Looking F O R W A R D: The ADR Option To Resolve Commercial Insurance Coverage Disputes

NAM (National Arbitration and Mediation)
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NAM (National Arbitration and Mediation)

New York residents have been asked to “P A U S E.” Across the Nation there is an all-out effort to “Slow the Roll.” Our scientist-leaders have implored us to “social distance.” The historic and courageous acts of healthcare professionals and first responders, undertaken in Herculean proportions, are beyond description. Markets are strained. Business relationships are stressed.

Social distancing has resulted in the “Great Interruption” in the administration of justice and the courts. We observe a judicial system, superior to any in the world, that endeavors to address existing commercial disputes – – never mind those spawned by the pandemic. What will surely become a “surge workload” in the resolution of commercial disputes requires a clarion call for the harnessing of alternative dispute resolution mechanisms especially in the context of the so-called “New Normal.” 

This bulletin highlights the unique potential for the use of ADR, rather than traditional litigation, to resolve at least one segment of the expected “work-load surge,” namely, insurance coverage disputes between policyholders and insurers – – for example, those under primary and excess commercial general liability policies. The use of ADR respecting insurance related matters is not new. We are mindful how the ADR/insurance relationship has served to produce cost effective, timely and thoughtful resolutions in countless and varied insurance disputes. The example that immediately comes to mind is the role arbitration has played in successfully resolving complex disputes in the domestic and international reinsurance markets. ADR, as well, has played a core-essential role in the resolution of no-fault cases. This is also true in coverage disputes between insurers and disputes involving agency relationships. Further, subrogation, uninsured motorists, healthcare benefits, and warranty claims are yet other examples of ADR successfully intersecting with insurance.

Notwithstanding these successes, the use of ADR to resolve insurance coverage disputes in the commercial liability arena has been the exception. For example, throughout notable and expensive insurance coverage litigations – – ranging from massive environmental and intellectual property insurance coverage suits to coverage suits involving antitrust, privacy, medical device and mass tort liabilities – – ADR alternatives were infrequently employed. 

So, the question is this: does the “New Normal” present a renewed and heightened opportunity to employ ADR to resolve insurance coverage disputes? The answer, yes. Thus, looking “F O R W A R D” we are reminded that ADR options may now be viewed as “options and processes of commercial need” as we, together, manage the “Great Interruption” and seek thorough and swift resolution of insurance coverage disputes. Let's briefly examine the F O R W A R D looking features offered by ADR. 

Fast and swift resolution is the central characteristic of a confidential, effective alternative means to resolve insurance disputes. 

Options that are available under the ADR umbrella include, for example: Early Neutral Evaluations, Mediation, Arbitration, and even Mini-Trials where the disputing parties under each option can select the timing and design the option best suited for the dispute at hand. 

Resource conservation; ADR can preserve human and financial resources that will be needed on the rebound from the stresses experienced in financial markets as the New Normal proceeds. 

Willingness to compromise in the context of mediation and a willingness to earnestly engage in a self-designed arbitration are mission critical to any successful ADR. Leadership in the “New Normal” to resolve commercial insurance disputes will likely include efforts to transition the disputes “away from the courtroom table to the board room table,” and ADR can more readily assist in creating or determining business solutions for these disputes. A

A Avoidance of prolonged, expensive litigation is the watchword — the credo of well implemented ADR mechanism. In the “New Normal,” litigation as the means of resolving insurance coverage disputes would be like driving a Mack Truck at the Indy 500 when the faster, more nimble and efficient modern vehicle is ADR. Isn't this exactly what our technology driven age expects of disputants as they look F O R W A R D avoiding the distraction that is litigation; and, instead, engaging in an ADR option for swift, business driven resolution?

Responsiveness is another key characteristic of the ADR option; for example, responsiveness in setting a complete and flexible resolution schedule; responsiveness in quickly identifying the few core issues that generally drive an insurance coverage suit and responsiveness in tailoring a confidential, well-planned and intensely focused ADR option that can address all or a portion of the dispute. 

Depth of knowledge is yet another advantage of ADR. Aside from selecting the ADR option as mentioned above, having the ADR led by a facilitator or arbitrator possessing a depth of knowledge regarding the complexities of the insurance contract will expedite resolution and add merit to the solution reached. 

ADR as a F O R W A R D looking option to resolve insurance disputes in the “New Normal” offers viable options as disputing parties avoid the straight-up press to commence suit and, perhaps, regret having done so many costly dollars later on.

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NAM (National Arbitration and Mediation)
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