Arbitration Forums Settled $2.3 Billion in Inter-Insurer Disputes in 2010

A nationwide arbitration service said it resolved claims disputes between insurance companies valued at more than $2.3 billion in 2010 and saved insurers millions of dollars in litigation costs.

Arbitration Forums, Inc. (AF), based in Tampa, Fla., reported that it resolved nearly 500,000 inter-insurance company claims disputes in 2010. In the past five years, AF has resolved nearly five million disputes valued at nearly $23 billion.

According to W. Russ Smith, president and chief executive officer of AF, the not-for-profit’s arbitration services are saving the property/casualty insurance industry more than $700 million in litigation costs annually.

Disputes leading to arbitration typically arise when insurance or self-insured companies believe their insureds are not at fault or due to disagreements over the percentage of liability or the amount of damages, Smith explained. More than 85 percent of inter-company arbitration disputes involve auto collisions.

Smith said that 96 percent of the arbitration filings in 2010 were made electronically — double the percentage of just a few years earlier.

Smith said that arbitration enables insurers to return deductibles to their policyholders faster, which reflects positively on customer service.

“Companies are increasingly focused on controlling their expense dollars, and arbitration offers a proven, cost-effective way of generating those savings while enhancing customer service,” said Smith.

AF is continuing to expand its electronic capabilities. Its electronic subrogation claims service, E-Subro Hub, operated in 23 states during 2010. E-Subro Hub streamlines the process by enabling users to electronically send and receive subrogation demands, attach supporting documents, manage subrogation claims and electronically file inter-company arbitration where necessary.

Founded by the insurance industry in 1943, AF provides resolution and recovery services to its 4,400 members.