Subrogation

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WILLIAM D. HAGER

SUBROGATION EXPERTISE.

SUMMARY OF MOST RELEVANT SUBROGATION EXPERTISE.[1]

INTRODUCTION.  Subrogation, as used in insurance, defines a legal right held by an insurance company to pursue in law, a third party – that caused the loss (that was paid for by the insurer to its insured).  Successful subrogation recovers the amount of the claim from the negligent third party – that was paid by the insurance company to the insured for the loss.

By way of example, an insurance company who has paid a policy benefit to its insured, where a third party has caused or contributed to the loss, under the principles of subrogation, that insurance company then can steps into the shoes of its insured and via subrogation, recoup all or some of the payment from the at fault third party or its insurance company (consistent with applicable state law).  

In proceeding in subrogation, the insurance company gains the rights to: (1) use the insured’s (i.e., its insured’s) name in an action against the negligent third party or the third party’s own insurer; and (2) bring an action for the amounts the insurer paid to its insured. The insurer has no greater rights than the insured and can only pursue actions against a person who could have been pursued by the insured.

Auto Insurance. Subrogation occurs most often in auto insurance matters, where the insurer pays its insured for damage to its insured’s vehicle, where the damage was caused by a negligent third party, who (assume) ran a red light.  That insurance company via subrogation then seeks reimbursement from the at-fault party or their insurance company.

Homeowners.  Subrogation can apply to the circumstance of most property casualty coverages.  By way of example, assume an errant driver loses control of her vehicle and careens into the home of the insured, inflicting serious structural damage to the home.  The homeowner’s insurer would pay for the damage – to its insured – and then (at its volition) – pursuant to the principles subrogation – bring an action against the negligent driver or her insurer.  

Commercial Property.  Assume a business owner has a late-night fire, with the  damage caused by a defective water heater.  The owner’s commercial property insurer will pay its insured for the property damage and then, via subrogation, pursue the manufacturer and/or installer of the water heater.

Other Areas of Property Casualty Insurance.  Most other areas of property casualty insurance contemplate subrogation along the lines discussed here.

Life Insurance.  Unlike property casualty insurance, as a general rule, there is no subrogation in life insurance. The life insurer pays the death benefit when the insured dies and may not step into the shoes of anyone entitled to file a wrongful death claim against a person who caused the death.

The Advantage of Subrogation.  Subrogation keeps premiums low, because recovered subrogation dollars go to the insurer’s bottom line, reducing loss payments and thus keeping premiums lower than they would otherwise be.  

HAGER SUBROGATION EXPERTISE.

In connection with entering subrogation expert opinions, I draw upon my expertise as (i) summarized immediately below, (ii) as set forth in my Curriculum Vitae, and (iii) as set forth in my related websites as follows:

 

Subrogation expertise calls upon knowledge and background as to, among other things, the following: (i) the principles of subrogation; (2) the obligations of insurers in subrogation matters; (3) the circumstances under which subrogation can be pursued; (4) the rights obtained by an insurer in subrogation; (5) and the manner – and against whom – subrogation can be pursued.

Subrogation Insurance Expertise:  State Insurance Regulation.  My expertise as to these matters can be found as follows: I am a former:

  • Commissioner of Insurance (Iowa), as appointed by the Governor of Iowa;

  • First Deputy Commissioner of Insurance, as appointed by the Commissioner of Insurance;

  • Administrative Law Judge (“ALJ”), f/k/a Hearing Officer, to the Department of Insurance, as appointed by the Commissioner of Insurance;

  • Assistant Attorney General assigned on a full-time basis to the Department of Insurance, as appointed by the Attorney General of Iowa.

In those capacities, on a daily basis, I had full regulatory oversight and responsibility for, and I dealt directly with, (i) the principles of subrogation; (2) the obligations of insurers in subrogation matters; (3) the circumstances under which subrogation can be pursued; (4) the rights obtained by an insurer in subrogation; (5) and the manner – and against whom – subrogation can be pursued.[2]   

Subrogation Insurance Expertise:  Multi-State Insurance Regulation.  My expertise as to these matters can be found as follows: I am a former:

  • Member of the National Association of Insurance Commissioners (“NAIC”);

  • Elected Member of the NAIC’s Executive Committee.  

  • As an Elected Member of the Executive Committee, that oversight included responsibility for the so-called “C Committee” relating to Property and Casualty Insurance, inclusive of insurers and policies and their issues including that of subrogation.

Subrogation Insurance Expertise: Most Recent Legislative.  In addition to my regulatory background, I have served in the following capacities, each of which included daily knowledge of and interaction with (i) the principles of subrogation; (2) the obligations of insurers in subrogation matters; (3) the circumstances under which subrogation can be pursued; (4) the rights obtained by an insurer in subrogation; (5) and the manner – and against whom – subrogation can be pursued.

  • Elected Member of the Florida House of Representatives (most recently – I was first elected in 2010 and re-elected in 2012 and 2014 and 2016) where I serve or have served as a Member and Vice Chairman of the Insurance Committee as well as its upstream parent committee, the Commerce Committee, which collectively have legislative oversight over all insurance issues in the state (as administered by the Florida Office of Insurance Regulation) including those relating to subrogation insurance and related insurer and insured obligations.  Florida’s statutory and regulatory framework as to subrogation – parallels that of most of the other states.  

  • In addition, I have sat as Vice Chairman of the Civil Justice Subcommittee of the Florida House, which has responsibilities as to Florida laws that establish (among other things) liability.[3]

Subrogation Insurance Expertise: Other Legislative.  In addition to my state and national insurance regulatory background and my current legislative background, I have served in the past in the following capacities, each of which included daily knowledge of and interaction with (i) the principles of subrogation; (2) the obligations of insurers in subrogation matters; (3) the circumstances under which subrogation can be pursued; (4) the rights obtained by an insurer in subrogation; (5) and the manner – and against whom – subrogation can be pursued.

  • Legal Counsel to the Iowa House of Representatives;

  • Chief of Staff, f/k/a Administrative Assistant, at the U.S. House of Representatives,

  • Deputy Mayor and Council Member of the Boca Raton City Council, where I served as the Council’s lead on insurance issues;

        

Subrogation Insurance Expertise:  Actuarial. In addition to my regulatory background at both the state and national levels and my legislative background as to subrogation matters, I have served or am serving in the following capacities, each of which included daily knowledge of and interaction with: (i) the principles of subrogation; (2) the obligations of insurers in subrogation matters; (3) the circumstances under which subrogation can be pursued; (4) the rights obtained by an insurer in subrogation; (5) and the manner – and against whom – subrogation can be pursued.[4] 

  • American Academy of Actuaries, Washington D.C.  General Counsel and Chief Lobbyist for the American Academy of Actuaries, Washington, D.C., whose members must become intimately familiar with subrogation as it is a component of rate making.  

  • Actuarial Standards Board (ASB), Washington D.C.  I served as counsel to the forerunner of ASB, namely the Interim Actuarial Standards Board.  ASB promulgates professional standards for the actuarial profession including those relating to matters utilizing subrogation considerations – and runs parallel to Financial Accounting Standards Board (FASB), which does the same work on the accounting side relating to accounting for American business.

  • Commissioner of Insurance.  As Commissioner, I had ongoing responsibilities as to subrogation responsibilities in that most all personal and commercial property and casualty insurers engage in subrogation and subrogation impacts policyholder premiums.

  • First Deputy Commissioner of Insurance.  As First Deputy Commissioner of Insurance, like the Commissioner, I also had ongoing responsibility for subrogation matters in that most all personal and commercial property and casualty premiums engage in subrogation actions.

  • Degree in Mathematics.  I hold a B.A. in mathematics, the intellectual foundation of actuarial science.  

Subrogation Insurance Expertise:  Industry. In addition to my regulatory background at both the state and national levels and my legislative background and my actuarial background as to subrogation matters, I served in the following capacity,

  • President and Chief Executive Officer of the National Council on Compensation Insurance (NCCI), whose daily responsibilities included that of responsibility to formulate workers’ comp policies in the first instance, prepare underwriting manuals and related descriptions thereof (the so-called “Scopes Manual”); prepare e-mods for insureds throughout much of the U.S.; prepare rates for approval to the Commissioners of Insurance throughout most of the U.S.; prepare reinsurance materials for reinsurers and make NCCI’s expertise available to regulators and legislators throughout the U.S. as to matters such as those at issue here.  Workers compensation is in the family of property casualty insurance and subrogation is a constant feature of workers compensation insurance.  

Subrogation Insurance Expertise: Insurance Arbitration. In addition to my regulatory background and my legislative and my industry background as to subrogation matters, I have served or am serving in the following capacities, each of which included daily knowledge of and interaction with (i) the principles of subrogation; (2) the obligations of insurers in subrogation matters; (3) the circumstances under which subrogation can be pursued; (4) the rights obtained by an insurer in subrogation; (5) and the manner – and against whom – subrogation can be pursued.

  • Nationally Certified Insurance Arbitrator (ARIAS-US), where I sit as an arbitrator on disputes between (among others) insurers and other insurers or insurer’s agents as to matters in subrogation.  

Subrogation Insurance Expertise: Reinsurance Arbitration. In addition to my regulatory background and my legislative and my industry background as to subrogation matters, I have served or am serving in the following capacities, each of which included daily knowledge of and interaction with (i) the principles of subrogation; (2) the obligations of insurers in subrogation matters; (3) the circumstances under which subrogation can be pursued; (4) the rights obtained by an insurer in subrogation; (5) and the manner – and against whom – subrogation can be pursued.

  • Nationally Certified Reinsurance Arbitrator (ARIAS-US), where I sit as an arbitrator on disputes between (among others) insurers and their reinsurers as to matters in subrogation.

Subrogation Insurance Expertise: Current Practice: Insurance and Reinsurance Lawyer.  In addition to my regulatory background and my legislative background and my industry background and my reinsurance arbitration background as to subrogation matters, I have served or am serving in the following legal capacities, each of which included daily knowledge of and interaction with (i) the principles of subrogation; (2) the obligations of insurers in subrogation matters; (3) the circumstances under which subrogation can be pursued; (4) the rights obtained by an insurer in subrogation; (5) and the manner – and against whom – subrogation can be pursued.

  • As stated, I am an insurance lawyer admitted to practice, all by examination in Iowa, Illinois[5] and Florida.

  • I am currently a practicing Florida insurance lawyer, at the Hager Law Firm, Boca Raton, Florida, in private practice;

Subrogation Insurance Expertise: Prior Practice: Insurance and Reinsurance Lawyer.  In addition to my regulatory background and my legislative background and my industry background and my reinsurance arbitration background and current practice of law as to subrogation matters, I have served in the prior practice of law in the following legal capacities, each of which included daily knowledge of and interaction with (i) the principles of subrogation; (2) the obligations of insurers in subrogation matters; (3) the circumstances under which subrogation can be pursued; (4) the rights obtained by an insurer in subrogation; (5) and the manner – and against whom – subrogation can be pursued.

  • Legal Counsel to the Iowa House of Representatives;

  • Iowa Assistant Attorney General;

  • Counsel to the Professional Insurance Agents Association (IA), many of whose members as agents sold property casualty insurance;

  • Iowa Counsel to the Property Casualty Insurance Association of America (PCIAA), an organization of smaller stock property casualty insurers, all of whom used subrogation proceedings;  

  • Insurance and reinsurance lawyer with the firm of Hager and Schachterle;

  • General Counsel to the American Academy of Actuaries, Washington D.C.;

Subrogation Insurance Expertise: Undergraduate Educational Background.  In addition to my regulatory background and my legislative background and my industry background and my actuarial background and my reinsurance arbitration background and my legal background as to subrogation matters, my undergraduate education was helpful in this matter:

  • Bachelor’s degree (B.A.) in mathematics (University of Northern Iowa)[6];

Subrogation Insurance Expertise: Graduate Educational Background.  In addition to my regulatory background and my legislative background and my industry background and my actuarial background and my reinsurance arbitration background and my legal background as to subrogation matters, my graduate education was helpful in this matter:

  • Master’s degree (M.Ed.) in education (University of Hawaii);

  • Juris Doctorate: (J.D.) University of Illinois, Champaign Urbana;

Subrogation Expertise: Insurance Certifications.  In addition, the following certifications also support my expertise in these matters.

  • Reinsurance Arbitrator certified by ARIAS-US;

  • Insurance Arbitrator certified by ARIAS-US;

  • Graduate, the NAIC’s Commissioners School;

  • Member, Past U.S. Insurance Commissioners Organization (Passé Club);

Subrogation Expertise: Licenses.  In addition, the following licenses also support my expertise in these matters.

  • Members of the following bars, all by examination:

  • Illinois,

  • Iowa; and

 

  • Florida;

  • Admitted to Practice before the Florida Supreme Court;

  • Admitted to practice before the U.S. Supreme Court;

END OF THIS DOCUMENT.

        


[1]1These qualifications should be read together with (i) my expanded statement of qualifications as to this matter as set below in this Report and  my Curriculum Vitae, available on line at the home page of my website at https://expertinsurancewitness.com/ 

[2] I do not enter legal opinions in my expert reports.  My opinions are based on custom and practice in the industry that come to bear on this matter.  At the same time, insurance is one of the most highly regulated areas of commerce in the U.S. and as such, it is not possible to review insurance and reinsurance matters without reference to rules and regulations that apply to the insurer and the transactions at issue including subrogation.  

[3] My service at the Florida House of Representatives terminated as of 1/01/2019.  This is so because I am term limited, having served the statutory maximum of eight years as an elected Member of the Florida House of Representatives.    

[4] I understand actuarial matters are typically not at issue in subrogation matters.  I set forth my actuarial  experience because it is part of my overall background.  

[5] This license is currently in inactive status at my request and is eligible for reactivation at any time upon my request.  This is so because I am in good standing with the Illinois Bar.  

[6] Secondary mathematics education.