Overview

Disputes can arise when a policyholder is not satisfied with the insurance company’s judgment on a claim or when an insurance company is thought to not be upholding its obligations under a policy. Sometimes government regulation creates conflicts between insurers and their policyholders. Also, when an insurer is defending one of its policyholders, it has a financial interest, and resolution of a more complex dispute may depend on agreement on disputed coverage or policy terms.

Mediation versus Litigation

Insurance disputes can be handled either through litigation or mediation. Litigated disputes go to court and are resolved based on legal technicalities, which may strongly favor one side. In litigation, a judge is constrained by law, which may lead to an unnecessarily negative result for one of the parties. Litigation can be more time-consuming and more costly than mediation due to the exercise of extensive discovery requests.

Alternatively, mediation allows the parties to consider the dispute from the vantage point of their actual interests and fashion a resolution that is mutually satisfactory. With a mediator involved, no sides are taken. Equal opportunity is given to each side to express their concerns to help find a fair answer.

Benefits of Mediation

In a trial, the two sides are usually pitted against each other, not favoring a relationship to be fostered once a decision is made. Mediation allows more of a connection and empathy between the parties which encourages positivity and decreases anxiety. When both parties feel comfortable, a satisfactory conclusion is more likely. Mediation allows the parties to explain their perspectives; unlike litigation, where perspectives are just stated. The mediator listens to these viewpoints and facilitates a compromise.

Mediation has increased in popularity and is successful when both parties are determined to settle the dispute.

Mediating Insurance Disputes

Mediation can help solve almost any insurance dispute in a variety of policy categories, such as:

Mediation is voluntary, non-binding and informal. The mediator will make the negotiation as fair and equal as possible, especially since insurance company Claims Representatives are trained for handling claims disputes. Since mediation is non-binding, it is possible to turn away an offer.

Mediators often start with both parties in the same room. If a resolution does not become apparent, the mediator can elect to use a method called caucusing. In caucusing, each party is put into different rooms and the mediator listens to the concerns of each side separately. Caucusing allows the parties the space they may need to develop different agreements until a resolution is close to being found. Then the two parties will reconvene and sort out the rest of the solution until a mutual agreement is reached.

Mediation has increased in popularity and is successful when both parties are determined to settle the dispute. Depending on the complexity of the case, mediations can be concluded within a day or two or after a few sessions. The success rate for mediation is high so your insurance dispute is likely to settle during mediation.