26 Oct 2021
A subrogation adjuster’s nine-to-five
By Odom Wu, Assistant Head of Automotive
When I worked for a top five insurance company, I was responsible for centralized services that encompassed subrogation, salvage, triage, and administrative operations, including over 200 subro and arbitration adjusters on the staff. The teams recovered over $1B annually for the policyholders.
That number represents a huge number of claims that took up countless hours to review – even for such a large staff with access to outsourcing for the administrative tasks. If a digital solution for subrogation review would have been around then, we could have ploughed through the mountains of demands much faster with assurance that we were paying exactly what we owed.
That didn’t exist then, but it does now in the form of a new AI-powered solution custom-built for subrogation adjusters reviewing adverse carrier claims.
A day in the life of a subrogation adjuster
The first thing subrogation adjusters do when starting the day is retrieve voicemails left from adverse carriers, claimants, and any other third parties. Then they compare their voicemails with what’s listed in their diary to avert duplication of responses. Once those are combined, they prioritize claims and create a work agenda in order of importance.
The next couple of hours are devoted to contacting adverse carriers to obtain negotiated settlements on demand packets. Adjusters who are good at multitasking can enter notes while they are on the call. If not, they have to write up the note right after because they have to document files that they are working on.
For example, if adjusters find on review that the demand packets from Insurance Company A that are in excess of their policy’s allowance, they would contact Company A’s adjuster to attempt to negotiate the settlement. Once they come to agreement, the file is updated accordingly. Then the check would be issued to Company A, and the file is closed.
After the adjusters are done with their calls, they move on to the next subro demand packets. These usually arrive in digital format as a PDF via eSubro Hub, the central depository website through which all participating insurance companies file their demands. The subrogation adjusters pull up claims of incoming demand packers from adverse carriers and download the claim, the estimate, and relevant photos.
How long it takes to review claims
While most claims will be consistent with the insurer’s standards and can be approved on the spot, some will deviate from standards and require some back-and-forth negotiation.
Manually reviewing a claim typically takes about 15-30 minutes if the adjuster is equipped to assess the damages.
However, in many cases subrogation adjusters lack APD experience to properly assess auto property damage. In those instances, they need to involve APD adjusters to lend their expertise. Getting the figures needed for pricing such repairs can take an additional day or two, or even longer, depending on the extent of phone tag and emails going back-and-forth until they get their answers.
The issue is not just dragging out a single claim but the aggregate effect of a stream of constant demand packets. If the insurer fails to settle them in a timely manner, the inventory of claims starts to snowball, growing larger and larger until it carries the threat of an avalanche.
Improving the subrogation process with AI
An AI-powered subrogation solution makes it possible for subrogation adjusters to close a lot more claims quickly and accurately. For one thing, it eliminates the need to wait on answers from someone with APD expertise. The comprehensive data on pricing and assessment it contains includes identification of both parts and appropriate labor required for repairs.
For another, the adaptive capability of AI makes it possible to tailor the solution to each insurer’s standards. The basis would be a universal model that is tweaked to guidelines.
The AI reviews each subrogation estimate and associated photos to ascertain it is in compliance with the subrogation policies in place. If it detects a discrepancy between the demand packet and the insurer’s standards, it will flag that claim and identify the exceptions, giving the adjusters a clear list to work through when negotiating with the adverse carrier to pay what they owe.
For example, some insurers allow for Original Equipment (OE) parts to be used on repairs of cars under a year or two years old. Others only budget for alternative parts in repairs. Those kinds of differences in policy standards are what make negotiation between carriers in subrogation necessary.
That is where subrogation adjusters bring in the most value – using their negotiation skills.
When the team can rely on the AI to quickly approve the majority of claims with no issues and bring the exceptions to their attention, they can make the most valuable use of their time.
Tractable’s AI Subro solution addresses the three primary insurance concerns:
- Speed: it closes out claims faster.
- Accuracy: it upholds the standards of the company policy and compliance.
- Service: it can extend to recovering the deductible that policyholder incurs under the collision policy for the insurer issuing the demand.
All insurers will find themselves at both ends of the bilateral relationship of subrogation. That’s why the goal is always to maintain fairness and pay out exactly what is owed as efficiently as possible.