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Evolve Capital is pleased to release our latest Executive Research Note, offering an in-depth analysis on M&A transaction activity and evolving market trends within the Insurance Subrogation sector.  This piece serves as a continuation of our February 2024 Executive Research Note, during which we interviewed three leading CEOs in Insurance Subrogation.  Our current edition sheds light on the progressing trends and activities within the relatively underexplored domains of P&C and Healthcare Subrogation, now catching the attention of investors and strategic partners alike.

Our analysis covers the P&C and Healthcare subrogation markets, uncovering a significant, expanding $15 billion annual cost-saving opportunity for U.S. insurers.  The convergence of insurers expanding their subrogation targets and the integration of AI, predictive analytics, and other breakthrough technologies are generating more stable revenues and outcomes than in the past.  These favorable trends signal an inflection point for investment in this niche sector.

The Evolving States of Technology in Subrogation:

• We’ve transitioned from a past dominated by legacy systems, which facilitated larger, more litigious claims often with binary outcomes, to a present where sophisticated tech-enabled systems prevail.
• Today’s technological landscape broadens the spectrum to encompass smaller balance claims and those once dismissed due to prohibitive labor costs. Ongoing technological advancements and adoption will favor tech-savvy, high-quality service providers, attracting further investment into this space.
• Looking ahead, the future state is where automation and widespread adoption streamline the processing of large and intricate claims, positioning subrogation for efficiency gains in the medium to long term.

Reflecting on our February Subrogation dialogue, we’ve seen a rise in investor interest, highlighted by several notable transactions:

• SubroIQ, a division of ARMStrong Receivables backed by BharCap Partners, grew its portfolio by acquiring P&C Subrogation firms SecondLook and Vengroff Williams in August 2023.
• CCC, a premier SaaS platform for P&C insurance, acquired Safekeep, an AI-driven enterprise solution specializing in subrogation claims management, for $32.5 million in early 2022.

Evolve CEO Interviews:

Our February 2024 research note featured discussions with three industry-leading CEOs, who offered comprehensive views on their firms and the market at large:

• Jon Coscia of Latitude Subrogation Services.
• Greg Zarin at SubroSmart.
• Leslie Wiernik, guiding the National Association of Subrogation Professionals (NASP).