Arbitration For Insurance Disputes Up Sharply
NU Online News Service, Feb. 10, 10:50 a.m. EST?Use of arbitration to resolve inter-company claims disputes between property-casualty insurance firms and self-insureds jumped nearly 25 percent last year, according to Arbitration Forums, Inc. of Tampa, Fla.
The increase was driven in part by use of Internet transactions, which speed the arbitration process, the company said.
AF, a nonprofit provider of inter-insurance dispute resolution services, resolved nearly $1.8 billion in inter-company claims disputes in 2002, up 24.3 percent from 2001, according to D. Kay Smith, chief executive officer of AF.
The number of arbitration filings in 2002 also grew, increasing to nearly 400,000, an 11.3 percent jump from 2001
Ms. Smith said a study found that for every dollar a company spends on inter-company arbitration, the return on investment in 2001 was $20.63.
AF said disputes leading to arbitration typically arise when insurance or self-insured companies believe their insureds are not at fault or if they disagree as to the percentage of liability or the amount of damages.
Ms. Smith said more than 80 percent of inter-company arbitration disputes involve auto collisions.
"Insurance companies and self-insureds are saving an increasing number of expense dollars by choosing arbitration over litigation as the means of resolving property and casualty claims," she said.
Smith noted that the increase in arbitration filings could be attributed, in part, to the ease of use of the Internet and e-mail to further speed the arbitration process. The company said its new E-Speed Filing Program at AF offers high-speed electronic filing for small-dollar auto liability and damage disputes.
New Web-based training programs also are helping a growing number of subrogation professionals become more aware of how to use arbitration effectively and enhance their recoveries, she observed.
"The heightened company focus on saving expense dollars coupled with the ease of electronic filing and an increased understanding of the benefits of arbitration programs should generate even more growth in the future," said Smith.
Founded in 1943, AF has a membership of more than 3,000 insurers and self-insureds nationwide.
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