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💰 '''Loss recovery''' is the process by which an [[Definition:Insurance carrier | insurance carrier]] recoups all or part of a [[Definition:Claim | claim]] payment it has already made, typically through [[Definition:Subrogation | subrogation]] against a responsible third party, [[Definition:Salvage | salvage]] of damaged property, or recoveries from [[Definition:Reinsurance | reinsurance]] contracts. In insurance accounting, recovered amounts reduce the carrier's net [[Definition:Incurred loss | incurred losses]] and directly improve the [[Definition:Loss ratio | loss ratio]], making recovery operations a meaningful contributor to underwriting profitability.

🔄 Recovery efforts can take several forms depending on the line of business. In [[Definition:Auto insurance | auto insurance]], a carrier that pays its policyholder's collision claim may pursue the at-fault driver's insurer through subrogation. In [[Definition:Property insurance | property]] lines, salvage recoveries arise when the insurer takes possession of damaged goods — for example, a water-damaged electronics shipment — and sells them for residual value. [[Definition:Liability insurance | Liability]] claims may generate recoveries when contribution is sought from co-defendants or other [[Definition:Insurance policy | policies]]. On the reinsurance side, the [[Definition:Cedent | ceding insurer]] submits recovery claims to its reinsurers once losses breach [[Definition:Attachment point | attachment points]] defined in [[Definition:Reinsurance treaty | treaty]] or [[Definition:Facultative reinsurance | facultative]] agreements. Dedicated recovery teams or third-party specialists manage these efforts, and sophisticated [[Definition:Claims management | claims management]] platforms now flag recovery opportunities automatically at the point of claim closure.

📈 Effective loss recovery programs can shave several points off an insurer's loss ratio — a material impact in lines where margins are already thin. Beyond the financial benefit, disciplined recovery practices send a market signal that the carrier manages claims rigorously, which can strengthen relationships with [[Definition:Reinsurer | reinsurers]] and improve [[Definition:Rating agency | rating agency]] assessments. Carriers that underinvest in recovery infrastructure, by contrast, leave money on the table and may face questions during regulatory examinations about whether reserves accurately reflect anticipated recoveries. As data analytics and [[Definition:Artificial intelligence | AI-driven]] tools mature, insurers are increasingly able to predict recovery potential at first notice of loss and allocate resources accordingly.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Subrogation]]
* [[Definition:Salvage]]
* [[Definition:Reinsurance recovery]]
* [[Definition:Loss ratio]]
* [[Definition:Claims management]]
* [[Definition:Incurred loss]]
{{Div col end}}

Definition:Loss recovery - Revision history

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