Insurance claims handlers are tasked with navigating the intricate web of policy coverage, assessing damages, and ensuring prompt resolution for policyholders. Amidst the flurry of processing claims, it’s essential not to overlook a critical aspect of the role: the recovery process.

While the primary focus is often on addressing the immediate needs of policyholders, overlooking opportunities for recovery can impact both the insurer’s bottom line and the overall efficiency of claims management.

Here’s why prioritising recovery is important:

1 Cost mitigation: By pursuing a recovery from the wrongdoer, insurers can offset some of the financial burden associated with claims payouts;

2 Preserving evidence: Memories fade over time and evidence may become lost or destroyed. Securing evidence upfront can mean the difference between a successful and an unsuccessful recovery;

3 Preserving rights: Failing to pursue a recovery timeously may undermine it, not only from a prescription point of view but also because of contractual time limitation periods and prerequisites which must be met timeously before suing certain organs of state and for instance in marine claims; and

4 Enhanced risk management: Incorporating recovery considerations into claims-handling processes promotes a proactive approach to risk management. Identifying patterns of liability or recurring sources of loss enables insurers to require preventive measures and minimize future exposure.

To optimise the recovery process, claims handlers should:

1 Focus on recovery from the outset: Assess claims not only against policy response, but also the potential for recovery;

2 Conduct thorough investigations: Gather evidence, documents, witness statements and expert evidence to establish liability and assess the potential for recovery early on;

3 Collaborate with legal professionals: Engage insurance attorneys early in the claims process to evaluate recovery prospects, provide legal guidance, and initiate legal proceedings within the relevant contractual or statutorily prescribed periods; and

4 Pursue recovery simultaneously with processing and acceptable claim.

A few more points to keep in mind:

1 Subrogation rights arise only after the insured has been indemnified in full for its loss. Insurance contracts do, however, often alter this position and give immediate recovery rights.

2 The rights asserted in the recovery are those of the insured, not the insurer.

3 The insured should be involved in the recovery process, as it will usually feature as the plaintiff who may have a stake in the recovery and will therefore need to participate in the process (for example, discovery, testifying etc). Insurance contracts usually oblige insureds to cooperate with and assist insurers in recovery rights. If they don’t, there is a potential for the indemnity which was provided to be withdrawn.

4 Any uninsured losses will need to be included in the recovery, in line with the once and for all rule;

5 Unless the insurance contract provides otherwise, the insured has the first bite of any net recovered funds, until its economic loss (including excess) is satisfied.

6 The insured might not wish to feature as the plaintiff, due to commercial or other reasons (for example, the contemplated defendant is a friend, family member, employee or in a continual business relationship). In such instances, the insured can cede the cause of action to the insurer. The insurer can also sue the wrongdoer in its own name unless the wrongdoer would be procedurally prejudiced.

Don’t forget the recovery – it’s an integral part of effective claims management.