What is the goal of "subrogation" in the context of insurance?

In the context of insurance, the concept of subrogation primarily aims to mitigate losses by allowing the insurer to seek compensation from third parties who are responsible for causing a loss that the insurer has already covered. When an insurer pays a claim to the insured, it acquires the right to pursue recovery of that amount from the party that caused the loss. This process not only helps the insurance company recover its expenses but also promotes accountability by holding the responsible party liable, thus preventing the insured from suffering undue financial hardship.

This principle serves to ultimately maintain the financial balance within the insurance industry, as companies can reclaim costs associated with claims, which helps keep insurance premiums stable for all policyholders. By pursuing subrogation, insurers aim to reduce their overall costs and, consequently, the impact on clients, making option A the correct choice in highlighting the goal of subrogation.

In contrast, the other options do not accurately capture the primary function of subrogation in insurance. Strengthening policy terms, broadening coverage, or decreasing premiums are all worthwhile objectives in the realm of insurance but are not the specific purpose of the subrogation process itself.