Contingency vs SaaS: Pricing Subrogation Technology Against Recovery Yield

Four ways to pay for found money

Subrogation technology is priced in two basic ways: a share of what it helps recover, or a fee for the platform. Ishqkala offers both, plus two variants. The Closed-Claim Recovery Sweep is a 10% to 15% contingency on net dollars recovered, with zero upfront fee, and if no actionable subrogation is found the customer pays nothing. Continuous Real-Time Detection is a $1,500 to $5,500 monthly platform fee banded by annual claim volume, plus a reduced 5% to 8% contingency. Enterprise and Tier 1 carriers license the platform on a custom annual basis. Self-insured entities and captives pay a flat fee per analyzed file or a contingency.

The right choice depends less on the rate card than on what the carrier is trying to recover, how predictable its volume is, and how it measures yield.

Define recovery yield before comparing prices

Recovery yield is the net cash collected per file analyzed, after every cost of collecting it. The technology fee is one cost. The others are often larger: internal staff time, recovery counsel fees on litigated files, expert and lab costs on property and product files, arbitration filing fees, and the share of each recovery returned to the insured for the deductible or owed to reinsurers on ceded losses.

Ishqkala is software. It does not contact adverse parties, file suits or act as a collection agency, so a carrier using it still staffs or retains the recovery work. A fair comparison with an outsourced recovery vendor puts the full cost stack on both sides.

Per file, the numbers are easy to line up. In the $150M DWP worked example, a sweep of about 30,000 closed claims finds roughly 660 viable files worth $8.25M and recovers $4.95M before limitation periods run. That is $165 recovered per file analyzed. At a 15% contingency the fee is $24.75 per analyzed file, leaving $140.25 before the carrier's own recovery costs. The same view is how a self-insured entity or captive should test a flat per-file fee: the fee should sit comfortably below its expected net recovery per file.

Then define the word recovered. A contingency should apply to cash collected, not to dollars identified or demanded. Ishqkala's contingency is calculated on net dollars recovered, so a demand that is never paid costs nothing. Every vendor contract should spell out how partial settlements, arbitration awards and offsets are treated.

The break-even math

Take a carrier in a middle volume band at $3,500 a month, or $42,000 a year, with a 6.5% contingency, and compare it with a 12.5% sweep contingency. The fees are equal where 12.5% of recoveries equals $42,000 plus 6.5% of recoveries. Solving, 6% of recoveries equals $42,000, so break-even is $700,000 a year.

Below that, contingency alone is cheaper. At $400,000 recovered, the contingency costs $50,000 and the subscription $68,000. Above it, the subscription wins. At $2M recovered, the contingency costs $250,000 and the subscription $172,000, a $78,000 difference that grows with every recovered dollar.

The general rule: break-even equals the annual platform fee divided by the difference between the two contingency rates. At $5,500 a month and 5% against a 15% sweep, that is $66,000 divided by 10 points, or $660,000. At $1,500 a month and 8% against a 10% sweep, it is $18,000 divided by 2 points, or $900,000. Plug in your own band and negotiated rates.

The math understates the subscription, because recoveries are not the same under both models. Continuous detection works on open claims, where evidence is still in the house and the limitation period is fresh. Manual recovery cycles average about 14 months. With automated packaging and early evidence preservation they average about 4.5 months. A closed-file sweep will always find files whose evidence is gone or whose deadline has passed.

When contingency is the right answer

Contingency fits a backlog. A carrier that has never audited its closed files does not know its yield and should not have to budget for finding out. Between 1.8% and 3.4% of claims closed without recovery contain valid, enforceable third-party liability when audited with deep NLP, but where a given book falls in that range is unknown until the sweep runs. With zero upfront fee and nothing owed if nothing actionable is found, the carrier carries no downside.

It also fits procurement. A contingency agreement usually clears faster than a new budget line. The Free Closed-Claim Audit, 500 files returned as a Subrogation Opportunity Manifest within 5 business days, lets finance size the opportunity before signing anything.

When a platform fee is the right answer

A platform fee fits steady claim volume and the goal of catching opportunities at first notice. The fixed cost is predictable, the marginal fee on each recovered dollar drops, and large recoveries no longer carry a large contingency. Whether the fee is booked as loss adjustment expense or underwriting expense depends on the carrier's expense allocation, and both sit inside the combined ratio. The 14-day free production trial lets the claims team see open-claim alerts on its own book before the subscription starts.

An enterprise license fits Tier 1 volume, where any contingency would become a large line item and deep integration with Guidewire ClaimCenter or Duck Creek Claims is part of the scope. Self-insured entities and captives often prefer the flat per-analyzed-file fee because their recoveries are lumpy and their risk managers work to a fixed budget.

The incentives behind each model

Every pricing model pays the vendor to do something. A contingency pays for collected dollars, which can tilt attention toward large, easy files and away from the slow product defect claim that needs a joint lab exam. A platform fee pays for the subscription, which can tilt attention toward renewal rather than results. Neither is wrong, and each needs reporting that keeps it honest.

Under a contingency, ask for the full manifest, including opportunities scored low, so the carrier decides which ones to pursue. Under a subscription, ask for monthly yield reporting by line: opportunities identified, demanded and recovered. The Ishqkala manifest itemizes every scored opportunity with its adverse party, recoverable amount and deadline, so the decision to pass on a file stays with the carrier's own staff.

Questions to put in the contract

Whatever the model, ask the same questions. Which files are in scope, and are files already in recovery when the engagement starts excluded? Is the contingency on gross or net recoveries, and net of what? How are arbitration awards, partial settlements and reinsurer shares handled? Who owns the manifest and the scored data if the contract ends? Will the vendor train models on your claim files? Ishqkala does not.

The best pricing model is the one whose cost you can explain next to your recovery ratio in a board deck. If the fee and the net recovery appear side by side every month, the model is working. If they do not, no rate card will fix it.