Subrogation occurs when an insurer takes action against a third party responsible for a loss to an insured for which a claim has been paid. The system will allow insurers to process subrogation claims involving each others insureds.

AF said that the use of Siteras technology will allow "thousands" of insurers, self-insureds, third party administrators and claims service organizations to streamline the subrogation process and interactively manage both demands and responses.

Using the Web, AF said, users will be able to send and receive subrogation demands, attach supporting documents such as estimates, bills, photos, police reports and automatically route demands to file handlers, negotiate online and view and download online reports. The system will provide a flexible electronic link regardless of the platform operated by the user.

D. Kay Smith, AF president and chief executive officer, said, "This acquisition is a quantum leap in realizing AF's goal of transforming a slow, cumbersome, paper-driven process into a seamless, highly efficient electronic system that produces rapid settlements and slashes costs."

AF said all E-Subro Hub transactions will be electronically based, allowing instantaneous exchange of documents. For companies with limited electronic means, AF said it will offer an additional service to convert their paper into electronic documents.

Ms. Smith said that the purchase has accelerated the full implementation of the E-Subro Hub by as much as three years. The program will be phased in beginning next spring after the completion of pilot testing with several carriers.

The initial product, AF said, will eliminate the need for copying and mailing evidentiary or other paper material from the demand/response portion of the subrogation process.

Ms. Smith explained the system will immediately "help demanding carriers take full advantage of the recovery opportunities they now lose in a mountain of paperwork and manual tasks, while assisting respondents to quickly identify loss recovery opportunities."

She pointed out that subrogation claims processed through the E-Subro Hub may or may not go to arbitration for resolution.

AF said it projects the E-Subro Hub program will handle at least 100,000 subrogation transactions by the end of 2005.

The company said it plans to continue to roll out new features that will increase the speed of the process, eliminate manual tasks from the workflow and provide better management information.

The co-founders of Siteras Technologies and creators of the subrogation technology, Richard Radi, president and CEO, and Bob Falk, chief information officer, will support AF in product development and marketing on a consultant basis.

Arbitration Forums, Inc. lists itself as the nation's largest nonprofit provider of inter-insurance dispute resolution services. Founded in 1943, AF has a membership of more than 3,500 insurers and self-insureds nationwide.