customer experience, and drives in more and more revenue for a wide variety of goods and services. Even in my world of providing industry leading subrogation solutions we focus on app capabilities for everything from developing SecondLook’s proprietary SecondLook Technology and arbitration filings to conducting legal research and housing our extensive asset library.

However, wherever personal information or business opportunities reside, hackers lurk in the shadows, looking for opportunities to fund their illicit ventures on the dark web. This may go well beyond hackers, who are often perceived as being overseas.

Hacking apps isn’t a random thing; it is common and not overly difficult with the right tools. At the highest level, we can recall a 2017 WikiLeaks document dump about the CIA’s computer hacking tools, which highlighted the agency’s penetration of consumer electronics.

Beyond that we frequently hear of hacks involving dumps of data. Pick a big company and you can probably find a data breach somewhere. Some can be small; others can be hundreds of millions of users.

According to Security Intelligence, the majority of compromises took just minutes to complete. There are many tools available in the market to support hacking, and many of these tools are free. Mobile apps are easier to hack than centralized web environments as they are on distributed, fragmented and often unregulated ecosystems.

But there are ways to protect yourself from hackers:

Keep your apps up to date. It seems simple, and we typically do this on our laptops but often are remiss when it comes to apps. Sometimes there are no reminders; other times, it is frustrating because the interface changes. But the most important thing to remember is that most hacks exploit vulnerabilities that have since been patched.
Periodically give your app portfolio a once over. Take a look at your privacy under your settings. Delete apps you are no longer using. Make sure that the proper level of privacy is in place on your phone, social media, and apps.
Be cautious of what you install. Whenever you download an app, you are granting certain permissions. Are you taking the time to read the user agreement? Don’t worry, neither am I, nor most people for that matter. But oftentimes you are giving access to certain capabilities. This becomes especially troublesome when there are lax app vetting processes in place.
Don’t make it easy for thieves. Having a password that is not easy to guess is a start. Facial or thumbprint recognition provides additional security; although, none of the above is perfect. Think about the thief who swipes your purse containing your facial recognition prompted iPhone. Having the ability to use your ID to pull up your picture online and use your LinkedIn public profile image to unlock the phone, while perhaps a stretch, could be quite problematic.
Auto-login is great…unless you forget to log out. Using a password manager can minimize this risk and using different passwords for different accounts lowers your risks even more.
Watch out for public Wi-Fi, where your usage could potentially be monitored by specialized software. Stick to VPN tools that route traffic through encrypted channels.
Be careful what you post on social media. Consider that nearly two-thirds of Facebook accounts have limited or no privacy settings, which becomes a treasure trove for hackers. Some users will show their actual name, date of birth, city of birth and current residence. There really isn’t much more needed to create an alter ego to hack your accounts and set up fake profiles.
Give some thought to investing in smartwatches that can keep track of your phone, and if they lose contact, can provide you with notification if your phone is more than 100 yards away, a possible indication of theft. Even in the absence of a smartwatch, several steps can be taken, such as enabling the “find my phone” functionality or programming your phone to automatically erase after a certain number of login attempts.

The bottom line is that we are all vulnerable unless we decide to forgo all technology (yes, the thought has crossed my mind). But we must balance safety and security with convenience and practicality. Perhaps you have tried to give up social media for a New Year’s resolution or your smartphone for Lent. It’s tough. Really tough. We have become a truly mobile society where virtual connections with everything from family and friends to banks and consumer products.

We can’t live in fear of hackers, but a better understanding of how to prevent them from attacking us will go a long way toward providing some peace of mind.

Chris Tidball is an executive claims consultant with SecondLook, Inc., a leader in subrogation solutions. He is a frequent speaker at insurance trade shows and the author of multiple books including Re-Adjusted: 20 Essential Rules To Take Your Claims Organization From Ordinary To Extraordinary, as well as the acclaimed thriller Deep State: A Jake McFarland Thriller. You can e-mail him at ctidball@2ndlook.net.

Aug

The Subrogation Cash Cow (The Story Continues)

My first Subrogation Cash Cow article was published back in 2010, followed by a series of educational training modules over the next few years. But as we evaluate the state of subrogation practices today, it seems that for as much as the world has changed in the past decade, many subrogation practices remain the same.

Back in 2010, carriers faced some big challenges largely driven by the crash of the housing market and the great recession. Today, the challenges faced are from an ongoing pandemic. Claim volumes have fluctuated up and down. There seems to be less predictability in an already unpredictable world. Exacerbating these challenges are ongoing mergers, acquisitions, downsizing and much consolidation within our industry.

So how does this impact claims, in particular subrogation. Increased productivity demands, fewer resources, and ever changing technology all play a role in the quality of claims investigations and outcomes. Arguably one of the biggest opportunities in the world of claims as the estimated 15% of claims closed with missed subrogation opportunities at an annual cost to the industry of over $15 billion dollars!

In a recent conversation with a long time colleague, we discussed how it was “back in the day”. Claims were handled with a generalist approach requiring adjusters to have their eye on the ball at all times. In today’s more specialized world there are arguably more opportunities for defects in the claims handling process. While there may be economies of scale and productivity gains, there is also a greater risk of leakage, which can offset many of the other gains.

When it comes to subrogation, the key to winning the game is ID. If you don’t ID the subrogation you are going to miss the recovery. Vince Lombardi once said, “If winning isn’t everything, why do they keep score?” It is a pretty simple formula. Despite this, many opportunities do get missed as our industry leading subrogation experts often see in routine closed file audits.

In this day and age of advanced algorithms, AI and machine learning this just shouldn’t be the case. The reality is that all of the aforementioned are good, and vitally important. But they only get you 80% of the way there. Certainly technology can do a good job at the majority of claims, but when you have complex recovery scenarios, PIP nuances, convoluted workers’ compensation laws and ever changing case law, basic technology simply can’t adapt fast enough. This is why SecondLook has deployed SecondLook Technology, which has been shown to outperform AI.

Today, we are going to focus on two key strategies to drive subrogation outcomes. Comparative Negligence and Complex Liability Scenarios. When looking at recoveries on collision claims, there is a wide range, but generally it falls to a range of about 22-28%. When evaluating Six Sigma studies of quality reviews for a variety of carriers the statistically valid samplings find a recovery range of 37-40% on these same claim scenarios. The recovery gap is the variant opportunity for improvement that carriers can expect when staff fully understand and effectively apply the concepts associated with comparative negligence.

Aside from straightforward situations such as intersection, lane change or parking lot accidents, there are a myriad of opportunities where comparative fault would apply in virtually any coverage line. Concepts such as assumption of risk, laden versus unladen vehicle weight and last clear chance, phrases not heard since our adjuster boot camps, need to once again become part of the daily claim vernacular.

In simplest terms front line adjusters often miss comparative negligence assessments. Audits that I have been involved with routinely show that a mere 3-5% of claims have a shared liability assessment. This is a much different outcome that we see with juries where it is estimated that more than 50% of cases adjudicated have liability apportioned between the parties.

As the adjusting population ages and retires, there is going to become an even bigger void in experience that will likely result in even more missed subrogation. This is further exacerbated by the outsourcing of First Notice of Loss, often overseas. While FNOL can serve as a valuable training experience for future adjusters, the costs savings of outsourcing is what some carriers are more focused upon. When accuracy of information and data collection become problematic, it has a direct and quantifiable impact on a carrier’s bottom line. When relying on subrogation models, the output is only as good as the data being collected.

Beyond FNOL, adjusters are often measured in terms of production versus the quality of their work, which results in critical items slipping through the cracks. A missed witness statement here, a overlooked piece of evidence there, missing police reports, witness statements, etc., can all add up to billions of dollars in leakage across the industry. Carriers that see the highest subrogation success rates are those who are consistently utilizing impartial auditors for closed file reviews, as well as enhancing processes to leverage business partners to augment staff and provide valuable services such as applicant and response arbitrations.

By focusing on two areas- maximizing recoveries on tough collections and developing an acute understanding of comparative negligence- carriers can battle their way out of the red ink. These opportunities abound in our industry, and carriers that leverage expertise in these areas will have an immediate competitive advantage.

A renewed focus on execution associated with effective and accurate investigations and outcomes will drive overall subrogation recognition, a key component to improving profitability. Recognizing subrogation as an area of opportunity and focusing on continuous process improvement by leveraging expertise in the industry is what we will define the most successful carriers in coming years.

Chris Tidball is an Executive Claims Consultant with SecondLook, an industry leading subrogation firm with over 600 years of collective experience that has recovered over $1 billion dollars for clients. His career spans over 30 years, including adjusting, management and executive roles with multiple To 10 P&C carriers. He is a frequent industry speaker and the author of multiple books including Re-Adjusted: Taking Your Claims Organization From Ordinary to Extraordinary! To learn more about no cost closed file reviews to ID missed subrogation please contact ctidball@secondlook.net

Aug

Since the pandemic of 2020, it’s been trying for insurance companies to meet budgetary goals

Many companies large and small had to make extreme budgetary changes yet continue to spend millions of dollars a year to settle lawsuits, all because they did not adequately identify and properly pursue subrogation opportunities.

At SecondLook our promise is that we get results. In fact, our clients often see a 20-30% improvement in year-over-year recoveries when working with us. Our closed file reviews will always yield missed opportunities. We are so confident of this that we conduct these reviews at no charge to you! In fact, we will not only do a “Second Look” but perform any additional reviews as well. In a recent tertiary review, we found over $2 million dollars that the first two levels of review (adjuster and vendor) overlooked.

Outsourcing is not an all-or-nothing proposition. Rather it is working together to find the deltas in your processes that would benefit from outsourcing. Rather than pay attorney’s fees and court cost’s let SecondLook https://secondlook.net/ find your missed opportunities and settle cases for a fraction of the cost.

Maryann Vitkievicz is a National Sales Executive with SecondLook, a leading provider of subrogation services. Her career has spanned more than thirty years, working with C-Suite leadership for multiple top insurers, regulatory bureaus and TPA’s. To learn more about how SecondLook can deliver missed revenue to you please contact Maryann or visit our website https://secondlook.net/.

Aug

Effectively Playing the Blame Game to Drive Subrogation Results

As a society, we sure can be quick to jump to conclusions. On the surface, these conclusions may seem to make sense, but are they always right? Perhaps nowhere is this more evident than when it comes to comparative negligence and its application in resolving insurance claims.

Consider the typical rear-end accident and the presumption that the person in the rear is always at fault. However, what if the person who got hit from behind had intentionally slammed on their brakes, had a defective brake lamp or was in the process of backing up? Compounding matters, consider claims scenarios involving intersections, parking lots, slip and falls, product defect, or liquor liability.

When considering that Americans have been conditioned by a never ending barrage of attorney ads promising to find fault with someone other than the victim, even if they were at fault, it’s no wonder this has become such a contentious negotiation issue. The reality is that fault is a complex component of any claim. Rarely are issues black and white. Rather, they are comprised of a myriad of minor details that all play a pivotal role in the proper outcome.

Having managed claims organizations across the country and being responsible for claims process improvement initiatives, including software applications that promised to improve results, I will be the first to attest that driving the right outcomes is no simple process.

It is estimated that 15 percent of all claims are closed with a missed subrogation opportunity. Frequently this is due to adjusters making erroneous liability calls. In multiple Six Sigma projects that I have managed, the results were actually much higher, often approaching 30 percent. This is a tremendous financial burden that has been placed upon an industry already faced with increasingly tight margins.

The reality is that far more accidents than most people realize have elements of comparative negligence. According to Jury Verdict Research, a national organization that tracks such data, rear end auto accidents accounted for only 45 percent of auto cases adjudicated, with the remainder comprised of intersection collisions, lane changes, chain reactions, and parking lot scenarios. In other words, a lot of claims where there was shared liability. These are claims that need a SecondLook.

As an insurer, you certainly shouldn’t expect to set a benchmark that high, as very few claims actually make it to trial. What you can do, however, is bank on the fact that many of your claims are closed with a missed subrogation opportunity and can benefit from a closed file audit or missed opportunity review.

So what can carriers do to drive these results? The process I utilized was to bring in SecondLook, an organization with over 600 years of claims expertise and proprietary SecondLook Technology, to review closed inventory. What I liked was that there was never a charge to do this, but they always found missed subrogation. Often to the tune of millions of dollars!

It may be tempting to go it alone, which can yield results. But the time commitment and costs associated with getting it right the first time can hamstring any lean organization. This is compounded by everything from staffing shortages, inadequate training, lax management oversight and even staff reallocation due to Covid.

To really nail down the successful path to recovery on a consistent basis, claims organizations have to focus on claims. The carriers that do get it right optimize claims performance by instilling an ethic of “investigate, evaluate, and negotiate.” These form the foundation for quality claim files containing accurate settlements yet are increasingly overlooked in a never ending quest to chase other metrics of dubious distinction.

Investigate…Evaluate…Negotiate

Investigate, investigate, investigate! This can’t be said enough. Are statements taken from all parties? Has all damaged property been inspected, photographed and preserved? Was there a scene investigation? Were primary and secondary liability factors or mitigating factors considered? Which duties were owed; which ones were breached? By taking the steps to complete a thorough investigation, not only will quality improve but so will results.

Evaluations are the critical byproduct of a thorough investigation. If the latter is incomplete, then how can the former be conducted at the level expected of a fiduciary? From the time the claim is reported, it is incumbent upon all involved to secure the necessary documentation to enable a fair and accurate assessment of coverage, liability and damages which are all of equal importance.

There is no question that evaluations take time; a necessity if one is to achieve accuracy. A detailed evaluation necessitates not only looking at all of the facts presented to date, but thinking outside the box. If an injury doesn’t seem plausibly related, then perhaps running background checks, hospital searches, index reviews, or simply knocking on a neighbor or ex-spouses door will provide missing pieces to the puzzle.

One aspect of the claims process that many adjusters struggle with is negotiation. There is no question that this can be a contentious and adversarial part of the process. Complicating matters is an economy struggling through the covid recovery that has resulted in an uptick of insurance opportunism. Whether a claim is legitimate, inflated, or an outright fraud, it seems that everyone is trying to haggle for as much as they possibly can.

This makes the job even more challenging, as carriers must take steps to ensure that they have not only the best and brightest in their ranks, but provide them with the negotiation tools and strategies that have been proven to work. Far too often people will take the path of least resistance, failing to negotiate the shared liability or pre-existing conditions. This not only costs the carrier, but alas violates the fiduciary duties between the insurer and the insured.

Calibrating Your Organization

During my tenure as quality assurance director for a large multi-national carrier, our team was tasked with providing the necessary feedback to enable the organization to improve the entire claims process. From loss intake and investigation to evaluation, settlement, and recoveries, a myriad of opportunities existed.

Perhaps one of the greatest challenged faced across the insurance industry is consistency, such as liability assessment. While consistency in any process is a challenge, it becomes even more so when there is an element of subjectivity. After all, who’s to say if the accident was 50/50 or 60/40?

Herein lies the challenge, as a 10 percent differential in liability assessments is not necessarily the concern, but having clear comparative losses settled as absolute is. When reviewing internal data, it is critical to not only identify the frequency by which comparative is assessed, but to conduct calibration exercises to ensure that staff understands and uniformly applies the proper application of jurisdictional laws and general duties owed.

Calibration, defined as a set of gradations to show positions or values, brings into alignment what previously was out of sync. In the world of insurance claims, it accomplishes the ever-elusive goal of organizational consistency.

This process can be used to benchmark both current results and internal knowledge. Once this has been established, internal processes can be designed to achieve a variety of metrics to gauge results.

While many aspects of the claims process should be calibrated, liability is often a key issue that can serve as a foundation for organizational improvement can be based. Proper liability assessment will ultimately lead to improved negotiations, more accurate settlements, better recovery identification and ultimately an improved bottom line.

In the end, it isn’t the bells and whistles that will improve results, but rather a keen focus on blocking and tackling the very basic elements of insurance claims. While there are certainly claims in which one person bears sole responsibility, they do not comprise the majority.

To the contrary, there are many more opportunities where shared liability exists. From product defects and dram shop claims to homeowner’s, commercial, and auto insurance, there are often multiple parties that share culpability. From points of impact to statement inconsistencies, it is incumbent upon the investigating claims team to identify those opportunities. But beyond the identification comes the effective negotiation. It is one thing to determine shared fault, but another to effectively educate a person as to why they bear some of the responsibility.

To take advantage of the opportunities that exist, it is critical to evaluate current results, both internally and against the industry. But even then, if 15 percent of all claims across the industry are closed with a missed subrogation opportunity, is that benchmarking enough?

A good solution is a three-pronged program that begins with the recognition that opportunities exist, and certainly can serve as a foundation from which to gain a competitive edge. By recognizing that money is being left on the table, there should be a tremendous cross-functional incentive to collaborate on effective solutions that have been proven to work.

Next, identifying an organization’s gaps can serve as an invaluable exercise to identify glaring openings like a football coach reviewing game day film. Simply asking process related questions isn’t enough. Sit down and plot out every single action taken from the inception of a claim through its final disposition. For carriers with multiple physical locations, or even multiple teams, this can prove to be an eye-opening experience.

Lastly, calibrating the audience to ensure consistency of purpose is the only way to create an exceptional organization. As Vince Lombardi once said, “perfection isn’t attainable, but if we chase perfection we can catch excellence,” which should be everyone’s ultimate goal.

Chris Tidball is an executive claims consultant with SecondLook, an industry leading subrogation firm and spent more than 20 years in various claims capacities with multiple top 10 P&C carriers. He is the author of multiple books including Re-Adjusted: Taking Your Claims Organization From Ordinary To Extraordinary as well as the acclaimed fictional thriller Deep State: A Jake McFarland Thriller. To learn more contact ctidball@2ndlook.net or on LinkedIn @SecondLook.

Aug

How To Effectively Subrogate Mother Nature

Acts of God happen frequently. Sometimes they aren’t covered by insurance, other times they may be covered but it quickly becomes apparent that there is no subrogation potential. But what if an act of God occurs, resulting in covered damage and the property owner was aware that under certain conditions of Mother Nature, the act of God would happen.

Digging deeper into investigations is what separates the ordinary from the extraordinary. During a recent closed file audit of a leading insurer, we came across a series of flood claims that warranted further investigation. At first glance it would appear the flood was an act of God. The scenario involved the claims made by insureds who had parked their vehicles at a commuter train station near a major river. A flash flood ensued, totaling out most of the vehicles and causing extensive damage to the remainder.

The carrier paid out the claims under their respective insured’s comprehensive coverage and the handling adjusters each indicated no subrogation potential existed. During an audit by SecondLook, a leading provider of recovery services, the files were identified as having potential subrogation.

When the weather was researched it was determined that the flood occurred under a full moon at high tide during a nor’easter. Further digging determined that this particular parking lot always flooded when these three weather phenomenon occurred simultaneously. The SecondLook adjuster dug a bit deeper to find a series of prior claims related to this type of flooding which would indicate that the parking lot owners were aware of the risks and warnings should have been provided to the vehicle owners.

The adjuster dug even deeper, and found that the parking lot had grown in size. Aerial imagery showed that year over year there had been encroachment on the river as the owners brought in fill. Yet no permits were ever found, indicating that this parking lot expansion was occurring without the oversight and permission of the local government.

The SecondLook adjuster reached out to the carrier for the parking lot, presenting evidence that the owners were aware of the risk. The evidence was compelling enough that a settlement was reached with the parking lot carrier, subrogation money was collected for the SecondLook client, and deductibles were returned to many very happy customers.

There is a reason that 15% of all claim files are closed with missed subrogation. Adjusters, models, AI and ML can identify less complex recovery opportunities. SecondLook’s SecondLook Technology takes things a step further by adding over 600 years of collective claims experience to identify what everyone else misses…to the tune of millions of dollars annually for insurers in the US and abroad.

If you dare to take a SecondLook, who knows what you will find in those closed files.

Chris Tidball is an Executive Claims Consultant with SecondLook, a leading provider of subrogation services. His career has spanned more than thirty years, working in adjusting, leadership, and consulting roles for multiple top insurers. He is the author of Re-Adjusted: 20 Essential Rules To Take Your Claims Organization From Ordinary To Extraordinary, fictional thrillers Swoop & Squat and Deep State and is the creator of the TV series The Adjuster. To learn more about how SecondLook can deliver missed revenue to you please contact ctidball@2ndlook.net or visit our website.

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