In response to the twin catastrophes of Hurricanes Katrina and Rita, the American Arbitration Association (AAA), a provider of conflict management and dispute resolution services, has established a new Disaster Recovery Claims Resolution Services program to use mediation to resolve insurance claim disputes between homeowners and businesses and their insurance carriers.
The program reportedly saves not only money but also time – the most valuable commodity for all involved after disasters like Katrina and Rita.
AAA Senior Vice President India Johnson, based in Atlanta, visited the disaster zone in Louisiana and Mississippi this last week to offer the organization’s services to help resolve disputes regarding insurance settlements for storm damage-related claims. “Mediation offers the most direct way for homeowners to resolve their insurance claims and move on with rebuilding their lives,” said Johnson. “It streamlines a process that can take months or years in litigation and will help put money in the hands of the individuals who will rebuild the Gulf Coast.”
Under the new AAA program, the insured’s only costs would be to gather evidence to present to their insurance carrier during mediation. The insurer pays all filing fees and compensation for the mediator — set at a low rate, as little as $300 per case for homeowner disputes and $350 per case for business disputes, to give carriers an incentive to mediate.
AAA has previously established a disaster-specific claim program in cooperation with the Florida Department of Insurance after Hurricane Andrew in 1992. In the year following Hurricane Andrew, the AAA handled more than 1,900 cases with a 92 percent settlement rate. Through 1996, the AAA handled approximately 2,400 claims.
During the 1990s, the AAA also consulted with state departments of insurance to assist survivors of Hurricane Iniki in Hawaii in 1992, the Northridge earthquake in California in 1994, and the Grand Forks, North Dakota flood of 1997.
William Slate II, AAA president and CEO, said the new program demonstrates the AAA’s ability to meet the critical need for dispute resolution services identified in the aftermath of the Gulf Coast hurricanes.
“The American Arbitration Association has the deepest and most extensive experience in the nation in delivering conflict management services to victims of natural disasters, whether caused by hurricanes in the South or earthquakes in the West,” said Slate. “We have worked closely with state agencies to develop programs that address post-disaster claims and are pleased that recent Katrina-related legislation introduced in the U.S. Senate recognizes the value of these services.”
The Disaster Recovery Claims Resolution Services process is reportedly simple and straightforward. All homeowner claims after a disaster, and all business claims up to $75,000, are eligible for the new AAA program.
An insurance carrier with a disputed post-disaster claim will file the case with the AAA using a simple one-page form. A mediator will be appointed from a panel of several hundred AAA neutrals who have agreed to discount their normal rates to assist with the disaster claims program. Both parties will then be contacted to schedule a mediation session — which can be in-person or by telephone.
If a settlement does not result from the initial two-hour mediation conference, the parties may agree to schedule an additional mediation session (for a modest fee, again paid by the insurance carrier) to try to finalize an agreement.
If there is still an impasse, the parties retain their full legal rights to proceed to arbitration, also through the AAA, or litigation if necessary.
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