Shared Culpability
Another critical oversight is comparative negligence. When reviewing claims in your organization, does there appear to be a disproportionate number of liability decisions at either zero or 100 percent? If my experience spanning more than 20 years of claims leadership is any indication, then the answer is “yes.”  

The reality is that far more accidents have shared culpability than most people realize. According to Jury Verdict Research, a national organization that tracks such data, rear-end auto accidents accounted for only 45 percent of auto cases adjudicated, with intersection collisions, lane changes, chain reactions, and parking lot scenarios comprising the remainder. In other words, this translates to a lot of claims in which there was shared liability. 

Insurers should certainly not expect to set a benchmark quite so high, as few claims actually make it to trial. What an insurer can do, however, is bank on the fact that money is being left on the table if fewer than 35 percent of its collision claims in pure comparative states are closing without comparative fault. Of course, this benchmark should be adjusted downward for modified comparative and contributory jurisdictions.

To attain improvement in this area, the challenge is to effectively train staff to not only identify opportunities, but to also effectively negotiate. When considering subrogation response, there are seven key areas where an organization can benefit while gaining a competitive edge in the marketplace. 

• Estimatics opportunities. While this can be partially accomplished by re-keying or redlining, why not take the next step and use automation to identify opportunities? Note that this step can also enhance productivity.
• Historical alternative parts identification. Subrogation responses can be significantly impacted by determining whether used or aftermarket parts were available on the date in history when the claimant carrier wrote its estimate.
• Adjust the fluff. How much are you being billed to tint paint, feather edge, cover cars, and dispose of hazardous waste? While not the bulk of the estimate, fluff can really add up. 
• Diminution of value. There are rarely statutory guidelines that govern how much is owed, if anything, because of diminution of value. After all, is there really any diminished value until the owner sells the car, discloses the accident, and suffers diminished value as a result of the disclosure?
• Comparative negligence. This is arguably one of the most overlooked aspects of the subrogation response process. By effectively understanding the principles of shared liability, claims adjusters can more effectively apply the laws in their given states. This is also an aspect of the claims process that can be measured and continually improved upon. 
• Loss of use. Did the claimant really need their rental vehicle for 30 days when the estimate called for 16 hours of repair time? The reality in many claims organizations is that rental is not well managed. In some cases, the process of overseeing rental is even outsourced to the rental company who is in the business of increasing their own revenue, not yours. By applying a reasonable standard, such as one day of rental for every few hours of repair, one can effectively reduce what is owed in this regard.  
• Towing and storage. A basic premise of indemnification includes the concept of mitigation of damages. It is incumbent upon all parties involved in claims process to ensure that vehicles are not incurring excessive towing and storage fees in order to take reasonable steps to mitigate these costs.

While there are sometimes other critical aspects of the process worthy of consideration, these seven key areas will provide carriers with the fundamental building blocks for process improvement. Of course, the ultimate success will be determined by the negotiation skills of the adjusting team. Remember, it is easy to say what you think something is worth; it is an entirely different story to convince others.

As subrogation demands come in, consider the steps that are being taken to identify opportunities. While there are many aspects of claims that can often be improved to benefit the organization, subrogation response provides an immediate financial gain because those effectively handling this process will gain a competitive edge over those who are not.