A Road Map to Financial and Operational Success The Seven Dimensions of Subrogation The Subro Grapevine

Course Presenters Rod Crane –Praxis Consulting Dan Dudenhoeffer – Praxis Consulting Chris McPadden –Travelers Insurance and NASP Board of Directors These presentation materials are privileged and confidential to Praxis Consulting, Inc. and intended solely for the use of the training participants. Any dissemination, distribution or copying of these training materials is strictly prohibited.

Introduction Data gathering, in varying degrees of detail, occurs in all industries. Information overload occurs when there is a lack of skill set or processes to use the data to make decisions. Data organized and analyzed in a systematic way ensures its value and prevents information overload. Both operational and financial objectives and metrics are necessary to ensure the best possible results.

Has This Ever Happened To You? You are concerned about the decline in collections since last month. The Claims VP wants to know why your cycle times lag behind the previous quarter. The CFO wants to know why your cost of collections has increased in the past three months.

What Did You Do?

One Possible Solution Look inward and outward at your Subrogation Operation, the entire organization, and the Industry. Evaluate performance against Industry Benchmarks and Best Practices. Use a comprehensive and systematic approach. Consider the pros and cons of an internal or external team to perform the evaluation.

The Seven Dimensions Quality of Initial Investigation Systems Support Documentation Claims Handling Velocity Organization Recovery Results Management Controls

Quality of Initial Investigation Assessment Areas: First notice of loss capture Liability investigation and evaluation Damage evaluation and supports

Quality of Initial Investigation Best Practices: Centralized initial loss unit to preserve claim details or triage claims to the right adjuster Recorded interviews and scene investigations Inspect and photograph all involved vehicles Estimates within industry standards to minimize PD redlining Invoices to support non-estimate damage payments Rentals within industry standards to minimize overpayments and third party reductions

Systems Support Assessment Areas: Ease of use of system System work flows Management information system

Systems Support Best Practices: Expert tools usage to assess fault Imaged documents Subrogation-specific functionality Interfaces between separate systems Availability of systems support for reporting and systems enhancements

Documentation Assessment Areas: Complete and accurate Knowledge transfer Ease of access

Documentation Best Practices: All pertinent information is documented in the file notes File notes support liability and damages decisions File speaks for itself, allowing easy knowledge transfer Documents are easy to locate Timely access to archived file documentation

Claims Handling Velocity Assessment Areas: File tempo Aged pending status Production standards

Claims Handling Velocity Best Practices: Timely first notice of subrogation claims to adverse party Aggressive follow-up dates, maintained currently Use of telephone contacts vs. written communications Management of aged pending claims Effective statute management program

Organization Assessment Areas: Organizational model Staff training Referral process Organizational Best practices

Organization Best Practices: Centralized vs. decentralized handling Written best practices (subrogation-specific) Claim referral guidelines (e.g., collision referrals within 10 days of claim payment) Guidelines for interactions with claims handlers (e.g., securing additional investigation or supplemental payment information) Immediate outsource of UM claims

Recovery Results Assessment Areas: Recovery to paid loss Industry benchmarks Cycle days

Recovery Results Best Practices: Measure internal results against industry benchmarks (apples to apples) Performance metrics with counterbalances Individual and team objectives Measure cost of collections Measure cycle days (e.g., date referred to date collected)

Industry Benchmarking NASP benchmarking committee NASP benchmarking studies (e.g., auto, property, health) Independent benchmarking studies completed by the Ward Group (e.g., NY/NJ PIP study) Other benchmarking studies completed within the industry

Management Controls Assessment Areas: Reports Quality review programs Performance management Missed subrogation

Management Controls Best Practices: Subrogation objectives for claim adjusters and managers Quality review program to ensure adherence to Best Practices at both the claim and subrogation level (including arbitration) Data availability to measure key performance objectives Flexible reporting to turn data into useful information Use an independent missed subrogation file review process

Quality of Initial Investigation Claims Handling Velocity Sample Assessment Rating Scale Quality of Initial Investigation Systems Support Documentation Claims Handling Velocity Organization Recovery Results Management Controls First notice of loss capture Ease of Use Complete and Accurate File Tempo Organizational Model Recovery to Paid Loss Reports Liability Investigation and Assessment Work Flows Knowledge Transfer Aged Pending Status Staff Training Industry Benchmarks Quality Review Programs Damages Evaluation and Support Management Information System Ease of Access Production Standards Referral Process Cycle Days Performance Management    Best Practices Missed Subrogation Score out of scope Below Benchmark Meets Benchmark Above Benchmark Best in Class

Summary Be pro-active to identify variances prior to negative trends. Develop both financial and operational key performance indicators/objectives supported by metrics. Have a comprehensive and systematic process to evaluate performance against the financial and operational key performance indicators/objectives.

Questions?