How to Maximize Insurance Claims Recovery
As insurance claims recovery specialists, we get to see many different claims processes, systems and procedures going on within an insurer or a TPA (third party administrator). So here are our thoughts on how the process of claims recovery can be maximized for successful recovery.
What is Insurance Claims Recovery?
Insurance Claims Recovery, also known as “subrogation” or subrogated claims recovery, is a legal term meaning that the insurance company assumes the right of its insured to pursue a claim against a wrongdoer.
If an insurance company pays for damage to property, under an insurance policy, it will pursue its payment from the party who was at fault for the accident. It will make a subrogation claim against that person’s insurance company. The insurer’s right of subrogation is often extended to a professional claims recoveries service provider, who will perform the claims recoveries process on behalf of the insurer.
How to improve insurance claims recovery
Claims represent an insurance company’s biggest expense, with claims payouts and loss-adjustment expenses accounting for up to 80 percent of an insurance company’s revenue. One way to reduce these expenses is through claims recovery.
Here are our top 6 tips to improve insurance claims recovery:
1. It starts at lodgement.
There are certain measures that an insurer should take immediately on discovering that their insured has lodged a claim and has suffered loss or damage. At that time, it is unlikely to be apparent where or how the loss or damage occurred. It is a prudent measure to notify and hold liable any other third party who might possibly have caused or contributed to the loss. This should normally be done by the insurer, or outsourced claims recovery provider. Either way, it should be done immediately. Early identification of a claim as recoverable provides a significant advantage to recouping costs, as there is a direct correlation between commencing recovery activity as closely to the date of incident and the chances of success.
Training lodgement consultants to ask more pertinent and detailed questions regarding the nature of the incident and the particulars of the parties involved can have dramatic effects on the potential for recovery. Ongoing education and communication of the importance of these details to your broker network and insureds customers is also vital.
2. Assessors and Loss Adjusters need to report on recovery prospects.
This is where a lot of leakage can be avoided right up front- getting the assessors to report on possible recovery avenues when they do their report. Not an assessor’s task you say. We disagree. This should very much be a part of the assessor’s job. Each and every assessing report should have some sort of tick box and report on at fault parties, liability, and possible prospects of recovery. If there are any at fault parties listed, the assessor should gather as much information as they can in regard to liability, names, addresses, insurance details, and list this in their report. Recovery agents often rely on these assessing reports in order to make full recovery down the track.
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3. Set recovery estimates and checks within the insurance claims software
Your claims software should allow for a recovery estimate to be inputted, along with at fault party details, tick boxes for liability, subrogation opportunities (if any), witnesses and actual recovery amounts. It should also have final checks inbuilt to follow up if recovery has been completed before the case is closed by the claims officer.
4. Outsource to a Debt Recovery Professional
The claims officer’s main priority is to look after the insured who has suffered a loss. Obviously, this is the most important part of the claims process- repairing the insured’s property as quickly as possible, as per the Insurance Code of Practice guidelines.
Claims recoveries often gets left to the very end of the claims process and then may get completely missed. Outsourcing this whole recovery function to a dedicated insurance claims recovery professional, will ensure you maximise the recovery rate and recovery funds.
A claims recovery professional can spend the time in skip-tracing, applying for reports, identifying the correct party against whom to claim, establishing liability, either with the un-insured party or their insurer, gathering evidence from reports and witnesses, then negotiating the receipt of payment.
5. External Claims Leakage Reports and Closed Case Reviews
Another way to increase claims recoveries and identify leakage is to get an external debt collection provider to conduct a closed case review and claims leakage report.
Recovery opportunities are missed simply because the indicator for a possible recovery is hidden in the claims narrative – for example, in unstructured text in claims forms or police reports. The management of claims, along with all the compliance, has become quite complex over the years. This complexity, together with overworked and understaffed teams, has led to a steady increase in time-consuming investigations and ineffective recovery processes. Unfortunately, this has resulted in missed opportunities for recovery that could have considerable implications for an insurer’s overall profitability.
Poor subrogation rates result in higher premiums that can reduce new business sales and lower retention rates. Professional external recovery professionals can help identify missed recovery opportunities and provide comprehensive reports on where the leakage is coming from and how to improve the internal claims recoveries process.
In a recent closed case review, Debt Recoveries Australia identified a total of 45 cases with potential for recovery and collected a total of $80,000.00, within 90 days.
We can come on-site and conduct the review or do it remotely.
6. Commencing legal proceedings
In many cases it may be necessary to consider whether or not to bring legal proceedings. Factors that may determine this include the size of the claim being pursued, the perceived strength of the case, the difficulty in obtaining an admission of liability from the party being claimed against and the need to prevent the claim from becoming time barred.
Again, an out-sourced insurance claims litigation professional can effectively manage the difficult issues around recovery of both insured and uninsured losses. This will save your claims staff to concentrate on keeping the insured happy.
A litigation expert will have the time and patience to obtain evidence from the insured, witnesses, police reports, at fault parties, then negotiate liability and payment.
Subrogation allows insurance companies to recover a significant portion of the money they pay out in the event of a claim, especially when they outsource to an insurance recoveries specialist, such as Debt Recoveries Australia. This helps keep premiums down, since the insurer is keeping its claims costs down.