What does an insurance company typically seek to achieve through subrogation?

The primary goal of subrogation for an insurance company is to obtain reimbursement for losses it has paid to the insured from a third-party source that is responsible for causing those losses. When an insurer pays a claim to its policyholder, it may have the right to pursue the party that caused the damage (such as another driver in the case of an auto accident) to recover the amount paid out. This process allows the insurance company to mitigate its losses and can contribute to overall financial stability.

Subrogation is particularly important for maintaining the insurer's ability to offer coverage at reasonable rates, as recovering funds from responsible third parties helps offset the costs associated with claims. Additionally, it ensures that the responsible parties bear the financial implications of their actions, reinforcing accountability. The other options do not directly relate to the mechanisms or objectives of subrogation, which is focused on recovering funds rather than enhancing customer service, profitability from policy sales, or reducing premiums for policyholders.