Report: Arbitration Resolved Record Number of Inter-Insurer Claims Disputes in 2011

Arbitration Forums, Inc. (AF), the nation’s largest provider of inter-insurance dispute resolution services, resolved nearly 520,000 claims disputes valued at more than $2.4 billion in 2011, a new record, said W. Russ Smith, president and chief executive officer of AF, which has some 4,400 carrier and self-insured members nationwide.

Smith noted that the not-for-profit’s arbitration services are saving the property/casualty insurance industry more than $700 million in litigation costs annually through programs that effectively resolve insurance claims disputes.

He said that nearly 98 percent of the arbitration filings in 2011 were made electronically — more than twice the percentage of just a few years earlier. On an annual basis, AF projects its paperless systems will save more than 49 million sheets of paper weighing nearly 642,000 pounds.

Smith also pointed out 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.

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

In addition, he said that utilization of AF’s E-Subro Hub, an electronic subrogation claims system that increases the productivity and efficiency of the subrogation process, grew by more than 200 percent between 2010 and 2011.

The E-Subro Hub expanded to all 50 states in 2011 and handled subrogation cases valued at more than $1.4 billion. Eight of the 10 largest automobile insurers in the United States have already moved their subrogation process to E-Subro Hub, and a projected 80 percent of the private passenger auto market will be using the system in 2012.

E-Subro Hub significantly 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. AF offers this service at no cost to its members.

Smith noted that current users of E-Subro Hub are reporting that cases are frequently closed within days as opposed to weeks or months as in the past; printing and mailing costs have been eliminated and expenses associated with preparing an arbitration filing have been reduced. E-Subro Hub also enables insurers to return deductibles to their policyholders faster.