In our claim file reviews, one area that adjusters seem to constantly miss is the subrogation aspect of a file. If I did not see this as a workers' comp subrogation crisis, I would not write so many articles on the subject.

James Moore

The claims adjusters are not necessarily to blame for this current situation. Read on to see why the adjusters are not necessarily responsible for the near-misses.

This article, by attorney Gary Wickert, reminded me of how complicated subrogation can be in some workers' comp files. It's worth a read if you want to see how things may not work out on certain case settlements.

Subrogation definition

Let us start with my definition of subrogation. When an employer purchases workers' comp coverage, the carrier provides first-party insurance. The policy covers the second party: the injured employee.

A third party not named in the policy may be responsible for the injured employee’s injuries. The workers' comp carrier can pursue the third party and its insurance carrier for reimbursement of the benefits paid to the injured employee.

Subrogation allows this pursual of the third party to occur if the workers' comp adjuster realizes that responsibility for an accident could have resulted from a third party. If the adjuster passes over this reimbursement opportunity, a reduction in payouts and future premium reductions will not happen on the file.

I sometimes hear that “we have a subrogation specialist contractor” where files are referred to in case of a subrogation situation. However, if the subrogation is not identified, having a specialist does not matter.

Ending the subrogation crisis through training

I was trained as an all-lines claims adjuster many years ago. Bringing in an attorney to discuss subrogation for an hour provides a 30,000-foot view.

The insurance world, as in many professions, has become more of a group of specialists than generalists. As workers' comp claims handling became more complicated, adjusters were trained and licensed in only one line of insurance.

I am still a huge proponent of the associate in claims designation. My encouragement to obtain the AIC is not based on the fact that I have the designation. The AIC comes the closest to the old-school, all-lines claims training. Some carriers will reimburse the costs as the adjusters pass each test.

A simple letter (certified return receipt) to the third party’s insurance carrier or to the injured employee’s attorney, if represented, preserves the subrogation interests in a workers' comp file.

How do carriers and TPAs provide training on subrogation?

Subrogation training could occur as part of the initial training process for new adjusters.  Is that being done with most carriers? How about the experienced WC adjusters?

I do not have all the answers on how to train adjusters to avoid an upcoming workers' comp subrogation crisis. 

This blog post is provided by James Moore, AIC, MBA, ChFC, ARM, and is republished with permission from J&L Risk Management Consultants. Visit the full website at www.cutcompcosts.com.