Chris Tidball

VP Claims Transformation, Property & Casualty Insurance 

Subrogation is a funny thing, and I don’t mean that facetiously. Imagine the surprise as an insured awakes in the middle of the night, water dripping on her head, bed soaked through. Being a sound sleeper, she never realized that the condo above her was leaking like a sieve. Flipping on the lights, she leaps out of bed, hitting the floor with a splash as her brand new wood floors turned into Lake Gitchegumee.

She sprints up the flight of stairs from her condo, pounding on the owner’s door. No answer. Summoning the property manager and the local fire department, they enter the premise, and are met by a glaring cat standing on the bathroom sink as water pours over the edge onto the floor.

As it turns out, the owner was out of town but had filled the sink with water to sustain the cat. The cat wanted more water and had turned on the faucet. The insurer for the damaged condo paid the claim, ultimately subrogating the carrier for the unit above, recovering all damages and reimbursing the grateful insured her $2,000 deductible.

Sometimes it is easy to find the evidence…especially if it is sitting right in front of you, or in this case, standing on four legs. Sometimes it is not so clear and disappears before you can discover it.

Flying fire starter

Consider another story. An insured was sitting on his back porch when there was a large bang from inside his home. Racing inside, he found a small fire. An errant drone had crashed through a window and burst into flames. Luckily, the quick-thinking property owner was able to extinguish the fire before it spread.

The property owner promptly filed a claim, an adjuster was dispatched and the repairs commenced. There was only one problem. The drone was not registered with the FAA and had been discarded, essentially eliminating any shot at subrogation and the recovery of the insured’s deductible.

The key to success in property subrogation really comes down to three key things: identification of the person committing the tort, collection of physical evidence, and management of the cause and origin process. However, this isn’t always how things play out. Adjusters are frequently focused on getting things back to normal for their insureds. Far too often, critical pieces needed to prove a case fall through the cracks.

What can be done?

Subrogation solutions

While there are many complexities in renters and homeowners subrogation, there are some simple solutions to help improve your chances of success. One model is to use a clearinghouse approach to subrogation identification and evidence preservation. Using analytical models to identify the right claims from the start and ensuring early contact with the insured has a significant impact on your ability to recover. A difference of three to five days can affect recovery by as much as 15%.

Of course, many insurers are nervous about adding any service providers due to the potential impact on their bottom line. However, some providers can execute this solution on a contingency basis, which can be a better alternative to trying to get the internal funding and analytics expertise to staff the effort in-house. It is important to find vendors who understand your company’s culture and service model. Most insureds appreciate a call focused on recovering their out-of-pocket expense after a loss. It is a win-win for everyone, including allowing your front-end adjusters to do what they do best.

If you were to ask insureds what they really want from the claim process, it boils down to promptly getting their lives restored and recouping any deductibles they were required to pay. Like many things in life, time and money are an important focus for claimants. Utilizing a clearinghouse approach addresses both of these areas, while allowing the carriers to resolve claims quickly in addition to initiating the subrogation process. For the claimants this speeds up the deductible recovery process, resulting in higher customer satisfaction and improved customer retention. Leveraging this type of data-driven decision is the next step in the journey to creating the ideal claims process.

Christopher Tidball ( is Vice President of Sales and Claims Transformation Strategies with EXL and has more than 25 years of experience in various aspects of the insurance industry, and is an author of several insurance-related books. Don Pierce, CPCU, ( is Vice President of Recovery Operations at EXL and has been creating innovative solutions for his insurance customers for more than 30 years and is a co-inventor for six issued patents focusing on recovery.

Reprinted with permission from the May 2019 issue of Claims Magazine. ©2019 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.

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