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Subrogation is a critical concept in the insurance industry that allows insurers to maintain fairness and avoid unnecessary losses. When an insurer pays a claim on behalf of a policyholder, subrogation gives the insurer the right to seek reimbursement from a third party that may have been responsible for the loss. This process ensures that the insured does not receive a windfall from the claim, as they did not suffer the financial burden entirely.

For example, if a driver is involved in an accident due to another party's negligence and their insurance pays for the damages, subrogation allows that insurer to pursue the at-fault driver or their insurance company to recover the costs they have already incurred. This not only helps insurers control their losses but also deters negligent behavior since third parties can be held accountable for their actions.

The other options presented do not accurately capture the meaning of subrogation and address different aspects of insurance processes. Therefore, identifying subrogation correctly as the right of an insurer to pursue a third party for reimbursement after paying a claim represents a fundamental understanding of this important principle in insurance operations.