Explain "subrogation" in the context of casualty insurance.

Subrogation refers to the process by which an insurer, after paying a claim to the insured, acquires the right to pursue recovery from a third party that may be responsible for the loss. In the context of casualty insurance, this is an essential principle that allows insurers to protect their financial interests and manage costs associated with claims.

When an insured experiences a loss due to the actions or negligence of another party, the insurer compensates the insured for the damages incurred. Following this compensation, the insurer can step into the shoes of the insured to seek reimbursement. This pursuit can include legal action against the third party responsible for the loss.

Subrogation is beneficial for various reasons: it helps control insurance costs, reduces the overall burden on the insurance system, and can lead to lower premiums for policyholders over time. By recovering claims payments from at-fault parties, insurers can maintain their financial health and continue to provide coverage to their clients.