So sue me! Or not.

When claim disputes arise between insurers, the disagreementscan become heated, jeopardizing critical working relationships asthe lawyers gear up for battle. For those seeking a more measured(and less expensive) approach, Tampa-based Arbitration Forums, Inc.,(AF) offers an alternative. Founded in 1943, the organization helpsits member insurers and self-insureds settle claim disputes inmeeting rooms, not courtrooms.

President and CEO W. Russ Smith, CPCU, reports that themembership-driven, not-for-profit organization is the largest firmof its kind in the nation, with 4,300 insurers and self-insuredmembers and 5,900 arbitrators. In 2009, it resolved by arbitrationover 520,000 inter-insurance company disputes involving $2 billionof contested funds. Disputes leading to arbitration typically arisewhen insurance or self-insured companies believe their insureds arenot at fault or are in disagreement over the percentage ofliability or the amount of damages.

Smith began his insurance career in 1976 as a claims adjusterwith Amica Mutual Insurance Co. He joined AF in 2008 after a longtenure at USAA, where he rose to vice president-claims. Smith hasserved on numerous insurance industry committees, including theAmerican Insurance Association Casualty Claims and Property Claimssubcommittees, the Florida Joint Underwriters Association, theFlorida Residential Property and Casualty Joint UnderwritingAssociation, Citizens Property Insurance Corp. committees on claimsand quota share, and the Florida Claims Manager Association. Hespoke with Florida Underwriter about this industry niche and thesuccess of the organization he leads.

Q. Tell us about your business model. AF is member-driven, yetit does not cost to join. You have reduced your client fees, yet AFis successfully spreading across the country.

A. As a not-for-profit, membership-driven organization, AF iscommitted to serving our members' recovery and resolution needs,and therefore serving the needs of the entire insurance industry.From the beginning, our business model has been focused onresolving high-volume disputes. Amounts in most of the cases wehandle average between a few thousand dollars and themid-teens.

With improvements to our fee structure (which went into effectFeb. 1, 2010), in conjunction with previous changes to thenotification service and simplified program participation, weexpect to be able to give back $4 million to the industry duringthis year. Some fee reductions have come in the areas of uninsuredmotorist and special filings, deferments and reschedules, and inaward pays, challenges to deferments, and coverage denials.

Along with the fee reductions, we continue to explore theadvancement of the services we offer. Our services also helppreserve relationships among companies when disputes could growbitter or head to the courts.

Q. Your web site offers assistance with subrogation claimsinvolving homeowners, commercial property, inland marine coverage,and damage to vessels on navigable waters within the geographiclimits of one state. With Florida's immense number of propertytransactions, is this among the most utilized forums you offer?

A. The property forum is one of the many forums we offer.However, auto damage issues comprise one of the largest areas ofdisputes we help to resolve. Arbitrated auto property and physicaldamage, multiple-vehicle and bodily injury claims help not justinsureds, but also opposing companies who need to work together inthe future.

Q. What are the advantages of the special arbitration forum thatdeals with defective construction disputes?

A. AF responded to recent changes within the insurance industryby implementing the construction defect enhancement to our specialforum. Its key benefits include reduced litigation and claimexpenses, reduced cycle times, and improved productivity. Coverageand liability disputes between general contractors andsubcontractors and their respective insurers often get resolvedwith AF's help.

Q. You clearly have a strong dedication to using technologythroughout your operation. What are some of the innovations in usenow?

A. We have invested a great deal of resources into enhancing ouruse of technology in ways that improve how our members do businessboth with AF and with one another. Those initiatives include ouronline filing system, which provides a paperless alternative tofiling or responding to arbitration. More than 92 percent of thefilings in 2009 were made electronically. AF continues to work hardto create a paperless arbitration environment that reduces expensesfor members, lowers cycle times, and supports our greenphilosophy.

Q. Talk about your other big paper-saver, the no-fee E-Subro Hubsystem that eliminates paper and allows participants to track theprogress of subrogation demands and provide performance data.

A. E-Subro Hub is a free, web-based electronic communication,document, and claim management tool that provides our membershipand the industry with a more efficient method to process theirsubrogation demands and responses. Right now we are focusing onauto, but other forums will be added. The E-Subro Hub system tracksall activities, so every task's performance can be measured andreported on to improve business productivity. Our previous work wasin arbitration, but now with so much of the procedure electronic,the average time from filing to closing is 16.2 days, provingE-Subro Hub significantly reduces cycle time compared to using thetraditional mail and fax methods. After extensive pilot testinglast year in the mid-Atlantic states and Massachusetts, in Aprilthe system was expanded into California and Pennsylvania, two ofthe largest states in the subrogation market. Expansion continuesthroughout the rest of this year. E-Subro Hub will be in use inFlorida in October and rolled out in 26 of the largest states bythe end of 2010, with upwards of 60 percent of the marketparticipating. PIP and Med Pay are in our plans for the future forE-Subro Hub.

Q. You claim to save the industry huge amounts of money andtime. How does that play out in individual offices orcompanies?

A. Each company's business model will dictate the individualfinancial outcomes from using our products and services. The freeservices available on our web site such as E-Subro Hub, webinars,and on-site training, plus substantial litigation cost-avoidancemake our offerings integral to any claims organization.

Q. Your web site www.arbfile.org offers online tutorials andwebinars to provide the basics for filing or responding to cases inarbitration. Who should be visiting your site to consider yoursubrogation/arbitration services?

A. Anyone involved in claims adjusting should be very familiarwith our products, services, and forums. Our forums allow forrecovery and dispute resolution in physical damage, workers'compensation, bodily injury contribution, property/building, PIPand Med Pay, concurrent coverage, and uninsured motorists claims.We resolved 22,000 disputes in Florida in 2009.