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🔄 '''Subrogation''' is the legal right that allows an [[Definition:Insurance carrier | insurance carrier]], after paying a [[Definition:Claim | claim]] to its [[Definition:Policyholder | policyholder]], to step into the insured's shoes and pursue recovery from the third party actually responsible for the loss. In insurance, this doctrine prevents a claimant from receiving a double recovery — once from the insurer and again from the at-fault party — while enabling carriers to recoup [[Definition:Loss payment | loss payments]] that should ultimately be borne by someone else. It applies across virtually every line of business, from [[Definition:Auto insurance | auto]] and [[Definition:Property insurance | property]] to [[Definition:Workers' compensation insurance | workers' compensation]] and [[Definition:Health insurance | health]] coverage.

⚙️ The process typically begins once the insurer settles a covered loss and identifies a potentially liable third party. The carrier's [[Definition:Subrogation unit | subrogation team]] — or an outside recovery specialist — investigates the facts, gathers evidence, and either negotiates a settlement or files suit against the responsible party or that party's insurer. Timing matters: most jurisdictions impose [[Definition:Statute of limitations | statutes of limitations]] that can bar recovery if the carrier waits too long. In practice, many subrogation recoveries happen insurer-to-insurer through intercompany [[Definition:Arbitration | arbitration]] agreements, such as those administered under Arbitration Forums, Inc., which streamline disputes and reduce litigation costs. The recovered funds flow back to reduce the insurer's [[Definition:Incurred loss | incurred losses]] and can positively affect the [[Definition:Loss ratio (L/R) | loss ratio]].

💡 Effective subrogation programs have a material impact on an insurer's bottom line. Carriers that invest in early identification of subrogation-eligible claims and deploy data analytics to prioritize high-recovery cases can meaningfully lower their [[Definition:Net loss | net losses]]. For policyholders, subrogation can also matter directly: under many policies, the insured is obligated to cooperate with the carrier's recovery efforts and to refrain from settling with the at-fault party in ways that would impair the insurer's rights. [[Definition:Insurtech | Insurtech]] companies have entered this space with platforms that use [[Definition:Artificial intelligence (AI) | AI]] and [[Definition:Machine learning (ML) | machine learning]] to flag subrogation potential at the point of [[Definition:First notice of loss (FNOL) | first notice of loss]], accelerating recoveries that were historically identified only after manual file review.

'''Related concepts'''
{{Div col|colwidth=20em}}
* [[Definition:Claim]]
* [[Definition:Loss ratio (L/R)]]
* [[Definition:Arbitration]]
* [[Definition:First notice of loss (FNOL)]]
* [[Definition:Indemnity]]
* [[Definition:Right of recovery]]
{{Div col end}}

Definition:Subrogation - Revision history

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