People don’t often think about the legal field as a high-tech environment, but that is beginning to change. New applications of smart technology and AI can benefit all parties in a subrogation case at every turn. More effective management of insurance claims, from initial incident to final subrogation agreement, helps carriers maximize recovery on every viable claim while minimizing the cost of pursuing reimbursement.
The more consistently subrogation companies recover losses for clients, a cascade of positive effects follows. Carriers have the resources to continue offering quality policies at competitive rates. Their customers receive better service, resting assured legitimate claims are paid out swiftly and in accordance with the policy. Tortfeasors are held accountable for negligent actions, which is a deterrent for future negligence.
This positive feedback cycle is enhanced when subrogation companies and insurance carriers strategically apply new technologies. Here, we discuss five ways technology makes the subrogation process more sophisticated:
1. Improved Detection of Potential Subrogation Claims
Digital data management and analytics are revolutionizing how carriers and their subrogation counsel determine what is and is not a potential subrogation case. AI-driven software can be trained on specialized subrogation information on a closed, secure system that does not risk confidential information being leaked.
Not only can these programs quantify the risk: benefit ratio of subrogating an insurance claim, but they can take a second look at subrogation cases that may be stagnant or backlogged. Also consider the ability to teach an AI the specifics of varying subrogation laws by state. This enhances detection of potential claims even more, as different jurisdictions provide unique opportunities and/or obstacles to maximizing subrogation recovery.
2. Enhanced Insight for Subrogation Investigations
Smart technology for homes and businesses serve as extra proxies and even witnesses in a subrogation investigation. Consider an auto insurance subrogation case where the at-fault driver is accused of speeding but denies it. Their speed can easily be estimated if the car was tracked at 2 different houses who have doorbell cameras.
Similarly, take a utility subrogation case where a pipe burst under freezing weather and the homeowner claims it was a result of a defect. A smart thermostat can immediately tell you whether the homeowner had set it to at least 50°F when the pipe burst, which is their reasonable duty of care.
On the other hand, the investigator can harness technology to improve data collection at a scene. For instance, dictating observations into a device as opposed to scribbling things down at a property damage case where a roof collapsed and the scene is hard to move around in. Also, the ability to take an infinite amount of photos that are then automatically backed up to a cloud preserves site details that may become crucial later in a case.
Similarly, the ability to utilize real-time translation applications when witnesses may not speak English is valuable. Subrogation in Spanish, especially, is becoming more common, requiring attorneys to ensure cases are just as effectively handled regardless of any language barriers.
3. Data Analytics to Maximize Subrogation Recovery
The financial state of an insurance carrier is best observed in the long term. This is because the industry is always adjusting (pun not intended), sometimes volatilely. Digital data management and analytics software can provide insight into trends surrounding subrogation claims damages. This includes uncovering patterns associated with what types and sizes of subrogation cases result in the highest rates of recovery, and a host of other valuable kinds of data.
The ability to understand these trends provides carriers insight into where they can improve the claims process, how policies might be adjusted to better protect themselves as well as their insured, and other factors that minimize loss and streamline the time to filing a subrogation demand.
4. Better Preservation of Subrogation Documentation
With platforms that allow automated allocation and tracking of subrogation claims, attorneys are more easily able to ensure all documentation for a case is accounted for. They also allow clients to access sensitive documents on secure platforms, allowing all parties to track case details in real time. There is also more control and ease associated with who can access what material throughout the lifecycle of a subrogation lawsuit.
There is a lack of security in managing subrogation cases via email exchanges, even if they are encrypted. It is also much easier to misplace a file someone sent months ago. Because claims can now be handled digitally with everything stored in a centralized location, there is much less chance of losing important details and/or documents of a case along the way. This is particularly useful for subrogation attorneys, as claims, especially those that proceed to litigation, take years to resolve.
5. AI Assistance with Subrogation Case Management
Generative AI, while a caution, also offers “work smart” opportunities for subrogation specialists, claims adjusters, and litigators alike. The subrogation process is a moving target, and cases often involve huge amounts of data, like witness statements, incident documentation, legal forms, etc. Subrogation professionals often manage multiple cases that may involve several parties, have a high dollar amount, and/or are by nature very complicated, like fire subrogation cases, where everything is gone by the time the insurance investigation begins.
Consider the ability to ask a gen AI to read a document and provide a synopsis for you, as opposed to reading through the whole thing only to find it wasn’t the document you were looking for. Similarly, the ability to ask AI to find something specific within a document, such as what the investigators determined was the cause of a fire in a property subrogation claim, or whether a witness indicated the other driver ran a red light in an auto subrogation lawsuit. AI can serve as a digital assistant that streamlines the time and labor it takes to manage complex subrogation claims.
Cautions with AI-Assisted Subrogation Efforts
AI has become a new focus at NASP conferences as the subrogation industry learns how to leverage technology to improve client services while avoiding overreliance or misuse. Applying new technology like AI to legal methodology has to be a balance of ethics and efficacy.
Everyone’s heard of Steven Schwartz and Peter LoDuca who, in 2023, submitted to the court an AI-generated legal brief. The document detailed six examples of case law defending their stance, but none of those cases actually existed. The personal injury attorneys were sanctioned, fined $5000, and their client’s case was eventually dismissed by a federal judge.
Generative AI is not meant to be a primary source; it hallucinates, and it never went to law school. But it can take some of the time and tedium out of the claims process, which allows subrogation companies like Rathbone Group to enhance our ability to maximize client recovery while minimizing cost of pursuit.
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