Insurance Arbitration and Mediation

Insurance disputes are often at play in many of the mediations and arbitrations we conduct, either directly at issue or underlying other claims. Many of the mediators and arbitrators on The Mediation Group’s roster have decades of experience litigating, judging, arbitrating, or mediating messy “coverage” questions and can assist parties and their counsel in sorting out the complex thicket that otherwise could impede a satisfactory resolution.

In instances when an insurance dispute stands in the way and requires a resolution for which mediation appears inappropriate, our arbitrators can conduct a tailor-made hearing to decide the issues in dispute.

Among the cases in which the dispute between the insured and the insurer is the central issue, we often see disputes over disability or life insurance benefits as well as claims for coverage from fire and other casualty insurance losses. The key advantage of insurance arbitration or mediation is the ability to resolve such disputes quickly with minimal disruption to the parties involved and without resorting to lengthy and costly court proceedings.

It’s important to note that while many insurance contracts may have a clause that designates the American Arbitration Association as the default provider, parties can agree to modify their contract and select an arbitrator from our roster or choose mediation and a mediator of their choice before taking a dispute to arbitration. Similarly, when a contract specifies that disputes must be brought before a three-person arbitration panel, parties, by agreement, may instead opt for either a solo arbitrator or a mediator in lieu of a tripartite panel.

Types of Insurance Disputes

The claims for disability or life insurance benefits can be confusing as the law that applies will depend on how the insured obtained coverage. In many instances, ERISA will apply; in others, state contract law will govern. 

ERISA Disputes

ERISA is a federal statute that structures how disputes are to be resolved mandating that if they are not resolved in its administrative process, the cases will be decided in federal court. Federal courts in turn have developed case law on the standards to be applied and the obligations of insureds and fiduciaries, including the insurance companies that often act as the fiduciaries.

Mediation provides a unique opportunity, either pre-suit or once the suit has been filed, to resolve a dispute with more flexibility and control by the parties than would otherwise be available. Policyholders, their insurers, and both parties’ counsel can meet face to face and consider their arguments about eligibility for benefits, the calculation of retirement or disability benefits, the handling of the claim, or other related matters.

Parties can then negotiate a settlement that likely is not available in Court, which can include an agreement on coverage, a one-time lump sum payment, or reinstatement of benefits.

Disability Claims

Disability claims, whether brought under ERISA or state law, often involve conflicting medical evidence as well as strongly held and differing views of the claimant’s capabilities for work. Governmental and company regulations also set standards for handling claims fairly and expeditiously, and the parties may dispute whether those regulations were properly followed.

Mediation of these cases allows claimants and their counsel to present their views of their medical conditions, supporting documentation, as well as arguments about the insurance company’s procedures. It also allows the fiduciary, usually the insurance company, to present its views of the claimant’s condition, doctors’ reviews, and their views of how each party followed appropriate regulations.

The mediation may be the first time the parties have a chance to meet and speak to each other. With the assistance of a capable and understanding mediator, they and their counsel can then craft resolutions of the dispute that may involve either the resumption of benefits, one lump-sum payment, or reduced payments over time. The process is confidential, less costly than litigation, and leaves control of the result with the parties.

Life Insurance Claims

Litigation of life insurance claims can be difficult and complex, often leaving policyholders who may be dealing with grief, loss, and financial uncertainty feeling overwhelmed and unsure of how to proceed. Whether due to disagreements over the validity of a claim or issues with the payment timeline, these disputes can be challenging to navigate.

Annuity Policy Claims

Closely related to life insurance claims are disputes over annuity policies. The complexity of provisions for contributions by the policyholder, how contributions accumulate over time, choices for distributions for policyholders during their lives, and consequences at death make them ripe for disputes.

Claims can be about the interpretation of these complex provisions as well as whether salespeople, financial advisors, or brokers misrepresented those terms.

Litigation can be particularly expensive, involving multiple parties, experts, and considerable uncertainty about outcomes before a judge and jury. Mediation or arbitration of such claims offers an alternative to litigation that is effective, efficient, and respectful of the complexities of dealing with the legal, financial, and emotional issues of all parties.

Fire and Other Casualty Insurance Disputes

Fire insurance and other casualty insurance claim disputes can often be a source of frustration, confusion, and emotional loss, and the parties involved may disagree on the nature or extent of the damages and what, if any, payment may be due to the policyholder. The highly specialized language of insurance policies can add to the misunderstandings between those making a claim and the insurer. An experienced mediator can help the parties work through the valuation of the loss and any related claims saving the costs and delay of drawn out litigation.

When mediation is not appropriate Massachusetts law provides that policyholders can initiate a “reference” process to decide the amount of the loss. The process usually entails three “referees”, acting much like arbitrators, one each for the policyholder and the insurer, and a third chosen by the other two. TMG arbitrators serve effectively in either role. 

Claims involving Uninsured or Underinsured Motorists

A substantial number of disputes between policyholders and their insurers occur when a driver or passenger is injured by a motorist with no insurance coverage or whose insurance policy limits are insufficient to cover the damage caused. The insured driver or passenger can then turn to the coverage in their own insurance policy to make up the difference to their own Uninsured Coverage.

Massachusetts law calls for such disputes to be arbitrated rather than brought to Court and we provide experienced arbitrators to handle the matters efficiently and impartially.

Whether you are an insurer or a policyholder, insurance mediation and arbitration provide you with an opportunity to reach an outcome that everyone can agree to with fewer emotional and financial costs. Contact us to learn more.

Our Experts Specializing in Civil Disputes