When your employees are injured by negligent third parties, is your insurance carrier protecting your interests? The insurance term “subrogation,” or “standing in another’s shoes” to collect claim expenditures, is a sometimes overlooked avenue to lower your premiums.
Not-at-fault auto accidents that injure your employees are one easy-to-spot source of funds. But overlooked sources of subrogation such as tool failure, subcontractor negligence, a dog bite, or a slip-and-fall can be subrogation windfalls, as well. Especially in workers’ compensation, you must manage your experience modification factor to manage your premiums. Subrogation recovery will help to reduce payouts and should be tracked and monitored to ensure that carriers are aggressively protecting your interests.
What should you look for in an insurance carrier? There are many things to consider, but the way a company handles your claims should be one of the most critical factors in your decision.
If possible, choose an insurance carrier with a dedicated subrogation unit. Historically in the insurance industry, non-performing adjusters were sent to the subrogation department. A few decades ago, insurance companies began to realize that poorly handled subrogation was leaving significant sums on the table.
These units of highly trained subrogation specialists can improve your bottom line by collecting against others who have injured your employees. Without a subrogation unit, workers’ compensation staff may fail to pinpoint recovery opportunities, and with heavy caseloads, have little time to aggressively pursue subrogation even if they recognize it.
Call your adjuster to determine subrogation status on appropriate files. If subrogation has been overlooked, talk to the claims unit supervisor to ensure they are making aggressive recovery attempts. Too often subrogation falls to the bottom of a busy adjuster’s desk. While many carriers have about a one-percent recovery rate from subrogation, carriers with specialized units and an aggressive subrogation philosophy may recover as much as four percent of losses.
Paying attorneys to pursue subrogation may cost you more than you stand to recover. However, if the claim is relatively substantially, you are self-insured or feel your carrier has abandoned the pursuit, vendors such as Aon Recovery handle subrogation claims for a fee.
Sometimes the offending party or company appears to have no insurance or assets. Before your claim is closed, request that the adjuster perform an assets check from a reputable investigation company. If the driver or the owner of the vehicle has assets, you can take legal action to recover your damages. If the carrier abandons pursuit, your attorneys may be able to step in if the statute to file a claim has not expired.
Timing is critical in recovery, because statutes of limitations to pursue damages vary widely from state-to-state. In addition, adjusters normally reserve files at full case value and do not take potential subrogation into account. Therefore, your e-mod can hinge on how quickly money is recovered from the offending party.
Subrogation can shave points from your e-mod and reduce your insurance costs. Assist in the process by monitoring losses and providing accurate information to your carrier or third-party administrator, complete a thorough scene investigation and preserve any evidence.
Don’t let subrogation fall through the cracks. You have too much money riding on it.