Deborah Masucci discusses the use of alternative dispute resolution (ADR) in the insurance industry. She explains that the insurance industry is the largest consumer of ADR services, using it for issues like disaster recovery, coverage disputes, and subrogation. ADR is popular in insurance because it provides an alternative to litigation and most lawsuits are settled through ADR. Studies show ADR can result in claims being resolved up to 2.5 years earlier and savings of over $100,000 per claim. At AIG, Masucci established an Office of Dispute Resolution to provide ADR resources, training, and strategic support to more effectively use ADR.
2. The content of this presentation
represents the personal reflections of
Deborah Masucci regarding her
experience in the insurance industry.
Deborah is not expressing or
representing the views of AIG.
3. Goals for Today’s Discussion
Insurance Industry Use of ADR
Why is ADR so popular in the Insurance
Industry
ADR at AIG
4. Insurance Industry is the Largest
Consumer of ADR Services
Disaster Recovery
Coverage Disputes
Collectively Bargained ADR (Workers Comp)
Subrogation (loss shifting)
Reinsurance
Corporate Litigation
Employee Dispute Resolution
5. Goal of the Insurance
Professional
Close a file at the right price
Negotiate for the best results
Retain insured as customer
Manage cost per file
6. Why ADR?
Alternate to Litigation
80-90% of all lawsuits settle through ADR
Applies across all business lines
7. Why Should Companies Use
ADR
Control Legal Spend
Decrease Claim Duration
Indemnity Savings
Control Over Process and Outcome
Avoid Class Actions
8. Studies Show ADR Works
Resolution 2½ years earlier
$114,000 savings per claim
$670,000 savings for severe injury claims
$32,000 savings from lower legal expenses
$211,000 savings on legal expenses for severe injury
cases
9. 2011 Cornell, CPR, Pepperdine
Study on Corporate Use of ADR
Shift to appropriate dispute resolution and away from
default away from litigation
ADR expanded to include open door policies and
partnering on construction projects
Move away from always litigate to litigate when
appropriate, otherwise use ADR
75% ADR triggered by contract; 71% triggered by
corporate policy to save time and money
10. ADR at AIG
Established Office of Dispute Resolution in 2003
Collect data on mediators and arbitrators
Provide ADR training
Provide information and analysis regarding ADR
Consulted with Businesses
11. Office of Dispute Resolution
Mission:
Provide Strategic and Tactical support to use ADR more
strategically and effectively within the claims resolution
process to reduce legal expenses and indemnity payout
Provide Resources and Training
Identify and Implement Strategies to Use ADR
More Effectively
Support Negotiation by Claims Professionals
12. Mediator Effectiveness
Prepared
Organized
Neutral
Actively Worked With the Parties
Strong Negotiating Skills
Reality Testing
Advocate for Settlement Post Mediation
13. Training Programs
Purpose of Training
Increase Awareness
Strategic Focus
Special Skills
New ADR Horizons
Elevate Expectations
Types of Training
ADR Training Modules
Mediate to Advantage
WebBased
Mediation Advocacy
14. ADR Training Modules:
Training modules make it possible to learn all of this in enjoyable,
practical short sessions…
THE LANDSCAPE OF SETTLEMENT
BASICS OF MEDIATION
BASICS OF GOOD INSURANCE NEGOTIATION AND SETTLEMENT
PSYCHOLOGY OF EVALUATION
ADVANCED NEGOTIATION FOR EXPERIENCED PROFESSIONALS
DEALING WITH DIFFICULT SITUATIONS
PSYCHOLOGY OF PERSUASION
RISK ANALYSIS
APPROACHES TO NEGOTIATION: COOPERATION AND COMPETITION
ADR TOOLS TO RESOLVE INSURANCE CLAIMS
15. ADR Resources
ADR page to Litigation Management Website
ADR Audit Questionnaire
Keep apprised of case law or statutes
Florida requirement to affirm settlement authority
Specialized Programs
Arbitration Forums
Hurricane Dispute Resolution Programs
Kansas Alternative Mediation Program
List of Florida Insurance Approved Mediators
16. ADR Advantages Insureds
Preserve relationships
Shorten duration file is open
Allow parties to control process and settlement
Manage premiums
17. Questions?
Mediation is best used strategically when the parties have sufficient
information to evaluate and assess the settlement value
18. Deborah Masucci
Masucci Dispute Management and Resolution Services
Arbitrator, Mediator and Counsel
dm@debmasucciadr.com
Chair of the Board for the International Mediation Institute
Deborah.masucci@imimediation.org