Arbitration Saves Industry Millions In Litigation Costs

In a new record, nearly 520,000 insurance claims disputes valued at more than $2.4 billion were resolved via arbitration in 2011, Arbitration Forums Inc reports.

According to AF, the nation’s largest provider of inter-insurance dispute resolution services, it is 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 disagree over the percentage of liability or the amount of damages.

Over 85 percent of inter-company arbitration disputes involve auto collisions.

W. Russ Smith, president and chief executive officer of AF, said:

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.†

Some 98 percent of the arbitration filings in 2011 were made electronically, via AF’s electronic subrogation claims system known as E-Subro Hub – more than twice the percentage of a few years earlier.

E-Subro Hub expanded to all 50 states in 2011 and handled subrogation cases valued at more than $1.4 billion.

AF noted that eight of the 10 largest auto insurers in the United States have already moved their subrogation process to E-Subro Hub, and it projects that 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.