While not quite money for nothing, most insurance companies are losing millions of dollars of revenue through ineffective claims recovery processes. Opportunities for claims recovery, such as through salvage and subrogation, are often obscured by the sheer volume of claims data available. For example, there were more than 11 million motor claims reported in Europe last year. In the United States there were 6 million auto claims and a staggering 5 million workers compensation claims.
The management of subrogation rules and regulations 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. In fact, it is estimated that subrogation opportunities missed by insurers amount to $15bn annually in the US alone.
With all these challenges, insurance companies are turning to analytics to improve their loss ratio by optimizing the claims recovery process. By using analytics Property and Casualty insurers have:
- Minimized the number of missed recovery cases by recognizing known and unknown subrogation indicators in the claims information
- Increased the chances of recovery by detecting all case to be recovered earlier in the process and generating automatic alerts
- Reduced investigation time and costs by prioritizing and triage potential recovery opportunities
- Analyzed both structured and unstructured claims data to gain a better understanding of the loss.
In fact one leading European insurers was able to improve its recovery rate from 23 percent to 27 percent, represented a saving of millions of dollars per year.
While the primary impact of an improved claims recovery process impacts the bottom line, a secondary impact of increased and more-timely subrogation recoveries is the positive impact on customer satisfaction. Timely return of deductibles to customers can have a positive impact on customer retention.
Download this brochure to learn more about how SAS can help.
NOTE: Originally published on The Analytic Insurer.