Fundamentals
Claims Leakage
Claims leakage is the money an insurer loses to preventable inefficiency, including recoverable dollars that are never pursued because no one identified the opportunity.
Also known as: recovery leakage, subrogation leakage
In subrogation, leakage is usually a volume problem: recovery potential hides in files that closed before anyone reviewed them for third-party liability. The claim was paid correctly; the recovery was simply never chased.
Because leakage is invisible by definition (you don't see the recoveries you never pursued) it tends to be structurally underestimated. Systematically re-reading paid and closed files is where most recovered dollars come from.