Thomas W. Hamilton
No one disputes that the number of commercial claims being placed is on the decline. It has been a subject of discussion at every conference we have attended recently. One of the key factors is that credit managers continue to become more sophisticated and savvy about refining their credit risk management systems, and this is impacting the number of accounts that are becoming past due.
Assuming that the economy stays on a fairly even keel, we can probably expect that the number of companies going into default, along with those that eventually file for bankruptcy, will be decreasing. In view of what the future may hold, collection professionals need to find ways to broaden their opportunities for business. Subrogation is one area that I believe will continue to have growth potential.
As you probably already know, subrogation most often occurs under property and casualty insurance claims when one insurance company pays its insured for damages and then makes its own claim against the other party who caused the damage, which subsequently leads to requesting reimbursement from the other party’s insurance carrier. My insurance consultants tell me that many property and casualty insurance carriers are sitting on thousands of claims but very little effort is made to try and collect them. The reason is that it’s often easier to just pay out a small claim, which may be covered by the insured premium, rather than devote internal resources to try and recover it. However, when monies are recovered through the subrogation process, they not only support the insurance company’s bottom line, it can also be passed on to its policy holders in the form of lower premiums.
When agencies and law firms acquire a knowledge of insurance, and even forensics, when negotiating the reimbursement on behalf of one insurance company against another, this can be a gateway to a whole new lucrative market of financial and business opportunities.