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Subrogation Services – Auto Claims – How To Maximize Recovery

If you are a claims adjuster or manager or are employed in any capacity in the insurance claims industry, then you are familiar with the concept of subrogation, and your company probably has a subrogation department, or at least a subrogation specialist. The procedures used in subrogation are pretty standard across the board. Essentially, claims which are paid out due to the partial or full negligence of a third party are referred to the subrogation department where concentrated subrogation efforts are initiated.

The companies that realize the best recovery rates utilize a combination of methods to realize as many recovery dollars as possible. Depending on the quantity of claims coming into a claims department, the best recovery procedure can change dramatically. In general, here are the techniques my experience has shown me to be most effective. I will break down the processes by categorizing claim departments by quantity of new claims per month (keep in mind we are talking about automobile claims only).

0 – 500 new claims per month (small companies)

For small companies, employing one highly trained, subrogation specialist is the way to go. An experienced specialist can identify, manage and collect on all potential recovery claims if the amount of new claims coming in per month is less than 500. The specialist should be auditing every claim for potential recovery. Additionally, the specialist should not wait until the claim has been paid to begin auditing and directing recovery efforts. The recovery specialist should have the power to direct front line adjusters on the investigative needs of the recovery department prior to actually taking over the handling of the subrogation/recovery aspect of the claim.

Working as a team is paramount when it comes to maximizing subrogation / contribution recoveries. By getting involved in subrogation early on in the claims process, an experienced recovery professional can anticipate obstacles to recovery and eliminate them before they occur. Using an active “eye” on recovery is one major part of recovery that many insurance claims departments neglect. The difference in recovery can be huge.

500 – 2000 new claims per month (medium companies)

For companies in this bracket, it is beneficial to utilize a specialist and an assistant to the specialist. It is profitable to have the senior specialist train an assistant to handle all of the administrative tasks associated with managing a book of recovery business. In addition, companies in this bracket may find it useful to employ the services of a good subrogation attorney.

Locating and hiring a good subrogation attorney can be challenging as it is hard to find an attorney that will not neglect a company that doesn’t send a large quantity of assignments. There are a lot of considerations to be made when selecting a subrogation attorney, in fact, there are so many, I cannot include them in this article, but a great specialist should be able to screen an attorney properly, and there are some great articles floating around which were written by lawyers that give great advice on the general factors to consider when searching for a subrogation attorney. Additionally, companies in this bracket will benefit from using a specialty recovery company that focuses on recovery from uninsured motorists. This type of recovery is the most difficult and time consuming for an “in-house” specialist. Additionally, to efficiently work this type of recovery business, skiptracing prowess is mandatory. Managing claim information with an eye towards skiptracing is normally not possible with an insurance company’s claim management system, but a good specialty vendor will have a different way of maintaining claims data which is tailored towards the location of and contact with tortfeasors.

If the recovery potential is identified, the easy money is collected, and the management of the data is handled “in house”, then it is worth it to screen a vendor for the “hard dollar” recovery efforts. The vendor should be able to report their activity in a live manner that coordinates with the insurance company’s needs, and they should be able to demonstrate their effectiveness in quickly resolving uninsured motorist recoveries. The vendor should never spend more than 90 days making recovery attempts in “collection” mode. Within 90 days, the vendor should be able to refer the recovery claims back to the insurance company and suggest legal action if it seems prudent. Then, the in-house specialist or team can assign the file to an attorney for immediate litigation or if they are really sharp (and incorporated), they can usually litigate the file themselves in small claims court, if the total damages fall within the proper jurisdictional limits.

Time is of the essence here! A major advantage to subrogation recovery is that if the at fault party has a driver license, then over 90% of the time, the validity of the license can be put in jeopardy as a way to coerce settlement. Many people will just avoid paying a damage claim until there is a real consequence such as a driver license suspension. It is a myth that most uninsured motorists don’t have money. I have recovered money from doctors, lawyers, teachers, and many other professionals that were uninsured and involved in an accident, for whatever reason. Taking swift action after making the proper collection efforts is paramount in maximizing recovery.

2000 new claims and above (larger companies)

For companies in this bracket, the same philosophy as used for the medium sized company should apply. The difference is that the number of in-house specialists should most likely increase and be divided into teams. Any company that receives 2000 or more new claims per month is surely handling claims in more than one jurisdiction, and therefore since the laws are slightly different, and the claims tendencies are different in the different jurisdictions, the approach should be to have sufficient talent employed to properly manage and negotiate recovery in all jurisdictions.

The utilization of vendors for “hard dollar” recoveries should also reflect specialization in jurisdiction. Vendors that tout nationwide recovery services simply do not have the “talent” to properly recover “hard dollar” claims. The “talent” is paid a nice salary at an insurance company and doesn’t work for a small salary and commission, which in and of itself lends to the wrong philosophy when it comes to recovery. “Hard dollar” recovery is not profitable when working on commission, period. Most vendors work on a contingency basis, and the profit goes to the owner of the vending company, not the specialists that are trying to find that “easy” money so as to make a living on the “not so lucrative” commission structures that are available.

Don’t get me wrong, many large companies fail to utilize proper “in house” methods, and when they utilize “nationwide” vendors, the specialists that are lucky enough to work for these vendors will have a great opportunity at making a nice living by catching the large quantities of missed “easy” money left behind by the lacking methods of some of the larger companies. For companies that want the very maximum in recovery dollars, nationwide vendors will not be very helpful in recovery “hard dollar” claims, which is all that should be left over from the “in house” efforts.

Other tactics

In addition to using specialized vendors and attorneys, it is also very profitable to utilize recovery procedures to audit recovery demands from other carriers. Auditing demands can reduce subrogation related liability payments by as much as 18%. Even more profitable is to find a “hard dollar” recovery vendor that can serve a dual purpose and audit demands as well as perform the “hard dollar” recovery services. These types of vendors are few and far between. The blending of the two services has not been a traditional type of company because of the expertise and licensing required to audit claims.

Vendors that have this capability can provide actual recovery services at a reduced contingency and can also perform subrogation audits at reduced rates because of the blending of the services which have different profitability timelines. Subrogation audits are billed on a per claim basis and provide a vendor with immediate income whereas subrogation recovery on a contingency is not immediately realized.

Doing both allows a vendor to properly work “hard dollar” recovery assignments while still maintaining some immediate income on new demand assignments. The dual vendor is not forced to pursue quantity assignments of recovery claims like the traditional subrogation vendor, and they normally have only a couple of clients that they work for exclusively so as to maintain the profitability factors and provide the highest returns. Insurance companies who luck into finding one of these vendors will find that they get the most bang for their buck. The relationship is profitable for both the vendor and the insurance carrier.

Justin Petty / Licensed All Lines Adjuster and Public Adjuster

My personal cell phone and e-mail are listed on my website, and I will personally answer my phone to address your questions or concerns. I work for the “little man”, be it a small business, speciality recovery niche, or an individual. If you think honesty and integrity are a thing of the past, research me. I am truly a horse of a different color, so visit my website and give me a call or drop me a line. I trust you will be surprised when I personally answer the phone. I am the founder and CEO of Petty Details, LLC, and I have the power to bend my own rules and prices for the benefit of justice. Plead your case!

Driver License Suspension – How An Insurance Or Subrogation Company Can Suspend Your Texas License

If you have a Texas Driver License and somebody has called you or sent you a letter threatening the suspension of your driver license over an auto accident, it is highly possible that it could actually happen, but it is just as probable that the person making the threat doesn’t actually understand the rules as they apply in Texas. Only the Texas Department of Public Safety can suspend your driver license (and the DPS doesn’t call people to advise of a pending suspension, they will send a written notice). What an individual, insurance, or subrogation company can do is request the suspension of your license in accordance with Chapter 601 of the Texas Transportation Code, and there are a lot of exceptions and rules that have to be followed (it is notable that if you don’t have a license, a proper request will keep you from getting one, and the suspension is supposed to affect your registration, too).

If the person calling you is an insurance company or subrogation firm, they probably know how to get you suspended, and it is not required that you be sued. You can lose your license, registration, and ability to get a license even if you have not been sued. If you have been sued over an auto accident and you lost, then 99% of the time, you will be losing your license and registration privileges until you pay. Anyway, non-suit suspension of a Texas driver license is what this article is about, so here are some of the requirements your case will have to meet in order for your license to be in true jeopardy: The Texas Safety and Financial Responsibility Act has exacting rules that relate to the ability to get an individual’s driver license suspended due to a violation of the act, here they are in layman’s terms:

1. The accident must have happened on a public highway, road or way (like an alley) as defined by Texas rules.

2. Somebody has to file an accident report, either a police officer or a party that was involved in the accident.

3. There has to be a “reasonable probability” that you were at fault (like the police put on the report that you rearended somebody, or there are witnesses against you). This is the trickiest part, because there are so many factors that can indicate fault.

4. There must be bodily injury (any amount) or damages to an apparent extent of $1000.00.

5. If you are the owner of the vehicle, then you must have allowed the use of the vehicle either by saying the driver could use it, or by making it apparent by your actions that it was okay.

Keep in mind the rules I am relaying only apply to Texas and violations of the “financial responsibility law”. If all of these factors apply to you, then it is likely that your license will be suspended if the party threatening to take action follows the proper rules (in Texas) for requesting the suspension. Now, what can you do to protect yourself? Are there any loopholes? My best answer is “sort of”. If you were unfortunate enough to be involved in an accident that is probably your fault, and if you didn’t have insurance or some other way of complying with the financial responsibility law, then you have few choices. Here they are:

1. Pay for the damages.

2. Most companies will take less than what they are asking for if you can pay a lump sum, so if you have a little money, try and make a settlement for less than the alleged damage amount.

3. Work out a payment arrangement with the insurance company, subrogation firm, or person that is threatening you (it must be a written agreement that the State will accept in order to properly protect your license).

4. Fight about whose fault the accident was. In order to do this you must follow the rules for requesting a hearing when you get your first notice of suspension (also it is advisable to make sure the Department of Public Safety has your correct address because they will use the address on your driver license for all notices and you have a time limit to request a hearing).

5. If you were the owner of the vehicle that was involved in the accident, and the person who wrecked your car didn’t have permission to use your vehicle, then fight about that (again, you have to use the hearing rules to fight).

6. Always make sure you have researched all avenues of possible insurance. Sometimes you could be covered and just not be aware of it (like if you are a full time college student and your parents have insurance).

If you (as the owner) or the driver of your vehicle weren’t financially responsible at the time of an “at fault” accident, then the above things are pretty much the only things you can do to avoid a suspension outside of hiring an attorney. So, be careful about making the assumption that your license can’t be suspended for an auto accident (if you were uninsured). I can’t tell you how many times I tried to explain this to people and they simply didn’t believe me, so they ended up with a license suspension, and then having to call me to negotiate for their license or risk the consequences. If you get pulled over and you don’t have a valid license, you can be taken to jail. It is probably the best (and right) thing to do is to work out a payment plan to protect your driving privileges.

Justin Petty / Licensed All Lines Adjuster and Public Adjuster

My personal cell phone and e-mail are listed on my website, and I will personally answer my phone to address your questions or concerns. I work for the “little man”, be it a small business or an individual. If you think honesty and integrity are a thing of the past, research me. I am truly a horse of a different color, so visit my website and give me a call or drop me a line. I trust you will be surprised when I personally answer the phone. I am the founder and CEO of Petty Details, LLC, and I have the power to bend my own rules and prices for the benefit of justice. Plead your case!