AF: Value of Inter-Insurance Company Arbitration Filings Rose to Nearly $1.9B in 2004

February 14, 2005

Florida-based Arbitration Forums Inc. (AF), a nonprofit provider of inter-insurance dispute resolution services, resolved nearly $1.9 billion in inter-company claims disputes in 2004 – a new record, said D. Kay Smith, chief executive officer of AF.

Disputes leading to arbitration typically arise when insurance or self-insured companies believe their insureds are not at fault or if they disagree as to the percentage of liability or the amount of damages, Smith explained. More than 80 percent of inter-company arbitration disputes involve auto collisions.

At the same time, filings of self-insured companies rose 3.4 percent in 2004 and the number of new signatories to AF programs rose 6.5 percent.

Smith noted that the growing interest in arbitration programs could be attributed, in part, to the reported ease of use of the Internet and e-mail to further speed the arbitration process. The new E-Speed Filing Program at AF offers high-speed electronic filing for small-dollar auto liability and damage disputes.

Later this year, AF will introduce the E-Subro Hub, an electronic clearinghouse that reportedly will significantly speed up the subrogation process and further reduce costs. The web-based subrogation technology will allow thousands of insurers, self-insureds, Third Party Administrators and claims service organizations to streamline the subrogation process and interactively manage both demands and responses.

“Insurance companies and self-insureds are saving an increasing number of expense dollars by choosing arbitration over litigation as the means of resolving property and casualty claims and new technology will generate even more significant savings and efficiencies,” Smith said.

An AF study found that for every dollar a company spent on inter-company arbitration in 2004, the return on investment was $38.44, she said.

“The heightened company focus on saving expense dollars coupled with the ease of electronic filing and an increased understanding of the benefits of arbitration programs should generate even more growth in the future,” Smith added.

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