Doing More With Less

Is it really possible to do more with less and improve results?  It seems that companies are finding out the answer during tough economic times that have forced drastic cutbacks.   The answer is most certainly yes because less will result in a more streamlined and efficient organizational structure.   Couple this with new found B2B relationships and many companies could be in for big improvements to their bottom line. 

Like many of you, I like to see results.   We can talk all day long about hypotheticals, but just how do these efficiencies work?  In a recent case study, an organization took a close look at their subrogation department.  For those outside of the insurance world, subrogation is simply an insurer stepping into the shoes of their insured to collect monies owed under contractual and statutory laws. 

This particular organization had a dedicated subrogation department with an annual budget of $1.9 million dollars.   They had 14 full time employees consisting of a manager, three supervisors and eleven collectors.   The total budget for salary and benefits was $784,000.   Collections averaged approximately $2.4 million per month with collectors handling just over 5 new claims per day. 

Company leadership believed that this department was not overly efficient and entered into a B2B relationship with a vendor specializing in subrogation workflow optimization.   New cases were triaged, with more complex cases accounting for about 40% of daily assignments being outsourced.  This also enabled the company to increase the average new assignments of less complex files from 5 to 8 per day per collector.  

After overhauling the department, this particular company was able to reduce their subrogation staff from 14 to 6 (5 collectors + 1 manager).   The average recovery per adjuster, across all lines, increased from $2100 to $2800 dollars due to their focus on less complex files typically containing insurance and clear liability.  

In addition to the headcount savings, the average recoverable dollars increased by 16%.  The use of predictive modeling to find money on claims never referred to the subrogation department has turned up $1.3 million dollars.  

While this project continues in its pilot phase, it is important to note that overall recovery dollars, those that directly impact the bottom line, have increased from $2.4 million per month to $3.2 million dollars per month.   Given the trend lines present in subrogation dollars, in particular those involving uninsured motorists, it is likely that these monthly results will improve by another 15-20% towards the latter part of this year.   What is evident in the results is that companies can do more with less by focusing their efforts on what they do well and utilizing business partners to assist them in improving bottom line results in areas where they have typically struggled. 

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Chris Tidball is Vice President of Business Development for Sequoia Financial, a contributing writer to The Subrogator Magazine and the Jacksonville Creekline News.   He is the author of Kicked to the Curb : 20 Rules for Coming Out On Top When Your Life Has Been Turned Upside Down, developer of the training module Comparative Negligence: A Crash Course In Claims 101 and a frequent presenter at industry trade shows.  He can be reached at chris.tidball@sequoiafinancial.com or at 818.409.6016.  

There’s Gold In Them Thar Judgments

According to a recent study by the Haub School of Business, nearly 10% of medical dollars are left on the table during the claims process.   A leading insurance trade group found that 15% of all property casualty claims contain missed subrogation valued at $15 billion dollars.   Court records at all levels bear out that more than 80% of all judgments, valued at more than $150 billion dollars per year, go uncollected.   The amount of money being overlooked by businesses and individuals is staggering.   Fortunately, a good portion of this money is actually recoverable with the right tools and expertise.

When I am asked to assist a company what steps can be taken to maximize their bottom line, the first place to look is often their internal processes and procedures.   In particular, what procedures are in place for existing judgments, often overlooked or even cast aside during good times. 

During prosperous times, finding money was as simple as increasing sales.   As the economy deteriorated, the solution was to cut costs.   The challenge today is what to do when the sales dry up and the prolonged bad times result in every cost cutting measure being exhausted.   The solution is to get creative and perhaps nowhere is this more prevalent that pursuing existing judgments. 

If you are a hospital, insurer, manufacturer, municipality, utility or attorney the chances are pretty high that you have unpaid judgments, quite possibly collecting dust.    Now is the time to pull them off the shelves, make sure they are still valid, and begin the quest to put that money in your coffers. 

Judgments can be tricky to collect with debtors who are often hard to find and slippery as eels.   The state and federal mandates and regulations in the collection process can be as tricky as navigating a channel filled with landmines.  But when all is said and done, a competent collector can effectively find money to add to your bottom line.  

There are a number of on line resources to aid the ambitious in tracking down money such People Search, Pipl, Bigfoot, LexisNexis, Free Erisa and Skip Tracer.   There are also business partners who will provide expertise and knowhow that can have a dramatic impact on the bottom line recovery dollars.  

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Sequoia Financial is the preferred vendor of the Los Angeles County Bar, collection agent for more than three dozen cities, world renowned hospitals and multiple Top 10 insurers.   They pursue debt both domestically and internationally, including claims for faulty Chinese drywall. 

What Would You Do If You Found A $100 Dollar Bill On The Ground?

Spending time with various business leaders as they seek new ways to meet this year’s budget goals can definitely provide for some interesting conversation, as many carefully pinch pennies during these difficult economic times. 

Contraction seems to be the common denominator across business lines, with more and more employees facing layoffs.  Interesting, there is not a lot of discussion about finding money that may have been left on the table that could actually help a company avoid losing talent that they may never be able to reclaim once the economy picks up steam.  

My advice to businesses that have the ability to expand is to do just that.   Take advantage of discounts on everything from real estate to supplies to labor.   By growing your business during difficult times you will quickly leverage your place in the market and gain a competitive edge.   You may be asking why someone would recommend taking such risks with so much economic uncertainty.  My answer is exactly the same as it would be if you were to ask why I would recommend you put your personal money in a Roth IRA. 

We live in a pay me now or pay me later society.   In my latter example above, individuals have the opportunity to pay taxes today to avoid taxes later.   Given the massive monetization of our debt it is inevitable that our future tax rate, say when you turn 59 ½ and have the ability to access your Roth IRA, will be substantially higher than today.

The same is true for capital for your business.   Money remains relatively cheap and contrary to what the gloom and doom media is saying, money is available.   By investing in your business today, you will be substantially ahead of your competitors who are contracting and will be forced to play catch up when the cost of everything, including labor, gets more expensive as the economy improves.  

Remember, the best source of capital isn’t the banks.  It is actually within your own four walls; find money by looking for places where it is being left on the table.  For most companies, simple fixes can literally turn into millions of dollars by leveraging experts to assist you in identifying multiple sources of overlooked money. 

Simply put, if you were walking down the street and found a hundred dollar bill on the ground what would you do?  Most people would pick it up but then again many businesses are hamstrung by bureaucracies that don’t offer the operational efficiencies of individuals resulting in money just lying around.   Companies across all industries leave billions of dollars on the table each year.  While they often employ people to manage their receivables or pursue collections, they generally are only scratching the surface of the money that they are owed.  

As a matter of course, we routinely find money overlooked by existing vendors or internal receivables departments.   On top of this are the more than 80% of uncollected judgments, amounting to billions of dollars annually for the business community.

By partnering with experts in the field of operational, procedural and workflow optimization you will quickly discover a world where money can grow on trees.   By focusing on such aspects of your business as maximizing profitability and pursuing unpaid judgments you can quickly discover a substantial lift to your bottom line, with no new money required! That’s not a bad ROI, especially during these troubling economic times. 

Chris Tidball is the Vice President of Business Development for Sequoia Financial Services and can be reached at chris.tidball@sequoiafinancial.com or 818.409.6016.

Effectively Playing the Blame Game

One of the great impediments to finding client’s money is overcoming the paradigm that current processes are running smoothly.   Perhaps nowhere is this more evident than during discussions surrounding comparative negligence with folks in the property and casualty insurance industry.  

From my own experience while serving in various management and executive capacities for multiple top 10 insurers, I found this to be one of the single biggest opportunity areas completely within control of the any given organization. 

Let’s begin with some very basic assumptions and a quick look at the laws under which we have to operate.   There are thirteen states that are “pure comparative” jurisdictions, meaning that a party is accountable for their portion of any given accident.   Simply put, if party A is making a left turn in front of party B and it is determined that A is 75% at fault and B is 25% at fault then A will owe B 75% of their damages while B will owe A 25% of theirs.   In five other jurisdictions, “contributory negligence” applies which bars recovery for any party who is even 1% at fault.   The remaining jurisdictions are “modified comparative” with thresholds baring recovery at for parties either 50 or 51% at fault, depending on the state.  

With this brief overview it would seem that a large portion of claims involving multiple parties would have an element of comparative fault, thus reducing claim payments to those partial tortfeasors.   However, there is a vast disparity between accident facts and settlements with more claims than not being assessed at either 100% or 0%.    The former often results in overpayments while the latter often results in claim denials and ensuing litigation that cost insurers billions of dollars annually.  

So what is the solution?  At the most basic level training is the key common denominator to driving accurate outcomes.   With all of the competing priorities pushed down from above, training often can take a back seat which limits the effectiveness of front line adjusters.   I have come across adjusters who can’t explain what pure comparative means, let alone principles such as joint and several liability, assumption of risk or last clear chance.  

By getting back to basics, adjusters can be given the tools to both identify and negotiate comparative negligence settlements.   In their positions of expertise they must be able to share with customers all aspects of the law and how their actions played a role in a claim.   Contrary to many of my peers, you don’t need to spend millions of dollars to remediate this Claims 101 deficiency. 

I have had many discussions with industry leaders who insist that this is easier said than done, or more frequently that this is simply an unreasonable expectation in a day and age when shareholder demands create other priorities.   As a shareholder in several insurers it seems that return on investment would be the single biggest priority and what better way to maximize that than to positively impact the bottom line. 

Boiling this down, let’s say that an insurer pays out 100,000 property damage claims with an average paid of $3000 dollars, for a total of $300 million based upon full liability.   For every percentage of comparative negligence assessed, the insurer has the potential to add $3 million dollars back to their bottom line.   Throughout the insurance industry there is a wide variance in how effectively comparative is pursued.   The top end carriers are assessing comparative 35-40% of the time.   The laggers are assessing it less than 5%.   Certainly there is a gap between standard and non standard, but even taking this into account; one should be able to see the huge upside potential of properly educating their front line adjusters on the importance of comparative negligence.  

In addition, there is the customer consideration.   If an insurer is paying a disproportionate frequency of PD claims at 100%, they are not pursuing a potential recovery of not only their money but their insured’s deductible.  

As a participant in a number of voice of the customer studies, deductible reimbursement comes up as a frequent topic of dissatisfaction among insured’s.   This is particularly evident in claim scenarios involving turns, lane changes and parking lot accidents where intuitively it would seem that comparative fault would often apply. 

For more information about driving your organizations bottom line results and increasing comparative negligence identification, assessments and resolution, please give us a call. 

Chris Tidball is the Vice President of Business Development for  Sequoia Financial Services and a former claims executive at multiple top 10 P&C insurance carriers.   He is the author of the recently released book “Kicked to the Curb”, a contributing writer to The Subrogator Magazine and has developed several proprietary solutions for driving the right claim outcomes.   He can be reached at chris.tidball@sequoiafinancial.com or 818.409.6016.  

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