Types of Insurance Disputes Resolved

 

Insurance disputes that are eligible for the CPR resolution process are those that arise between insurers issuing commercial lines policies to the same or related insureds. Disputes involving reinsurers are not eligible, although excess insurers who may be brought into the dispute may be invited and elect to participate. Disputes solely involving personal lines policies are not eligible. Other ineligible coverage lines are pollution, environmental, asbestos, and/or other long-term exposures whether or not they involve commercial lines policies. Disputes involving both commercial and personal lines policies are subject to the commitment.

 

The entire resolution process is confidential. Any participating insurer may invite the policyholder to participate, but policyholders are not automatically involved.

 

Insurance Industry Dispute Resolution Commitment

 

A keynote of the CPR program in the insurance discipline is its insurance industry dispute resolution commitment, commonly called the commitment. Those who sign the commitment agree to try to resolve eligible disputes in good faith through unfacilitated negotiations and, if such negotiations are unsuccessful, through mediation according to the CPR program. The procedure also applies to non-signing policyholders and insurers who agree to participate, as well as to disputes not normally included but which the involved parties voluntarily agree to include.

 

The commitment is different from the previously mentioned CPR corporate policy statement on alternatives to litigation, which is a general promise to explore the use of ADR. The commitment spells out the process that those signing have agreed to follow.

 

Procedure

 

The commitment features a two-step procedure. Initially, authorized representatives of the involved insurers negotiate in good faith to resolve the issue without the assistance of a neutral third party. However, if the dispute is not resolved within forty-five days, mediation will take place.

 

Any party that has signed the commitment may issue a notice of negotiation. This notice describes the nature of the dispute and the name, address, and telephone number of the claims executive of the initiating company to whom responses and inquiries should be sent. A copy of the notice is sent to CPR, who may be asked to forward the notice to the other interested parties, including policyholders and excess insurers who are likely to become involved. Those authorized to settle the dispute meet within fifteen days after receiving the negotiation notice and continue to meet as needed.

 

If the dispute is not resolved within forty-five days after the notice is received, any party may issue a notice of mediation to all other parties and to CPR. Parties who have signed the commitment are obligated to participate in the mediation in good faith. However, if there is a conflict between the commitment and contractual dispute resolution provisions, the contract provisions will govern.

 

After a mediation notice is issued, CPR will convene the parties to select a mediator. If agreement is not reached promptly, CPR will submit no less than five mediator candidates with their resumes and hourly rates. If the parties still are not able to agree to a mediator, they will rank the mediators offered by CPR in order of preference. The candidate that is most preferred will be named. Alternately, the parties may select a mediator by themselves or by other means, as long as all those involved in the dispute resolution agree. The mediator's compensation and expenses—as well as the CPR administrative fee—will be shared equally by the parties involved. 

 

The mediation process is non-binding, with the mediator controlling the procedural aspects. No records of meetings are kept, and formal rules of evidence do not apply. At least one representative of each party, who is authorized to resolve the dispute, must attend each mediation session. The mediation process is terminated if a written resolution has not been agreed upon within ninety days of selection of the mediator and one of the parties has given notice of its intention to withdraw. Mediation also is terminated if the mediator concludes that further efforts would not be useful.

 

Despite the procedure, a party may commence legal action or other proceedings in addition to negotiation and/or mediation for statute of limitations or venue reasons, to seek a preliminary injunction or other provisional judicial relief, to avoid irreparable damage, to preserve the status quo, or for any other reason. Signers also may take whatever action is necessary to defend a lawsuit to which it is made a party.

 

Signers

 

Thirty-six insurance companies have agreed to resolve coverage disputes through the CPR negotiation and mediation process. These thirty-six are among the more than 800 corporations in the general business sector that have agreed to explore ADR to resolve disputes. Insurance companies that have signed are Alliance General, Allstate, American Contractors (RRG), AIG, Argonaut, Aegis, Atlantic Mutual, AXA Reinsurance UK, Beazley (Lloyd's Syndicate 623), Chubb, CIGNA, CNA, Commercial Union, Crum & Forster, DPIC/Orion Capital, Fireman's Fund, General Accident, Great American, Hartford Steam Boiler, Hartford, Kemper National, Liberty Mutual, Nationwide, North Pacific/Oregon Automobile, Ohio Casualty, Reliance, Reliance National, Risk Enterprise Management (formerly Home), Royal, Scottsdale, St. Paul, Sumitomo Marine (USA), USF&G, Wausau, Zurich American, and Zurich Reinsurance (UK).

 

Major Disasters

 

In addition to agreeing to use ADR in resolving commercial lines insurance disputes, seventeen insurance companies have agreed to process claims quickly and fairly in the event of a major disaster. The seventeen signers of the CPR future major disaster pledge also have agreed to meet with CPR and other insurers to set up an ADR system to resolve disputes that may arise if a major disaster occurs.

 

Those companies that have signed the CPR future major disaster pledge are Aegis, CIGNA, Crum & Forster, Fireman's Fund, General Accident, Hartford Steam Boiler, Hartford, Kemper National, Liberty Mutual, North Pacific, Oregon Automobile, Reliance National, Silvey, State Farm, St. Paul, Ohio Casualty, and USF&G.

 

Fair Housing Claims Regarding Homeowners Insurance

 

CPR administers the fair housing disputes mediation program, which resolves fair housing claims regarding homeowners insurance. The organization has assembled a national advisory committee with experience in civil rights and insurance issues to assist in identifying neutrals for such disputes.

 

Year 2000 Mediation Program

 

The CPR Year 2000 commitment is designed to address anticipated Y2K business interruptions and disputes. Companies that sign the commitment agree to negotiate and mediate a wide range of anticipated Y2K disputes. Among these are claims relating to Y2K problems by, against, or between insurers that involve insurance policies.

 

The Y2K commitment is similar to the general CPR insurance industry commitment in many, but not all, ways. The CPR Year 2000 commitment requires negotiation and mediation, while the general commitment requires the exploration of negotiation and mediation. There also is a general difference in that the Year 2000 document is prompted by an anticipated event with procedures established in advance.