If you are a Department of Transportation (DOT) executive who is frustrated by the many unrecovered damage claims in your state, know you are in good company. Most of your peers feel the same way, wondering, “Why is it so hard to collect the money owed on damages from accidents?” These unresolved claims are costing your state millions of dollars. Here’s why:
1. Not enough personnel
Your employees are busy and have many job duties.
Most DOT personnel are assigned the task of claims recovery on top of their already full workloads. It is common for DOT employees who are assigned to claims recovery to spend only 10% of their workday on recovery-related tasks. Their departments are not able to process more than a fraction of outstanding claims due to staff members’ various responsibilities. Since an employee’s key performance metrics are not aligned with recovery, the opportunities lapse, and DOTs lose money they are rightfully entitled to receive.
2. Not measuring claims recovery properly
Let’s compare apples to apples, not apples to oranges.
Many DOTs accidentally have a false assurance of their recovery success. They do not mean to measure the wrong things, but it is good to pause and reflect on how your organization tracks success in this area. It is common for DOTs to invoice a certain percent of claims, say 25% of total claims outstanding, and then recover the majority of the pursued claims. For example, all DOTs pursue the claims on motorists who have insurance and are easiest to recover first. Why wouldn’t you?
However, many DOTs find it challenging to track and report back on the total possible claims. When measuring your recovery, consider if your data reported is tracking recovery only on invoiced claims OR on the total possible number of claims owed to you by damagers. We see most DOTs leave as much as 75% of damages out of their internal process because these claims are more difficult to recover.
3. Lack of tools and time lead to delayed recovery cycle time
Here is the good and the bad about cleaning up accidents quickly.
Many DOTs are efficient in repairing equipment after it is damaged in accidents. Without the proper processes in place to gather claims data right after the accident, DOT staff is forced to research and recreate the accident information months after the incident occurred. A robust recovery program requires employees to gather information like damage type and location; damaging parties’ insurance; and recovery ratio, status, and names of adjusters. Most DOTs’ asset management software was not created to process such data. As a result, when a DOT employee opens a work order from an incident that occurred six months ago, it is almost impossible for them to prove the claim. Even when the DOT employee does recreate the data to pursue recovery, they then attempt to contact the damager (who does not want to be contacted). Without the proper tools, this process takes months and months — far too long to be able to recover what is owed.
4. Uninsured motorists and unknown damagers
This is the “lost cause” part of the recovery process.
Since every state has about 15% of their residents driving without insurance, it is hard to collect on damages when these individuals are in accidents because their information is harder to track down. Additionally, many uninsured individuals do not want to be found because they worry about being contacted, sometimes lacking the resources to pay the claim themselves.
Unknown damagers further stress the system. Because it is much more difficult to research, identify and match these individuals to the associated repair costs with the incident where the damage occurred, many of the damages are never invoiced or recovered.
5. Decentralized processes create a lot of waiting
We have a lot of cooks in the kitchen.
Inside a single geographic region, it is common for multiple people from different departments to be responsible for one step each in the overall recovery process. For example, a person in maintenance might be waiting for someone in the safety office. Because a DOT is rarely designed to have a claims department entirely focused on recovery of damage claims, there is rarely one single point of contact who is responsible for the whole process.
We have provided third-party recovery services to Departments of Transportation and major utility companies for over 30 years and have extensive first-hand experience with these most common reasons DOTs struggle to collect the millions of dollars owed to them. If we missed your main challenge above, we want to know about it! Contact us at jmusgrove@cmrclaims.com or 405-606-8205 to schedule a meeting to discuss how outsourcing your claims recovery can benefit your DOT.