The newest method of subrogation pursuit is the sale of subrogation rights on a claim by claim basis to a service provider by the carrier.  The purchaser then pursues subrogation at their discretion, including referral to legal counsel, when deemed appropriate.  Under almost all circumstances, the carrier does not need permission from the insured in order to sell subrogation rights.

Only a few service providers have an established program for the purchase of subrogation claims.  Auto, property, liability, and workers’ compensation claims are eligible for purchase.  Also eligible are liability claims of self-insured entities, which involve rights for recovery of uninsured loss.

Theories of recovery range from tort liability, product liability, statutory liability, and contractual liability to overpayment to policyholders, other applicable insurance, and second injury funds.  Common industry reference to all such types of recovery falls under the “subrogation umbrella”.

Latitude Claims Services has a Purchase Program which features a dollar purchase offer to carriers and self-insured entities, after analyzing all aspects of the recovery equation.  The offer is typically made following review of open and/or closed claim files.  Files may be purchased before subrogation pursuit has been initiated or at any time during the process.  Some of the files for which an offer is made may include a previous partial recovery, when potential for further recovery exists. 

Offers by service providers to purchase subrogation rights are designed to reflect the approximate net result the client may have ultimately realized via conventional pursuit methodology.  It is often advantageous for the client to receive a cash payment without the necessity to wait for the subrogation process time frame to run its course.  Sale of subrogation rights provides carriers and self-insured entities certainty in a very uncertain process.  Clients can apply the up front payment directly to their financial bottom line and close files early in the process.

After the purchase, subrogation pursuit is carried forth in a manner very similar to conventional subrogation.  The carrier or self-insured entity turn over their claim file to the purchaser.  When necessary, the purchaser conducts additional investigation before subrogation is pursued.   If voluntary payment is not made by potentially responsible parties, options for arbitration, mediation, and litigation will be considered.  As a member of Arbitration Forums, Inc., Latitude is allowed to file under their name as Applicant or Respondent on claims purchased from member carriers and member self-insured entities.

Sale of subrogation claims is often beneficial to policyholders of carrier clients.  After the sale, the carrier can refund the policyholder’s deductible, in whole or in part, in keeping with applicable law and their common practice.  The policyholder also has the option to pursue any uninsured loss, in tandem with the purchaser or on their own.

Retention of attorneys by a service provider is essentially the same on files purchased and conventional referral files, including compensation.  One obvious difference is that the carrier or self-insured entity is no longer a participating party.  Only the service provider and counsel are involved, unless the uninsured loss of a policyholder is included in the subrogation claim.

To date, the purchase option has not taken the industry by storm.  However, the practice is expanding among potential sellers because of the prospects for reduced risk of subrogation pursuit, reduced allocated recovery expenses, earlier receipt of money, and the possible reduction of in-house subrogation personnel.  Latitude has received favorable response from purchase clients, especially on claims which were previously closed without subrogation pursuit.  As the purchase option continues to expand and evolve, more and more attorneys will become involved in the process.

How can attorneys learn more about the purchase of subrogation claims?  Attorneys can contact carriers and subrogation service providers, in an effort to determine if they are involved with sale or purchase of subrogation rights, or contact this writer.  Attorneys can join The National Association of Subrogation Professionals (NASP).  For details, refer to the NASP Web site: www.subrogation.org.  A link to the NASP Web site is provided in The National List of Attorneys Web site.

Keep an eye out for a subrogation purchase program – it is worth a look. 

Griff Williams, CPCU, SCLA
Senior Subrogation Consultant
Latitude Claims Services
Bloomfield Hills, Michigan
www.latitudesubro.com
gwilliams@latitudesubro.com
877-454-3400