NU Online News Service, Feb. 1, 11:04 a.m. EST
Arbitration Forums Inc. dispute resolution service said it resolved more than 520,000 inter-company claims disputes valued at nearly $2.5 billion in 2009.
W. Russ Smith, president and chief executive officer of Tampa, Fla.-based AF, said the number of disputes handled was a record for the company, which has some 4,300 carrier and self-insured members nationwide.
According to Mr. Smith, AF is saving the property and casualty insurance industry more than $700 million in litigation costs annually through programs resolving insurance claims disputes. In 2008, AF resolved some 500,000 inter-company claims disputes valued at more than $2.4 billion, he reported.
Disputes leading to arbitration typically arise when insurance or self-insured companies believe their insureds are not at fault or due to disagreements over the percentage of liability or the amount of damages, Mr. Smith explained. More than 85 percent of inter-company arbitration disputes involve auto collisions.
More than 92 percent of the arbitration filings in 2009, said Mr. Smith, were made electronically--almost double the percentage of just a few years earlier.
"AF continues to invest in ways the industry can effectively and efficiently resolve subrogation claims. As a not-for-profit, we are committed to serving the industry's needs, and an electronic, end-to-end subrogation and resolution claim process is another way we can do so," he said.
Mr. Smith noted that AF continues to expand E-Subro Hub, an electronic subrogation claims system offered to participants at no cost that is designed to increase productivity and efficiency of the subrogation process.
AF said it projects that phase one of the E-Subro Hub system rollout will save p&c insurance companies and self-insureds hundreds of millions of dollars annually by enabling users to electronically send and receive subrogation claims, attach supporting documents, manage subrogation claims and electronically file inter-company arbitration where necessary.
AF's first paperless arbitration hearing was conducted last year, setting the foundation to easily move disputed claims from E-Subro Hub to arbitration.
E-Subro Hub functionality, the company said, was demonstrated by extensive pilot testing in Massachusetts and Mid-Atlantic states, causing a group of the insurance industry's leading company claims executives to adopt the system beginning with California and Pennsylvania.
The average time from filing a subrogation claim to closing was 16.2 days using E-Subro Hub in the pilot test states, reducing turnaround times by more than 50 percent in many instances, AF reported.
The pilot tests, it said, also found improvements in customer service, as subrogation demands were accepted in just 10.4 days on average, allowing insurers to return deductibles to their policyholders faster.
AF announced changes to its fee structure and clarifications to the Forum Rules that--in conjunction with 2009's notification service fee elimination--will save the industry $4 million annually and further speed the arbitration process, Mr. Smith said.
AF, founded by the insurance industry in 1943, is a membership-driven, not-for-profit organization. The company describes itself as the nation's largest arbitration and subrogation services provider.