What does "subrogation" mean in insurance?

Subrogation in insurance refers to the process by which an insurer seeks reimbursement from a third party that is responsible for a loss that the insurer has already compensated to the policyholder. When an insured individual suffers a loss due to another party's negligence or fault, their insurance company pays for the covered damages. After compensating the policyholder, the insurer can then pursue the at-fault party to recover the amount it has paid out. This ensures that the at-fault party is held accountable for their actions, and it helps keep insurance costs down by allowing insurers to recoup losses.

The other options describe different concepts within the insurance field. The agreement between insurers to share policy coverage, while relevant to certain insurance arrangements, does not encapsulate the idea of subrogation. Analyzing policy claims and calculating potential losses are part of the claims handling and underwriting processes, but neither of these tasks conveys the essence of subrogation, which specifically involves seeking reimbursement after payout for a claim.