Subrogation (Regress)
Subrogation refers to an insurer's right, after indemnifying an insured, to pursue recourse against the tortfeasor or another liable third party in order to recover the amount paid.
Concept
Subrogation refers to the recourse of an insurer, having provided a contractually owed indemnity to an injured party, against a third party who is liable for the loss. The legal basis is typically the statutory transfer of the injured party’s damages claim against the tortfeasor to the paying insurer, to the extent and as soon as the indemnity has been provided.
Requirements and Limitations
Subrogation presupposes that the injured party actually holds a damages claim against a third party, that the insurer has indemnified the loss accordingly, and that the claim is not excluded by special agreements, such as a contractual waiver of subrogation. Within the same insurance contract, or against close relatives of the policyholder, subrogation is statutorily restricted or excluded in many jurisdictions in order to protect family harmony.
Relevance for Premium Calculation
Successful recourse actions reduce the loss burden ultimately borne by the insurer and thus directly affect the loss ratio and premium calculation; many insurers therefore maintain specialized recovery departments that systematically assess whether, and against whom, recourse is possible in an individual case.