NU Online News Service, Feb. 1, 11:04 a.m.EST

Arbitration Forums Inc. dispute resolution service said itresolved more than 520,000 inter-company claims disputes valued atnearly $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 forthe company, which has some 4,300 carrier and self-insured membersnationwide.

According to Mr. Smith, AF is saving the property and casualtyinsurance industry more than $700 million in litigation costsannually through programs resolving insurance claims disputes. In2008, AF resolved some 500,000 inter-company claims disputes valuedat more than $2.4 billion, he reported.

Disputes leading to arbitration typically arise when insuranceor self-insured companies believe their insureds are not at faultor due to disagreements over the percentage of liability or theamount of damages, Mr. Smith explained. More than 85 percent ofinter-company arbitration disputes involve auto collisions.

More than 92 percent of the arbitration filings in 2009, saidMr. Smith, were made electronically–almost double the percentage ofjust a few years earlier.

"AF continues to invest in ways the industry can effectively andefficiently resolve subrogation claims. As a not-for-profit, we arecommitted to serving the industry's needs, and an electronic,end-to-end subrogation and resolution claim process is another waywe can do so," he said.

Mr. Smith noted that AF continues to expand E-Subro Hub, anelectronic subrogation claims system offered to participants at nocost that is designed to increase productivity and efficiency ofthe subrogation process.

AF said it projects that phase one of the E-Subro Hub systemrollout will save p&c insurance companies and self-insuredshundreds of millions of dollars annually by enabling users toelectronically send and receive subrogation claims, attachsupporting documents, manage subrogation claims and electronicallyfile inter-company arbitration where necessary.

AF's first paperless arbitration hearing was conducted lastyear, setting the foundation to easily move disputed claims fromE-Subro Hub to arbitration.

E-Subro Hub functionality, the company said, was demonstrated byextensive pilot testing in Massachusetts and Mid-Atlantic states,causing a group of the insurance industry's leading company claimsexecutives to adopt the system beginning with California andPennsylvania.

The average time from filing a subrogation claim to closing was16.2 days using E-Subro Hub in the pilot test states, reducingturnaround times by more than 50 percent in many instances, AFreported.

The pilot tests, it said, also found improvements in customerservice, as subrogation demands were accepted in just 10.4 days onaverage, allowing insurers to return deductibles to theirpolicyholders faster.

AF announced changes to its fee structure and clarifications tothe Forum Rules that–in conjunction with 2009′s notificationservice fee elimination–will save the industry $4 million annuallyand further speed the arbitration process, Mr. Smith said.

AF, founded by the insurance industry in 1943, is amembership-driven, not-for-profit organization. The companydescribes itself as the nation's largest arbitration andsubrogation services provider.