AAI: Arbitration Boosts Efficiency
NU Online News Service, March 11, 9:00 a.m. EST, Atlanta?Property-casualty insurers use of arbitration as an alternative to the tort system can create more efficient and equitable disposition of claims, according to an industry expert speaking on behalf of the Alliance of American Insurers.
David Narigon, senior vice president of Employers Mutual Casualty Co., in Des Moines, Iowa, representing the Downers Grove, Ill., association, made the observation during the National Association of Insurance Commissioners' Consumer Protection Working Group's public hearing on arbitration clauses in contracts. The hearing was held during the Kansas City, Mo.-based association's spring meeting here in Atlanta.
"Arbitration, as well as other forms of alternative dispute resolution, minimizes the costly and time-consuming elements of jury trials, including discovery and trial preparation expenses," said Mr. Narigon.
In this way, he argued, arbitration streamlines the process, saving time and providing all parties involved with more control over the process and eventual outcome. He also explained that p-c insurers use such clauses in auto insurance policies covering physical damage appraisals and to resolve personal injury protection claims.
"The availability of these agreements is beneficial for both policyholders and insurers because they provide an alternative avenue to resolve disputes and are less costly than litigation," Mr. Narigon added.
He said the most prevalent use of arbitration in the p-c insurance industry is probably signatory agreements for binding inter-company arbitration.
"Inter-company arbitration averages about $85 per case including the filing fee, claim adjusters' time, and all other expenses and costs," he said. "Litigation, on the other hand, usually costs thousands of dollars."
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