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.

1. Landscape of
Settlement
 ADR in the Insurance Industry
 Deborah Masucci

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