Self-Insureds Arbitration A Slow Grow

NU Online News Service, April 5, 4:28 p.m. EST?Self-insured companies are making more use of intercompany arbitration, but still fall below traditional insurance companies’ usage levels, according to a Florida arbitration firm.

Arbitration Forums Inc., in Tampa, Fla., said arbitration program membership rose 15 percent in 2001, with self-insured companies accounting for 90 percent of that increase.

“In spite of this surge in interest, however, utilization of arbitration services among self-insureds remains low,” said D. Kay Smith, chief executive officer of AF.

“More training and education is needed by the vast majority of self-insured companies that are not taking advantage of the cost-saving benefits of arbitration to resolve intercompany insurance claims disputes,” she said.

“Unlike traditional insurance companies, many self-insureds do not have subrogation units dedicated to recover claims dollars who are well aware of the benefits of arbitration,” said Ms. Smith. She observed that more training and education of self-insureds on arbitration and the ease of using the process would generate greater utilization.

AF said it will be working individually with its self-insured members to determine what type of training tools they need to help increase their participation in arbitration programs, she said.

AF describes itself as the nation’s largest not-for-profit provider of inter-company insurance dispute resolution services. The company said it resolved more than $1.4 billion in intercompany claims last year. However, only a small amount involved self-insured companies

An AF study found for every dollar a company spends on intercompany arbitration, the return on investment is $20.80.

“Self-insureds can cut expenses and improve their bottom line by capitalizing on the opportunity for saving offered by arbitration,” Ms. Smith said.

She also noted that the new E-Speed Filing program at AF offers high-speed electronic filing for small-dollar auto liability and damage disputes. The filing fee for the program was reduced recently to $45 from $100.

Bill Landolt, corporate loss control manager, Enterprise Rent-A-Car Company, said that arbitration is an important tool in reducing costs at his self-insured company.

He agreed that more self-insureds would participate in arbitration programs if they were more aware of the savings in time and money and how easy it is to use the arbitration process. “More self-insured companies should be taking advantage of these benefits,” said Mr. Landolt.

AF says it is the nation’s largest nonprofit provider of interinsurance dispute resolution services. Founded in 1943, AF has a membership of more than 3,000 insurers and self-insureds nationwide.