sub·ro·ga·tion: the substitution of one person or group by another in respect of a debt or insurance claim, accompanied by the transfer of any associated rights and duties.
Simply put, subrogation is a right given to insurance carriers, which allows them to sue the parties who caused losses to reimburse for what the insurer has paid out. Subrogation allows the insurance carrier to act on behalf of the insured in order to collect such monies.
What does this have to do with Workers’ Compensation?
Your workers’ compensation claim experience may be adversely affected by claims caused by other parties. Not at fault auto accidents, machinery failures, and equipment malfunctions are all causes of claims that result in workers’ compensation payments paid out of your pocket. But if you didn’t cause the accident, shouldn’t the responsible party pay for the costs they caused you to pay? Of course they should!
A standard workers’ compensation policy includes a clause known as “Recovery From Others.” A common example of how subrogation works in workers’ compensation policies is demonstrated by a motor vehicle accident. If an employee suffers an injury in a motor vehicle accident and another driver is at fault, the insurer will provide the employee the workers’ compensation they are entitled to and will then sue the responsible driver for the dollar amount of those benefits.
The Value of Subrogation Services
Eastern Alliance, Hearten’s insurance carrier, has a subrogation team that works aggressively to recover monies paid on your organization’s workers’ compensation policy that were a result of another party’s negligence or recklessness. Subrogation recoveries reduce the total amount paid for a particular loss, which can have a beneficial impact on your experience modification factor. While Eastern Alliance pays the claim initially, they also proactively work to recover loss dollars, reducing your claim costs and ultimately saving you money.
Last year alone, Eastern Alliance recovered $3.7M in paid workers’ compensation costs on behalf of their clients. In 2018, they averaged $11,106 per subrogated claim. This is a return that goes directly to the employers’ loss runs. In the past nine years, Eastern Alliance has recovered more than $20M for their policyholders.
This recovery is further magnified by the employer’s experience mod. When a subrogation recovery is received by the insurance carrier, a correction report must be filed with the corresponding rating bureau that reduces the reported incurred loss value on the claim by the amount of the subrogation recovery received. Depending on when the recovery is received, this could potentially lower several years of experience mods!
When it comes to subrogation, you need an experienced, tenacious insurance carrier to fight on your behalf. While you look after your injured employee or peer, you can rest assured your carrier is pursuing those responsible for the loss. Choose Hearten and reap the benefits of Eastern Alliance’s aggressive claims management strategies.