29 Sep Solving Subrogation Pain Points for Insurance Carriers
The insurance industry has been hit hard by tough challenges in the past few years – due to increased claims volume and staff reductions driven by the COVID-19 pandemic. Those challenges include supply chain delays that affect parts availability, scarcity and rising cost of rental vehicles, and increased vehicle downtime due to overloaded repair shops.
“With more claims being filed than ever before, it’s putting a strain on the insurance industry,” explains Megan Aloisi, Senior Subrogation Manager with Fleet Response. She has been with the company for 20 years and manages a team of subrogation specialists that she has seen grow from five to 110. Fleet Response has become a powerhouse in the industry – and a leader in recovering losses at a time when subrogation is more important than ever.
Every dollar recovered is essential to the bottom line of carriers and self-insured companies.
As a third-party administrator, Fleet Response helps many self-insured clients manage their fleet vehicle accidents and organize and schedule repairs. With this broad exposure, the company is uniquely positioned to understand and address pain points trending throughout the insurance industry.
Clients gained even more advantages in 2021 when Fleet Response acquired an industry leading subrogation company with a reputation for uncompromised integrity and stellar recovery results.
For the insurance industry, it’s a whole new post-pandemic world – with claim volume rising while the staff needed to resolve claims is shrinking and under stress. All this creates frustration, longer cycle times, higher costs and reduced recoveries.
Fleet Response has tackled these pain points to deliver results for clients.
Pain Point: Busy repair shops lead to more vehicle downtime and expense
Across the industry, getting a vehicle repaired is taking longer. This phenomenon drives up cost as repairs can take weeks and sometimes even months. It’s often difficult for insurance companies to prove and then pay for the true cost of vehicle downtime. Fleet Response helps decrease these costs by reducing the wait time up front.
“When you partner with someone who has relationships with repair facilities, you can speed up the repair process through preferred scheduling and insured parts availability,” says Aloisi. “One of the biggest advantages we offer Fleet Response clients is our direct repair network of more than 5,000 shops where we have built relationships. Any advantage you can come up with to get priority scheduling and ‘cut in line’ at a busy repair shop is certainly helpful.”
Combine that with adjustors who have years of experience in actual body repairs, making expert recommendations on only necessary repairs. They help Fleet Response clients do a cost/benefit analysis on whether or not to fix or replace a vehicle. Clients get the most accurate information, so they’re empowered to make the best decision before the repair gets started and they’re invested in it.
Pain Point: Recovering the actual cost of downtime
With vehicles stuck in the repair shop for longer periods, Fleet Response has come up with a different strategy to help clients recover those costs in subrogation.
“We can validate all of the costs of downtime in the subrogation demand, including parts invoices to show when a part was ordered versus when it was received. We no longer go on the industry averages, but instead we calculate and request the true and total cost,” says Aloisi.
Rental costs are a part of that story, with a rental vehicle sometimes costing more than the repair itself. Lucy Avsharian is an Arbitration Manager with Fleet Response and has worked in the industry for more than 25 years. She has seen post-pandemic costs skyrocket as claim volumes increased, demand for rentals grew and availability of appropriate vehicles became a challenge.
“People needed a car comparable to what they normally drive, but with the growing demand, they were put into a more expensive car they didn’t need, like a convertible. With our expertise in arbitration, we’re able to explain why a vehicle might cost $55 a day instead of $30 a day, or why it was needed for 60 days. And then we can recover those costs.”
And if no rental is used, Fleet Response’s loss of use calculation can prove how many days the vehicle was not available for use and then determine the true cost.
“Presenting detailed evidence helps us win our case,” says Avsharian. “Other companies are not defending themselves with the details, and the evidence to back it up. In arbitration, a win/loss ratio of anything over 50% is good – but we have a 59%-win ratio.”
Pain point: Inadequate staffing to acquire evidence.
Evidence acquisition is a central element in subrogation – as it provides the proof needed to determine accurate reimbursement. The most compelling evidence includes firsthand conversations and original documents, rather than relying on a third party’s notes.
Gathering that evidence requires adequate staff and the right skills. But with increased claim volumes since the pandemic, many insurance carriers shifted employees to other areas or lost experienced subrogation staff. The result: less evidence is acquired to prove the full picture and true cost of a loss.
“But at Fleet Response, we have maintained and even grown our staff,” says Aloisi. “We have an extremely tenured staff with low turnover, with no layoffs or reductions during the pandemic. In fact, we continue to grow and hire staff.”
In 2019, Fleet Response upped the game by adding a highly skilled team of specialists. With 26 years of industry experience and 65 staff members, this California business not only had the manpower to gather evidence, but the hard-earned savvy to evaluate each claim and assign it to a subrogation specialist with the best knowledge and experience. That approach delivers the best recovery result for the client.
“What makes us different from other vendors is that we look at each case closely and assign it to the right person,” explains Avsharian. “If it’s a complicated case, I don’t give it to someone with only three- or four-years’ experience. I give certain cases to those with the greatest expertise and that makes our outcomes higher.”
In her interactions with many large insurance companies, she’s seen them eliminating the human touch and shifting or downsizing staff, often making one person handle two or three peoples’ jobs.
“That’s a problem because quality goes down. We never do that. We look closely at our production and volume and KPIs, and we don’t let our people get burned out by giving them too much work. Most of the Fleet Response employees have been here 10 or 15 years. Our employees get the opportunity to learn new things and advance, so they stay. With subrogation, if you like it, you love it! You have a passion for it.”
Pain point: Recovery delays when files are handed off between staff.
In 2022, the average cycle time for repair of a damaged vehicle rose to 17 days, compared to an average of 12 days prior to the pandemic, according to J.D. Power. Those slow repair times have led to dissatisfied policyholders. They also complain about having to repeat the same information to different people throughout the subrogation or claims process. In fact, the lowest satisfaction scores occur when a claimant needs to interact with three or more representatives.
To reduce both cycle time and client frustration, Fleet Response put one person in charge of each subrogation claim from beginning to end, using a “straight-through” approach. They never shift files back and forth between employees – a common practice in the industry. At first notice of loss, a claim is directed to the right people and then it doesn’t move until recovery.
When one subrogation specialist is the only person touching a particular claim, they know the whole scenario of the accident. So, when the insurance company calls in, they speak to the person assigned to that claim, and get all the information needed.
“And it’s hard to collect money directly from a claimant, but when you get a call from them, it’s the best time to collect,” observes Avsharian. “You don’t want to be on the phone not knowing what you’re talking about. That’s another reason why we assign one person to the claim.”
By maintaining a short cycle time and reasonable caseload, employees are loyal, and turnover is low. “We’ve created a positive work environment. In fact, we are adding collectors to our happy family,” says Aloisi. “It takes special people to work in subrogation, where you’re asking people for money all day. We have a very competitive and motivated group.”
Creative approaches to recovery, all done with integrity.
Insurance companies are now living in a post-pandemic world where the old timelines and “norms and averages” no longer work. While Fleet Response can’t control what happens in the insurance industry, their leadership is determined to continue increasing subrogation efficiencies and driving down cycle times for recovery.
“Time means recovery,” says Aloisi. “It’s all about being first and fast and accurate as well. At Fleet Response, we’re finding creative ways to do this in a time where drivers are back on the road and claim volume is higher than ever. With insurance companies struggling to pay out, our subrogation demands are critical.”
And the human touch continues to make a difference in recovering the most dollars through subrogation. “Integrity, honesty and ethics. These are our priorities,” says Avsharian. “You can be the best recovery company out there, but if you don’t have these, it won’t keep you going for the long term. We have always been successful with our recovery and have built excellent relationships with our clients, who have been with us for a long time.”
Fleet Response is tackling pain points in the insurance industry – with a proven record of success in subrogation. But don’t take our word for it! Give us the opportunity to work on your subrogation claims and improve your reimbursement for losses. Learn more about Fleet Response subrogation management services.