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.  

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