Don t Leave Our Money in The Hands of

Don’t Leave Our Money in The Hands of Others …. Influencing Others to Support Subrogation Caryn Siebert President & CEO Carl Warren & Company John Ruiz President The Panel The Subro Grapevine

By the End of This Session: • Better Understand Resistance • Learn How to Build a Constituency for Change • Understand Their Ability to Persuade • Share Strategies to Succeed • Discuss the Different Demands Being Placed on Insurance Professionals

The Change Acceleration Process (Tech nical Strate “THE CHAN gy) GE” ) tegy tra al S NCE” ur Cult CEPTA ( “AC Our Subrogation Initiative Must Focus on Customer Needs (Target) The Challenge: Our Colleagues Have A Lot on Their Plates

We Need to Focus on Five Concepts Creating a Shared Need Shaping a Vision There is a strong commitment from key constituents to invest in the change, make it work, and demand receive management attention. Making Change Last The desired outcome of change is clear, legitimate, widely understood and shared. Mobilizing Commitment The reason to change, whether driven by threat or opportunity, is instilled within the organization and widely shared through data, demonstration, demand or diagnosis. The need for change must exceed its resistance. Once change is started and you get “wins”, it endures, flourishes and learnings are transferred throughout the organization. Progress is real; benchmarks set and realized; indicators established to guarantee accountability. Communicating Change Communicating the change effectively is key to the success of the acceptance.

The Change Acceleration Process What does this have to do with subrogation? “Consensus Builder” Co nn ec te d d ted cte ec ne nn co Diis Ds Inv ent? lvem o “Dictator” Joi nt De cis ion s? Many Ways to Skin a Cat

Culture Change I = Innovators CA = Change Agents P = Pragmatists S = Skeptics T = Traditionalists I CA P S T

Creating a Shared Need Variety of Approaches Data / Diagnosis / Demonstration Discussing with Internal Sources Cultivating External Networks Visiting Other Organizations Leading by Example Exchanging Best Practices Raising the Bar

EXAMPLE – Getting Buy-In Stakeholder Management Strongly Change Paradigm / R&R Against • Claims Handlers • Most expense saved $ and % ; Most indemnity saved $ and % • Highest cycle time reduction; Part of file audit • Claims Manager • Increase Closing Ratios; Increase potential staff reductions • Performance Management; Positive Impact ULAE/ALAE/Loss • Executive • See above plus resistance to not pursuing • Challenges to reserving and payment methodology • Defense Attorneys • More work in the future; success bonus payouts • Plaintiff Attorneys • Settlement checks quickly; margin on income increased • Insureds • Ultimately impacts pricing at renewal • Insured w/ SIR - stretch your SIR dollars farther; why? Likely starting point Desired ending point Against Neutral In Favor Strongly In Favor

Recovery Management Goal Keep the Focus on. . . Maximizing recoveries to reduce loss costs, lower severities, and improve customer satisfaction Positively impacting revenue through improved recovery first, then speed of recovery next Development of “Best in Class” Recovery practice Operational Efficiency and Consistency versus Many Approaches Establish consistent metrics, goals, reports

Benefit of Recovery Management Subrogation Plan jointly developed Set initial Benefit Realization Target $____ or ___% Benefit achievement dependent upon investment of adjusters and subrogation team and increased referrals Both tort programs and damage to property by others due to negligence. Many times there is not a protocol established by the insured or carrier to obtain restitution and repair costs go uncollected. 2009 YE ACTUAL Net Subro Recoveries % of $ Collected 2010 YE ACTUAL 2011 GOAL $? __%

Try to Create Experience As a Baseline or Just Try it From Scrap Referral Line Of Business PD YE 2009 2010 YE Goal Q 1 Actual YTD ____% $______ GL Arbitrations ____% $______ ____% $______ Property (net of CAT) ____% $______ 2009 YE 2010 Goal Q 1 Actual YTD Applicant Win Rate 59% 63% 62% Respondent Win Rate 39% 37% 39% Non-Response Rate 27% 25% 31%

GROUP # 1 Your Chief Claims Executive asks to meet with you to discuss whether or not to centralize your subrogation teams who are geographically spread out. You have been contacted since you have a unique view of the company’s total claims operation. Since you are receiving files from all units, you have the opportunity to see and review every unit’s work product. At round table discuss: How will you use change acceleration process discussed this morning to persuade your Chief Claims Executive to centralize or not to centralize? How will that differ from the methods used in speaking with the field?

GROUP # 2 You have been asked to work as the subrogation department chair. You and your team have been asked to develop a program for your line claim operations in order to help them better understand the importance of subrogation. To begin, you determine it would be beneficial to conduct some interviews with claim representatives and unit managers from your line claim units. In the course of these discussions you are repeatedly told that line units simply don’t have time to deal with subrogation. You are told that priorities are returning phone calls, paying claims, and answering questions about first-party portions of the claims they handle. Subrogation is simply something that has to wait until the first-party claim is handled to a conclusion. One of the most repeated phrases heard in these discussions was, “Besides, I’ve got what I need to pay the claim, that’s the important part of the process and what really matters, isn’t it? ” At round table discuss: What tools from the change acceleration process reviewed earlier will you use in persuading front line claims adjusters as to the importance of subrogation What tools would you use in demonstrating the importance of how to prepare a file in anticipation of subrogation?

GROUP # 3 You have hired a new director for your company’s subrogation department. Things are going well, but in a recent visit, your new director has expressed some concern about inconsistencies among units, especially in the selection and management of subrogation providers/vendors. There seems to be little rhyme or reason as to how certain vendors were approved, and when searching for data that might lend some clarity regarding vendor performance, the director learned there was no such data available. It was noticed that certain vendors were utilized more than others, and some vendors, while still shown as active on the companywide list, in fact had received very little or no work over the last twelve-month period. At round table discuss: Utilizing the change acceleration tools discussed earlier, how would you manage vendors on a national basis that we may have never seen or met? How would you get adjusters to be honest in their assessment of vendors and streamline the list?

Final Thoughts: • • • Acceptance and compliance are the key Need to work on building readiness for change Strong leadership and a clear vision is critical People need time to assimilate ideas We as subrogation professionals need to have a partnership mindset • Those involved need assurance that their concerns will be considered Please feel free to contact us anytime: Caryn Siebert at: csiebert@carlwarren. com John Ruiz at: thepanel@verizon. net