On 16th July 2009 Teceris and CEDR hosted a roundtable of experts from the insurance and legal sectors to debate the industry’s attitudes towards alternative dispute resolution (ADR), and mediation in particular.
It is 10 years since the government introduced the Civil Procedure Rules, following Lord Woolf’s recommendations. These rules advocated the greater use of ADR in the settlement of legal disputes, and mediation has developed as the primary ADR process.
Leading industry figures addressed key issues surrounding mediation, impacting insurers, lawyers and customers. They also offered insight into the merits and disadvantages of implementing a mediation strategy; the importance of maintaining regular dialogue within the sector to share experiences and best practice; training; potential abuse of the process; and the potential evolution of the process to meet the changing dynamics of the marketplace.
The panel was chaired by Lord Woolf and featured John Davey (RSA), Alan Hunter (Zurich), John Bell (Aon), Paul Redington (Aviva), Richard Sands (Mitsui Sumitomo Insurance Group), Paul Fox (XL), Colin Masson (Beazley), Simon Gildener (Howden), Alex Oddy (Herbert Smith), Kent Chaplin (Lloyd’s of London), Phil Heron (Teceris), Gregory Hunt and Mike Holland (CEDR).
It was established at the outset that members of the panel see mediation as making a positive contribution to the settlement of claims. Generally however, they admitted that no structured approach exists amongst insurers to introduce it into the settlement process. Lord Woolf challenged the panel to answer why this is the case.
It was suggested that a consensus should be agreed amongst insurers for the early introduction of mediation and that, as organisations, they possess enough weight to realise this.
Paul Fox, UK head of claims at XL expressed the view that, while organisations support mediation it can be frustrating because often, mediation isn’t introduced until the latter stage of the litigation timeline when the majority of costs have already been incurred, This means that the benefit of savings aren’t as great.
It was discussed that this is sometimes predicated by a lawyer-led approach and Colin Masson, speciality claims manager at Beazley elaborated, commenting that lawyers can often find it difficult to push for mediation until they have every piece of information required to settle a dispute. Masson went on to say “Sometimes, you just need to do it – put your neck on the line.”
Simon Gildener, legal counsel, Howden, agreed: “Even if it’s ultimately the wrong decision, people need to be encouraged to just make a decision regarding mediation.”
In order to ensure mediation is given appropriate consideration, Kent Chaplin, head of claims at Lloyd’s of London, argued that insurers should take the lead rather than lawyers, adding: “Bringing a dispute to a resolution as quickly as possible should be the goal.”
Focusing further on the insurer’s role, Fox said: “The claims manager needs to have control of the claim, and the legal representative should have a clear role, which is to provide expertise to the process.”
Richard Sands, professional indemnity claims manager Mitsui Sumitomo Insurance Group commented: “It wasn’t just about mediation and following a defined process. If parties are prepared to negotiate they could achieve satisfactory settlements provided each of the parties had the sufficient level of authority.”
John Davey, technical manager, Specialist & Large Claims at RSA added: “Mediation can be useful in resolving specific elements of a dispute, discussing issues around the table and narrowing areas of contention. Nevertheless we were dealing with what still remains a fundamentally adversarial process.”
In order to ensure a less adversarial approach and to implement cultural change, training and education can play pivotal roles and Mike Holland, consultant at CEDR, mentioned that the industry needs to improve the training provided.
Focusing on the recession as a backdrop, Paul Redington, claims manager (property), technical claims at Aviva, said: “The recession shouldn’t be used as an excuse not to provide training – it should be seen as an investment.”
Alan Hunter, technical claims manager from Zurich sounded a note of caution as to how readily such measures could be implemented and controlled within large organisations but acknowledged that: “While some structural issues exist which make it difficult, these are mainly management and executive issues which can be overcome.”
John Bell, head of claims from Aon, also added: “Just because an organisation is big, it doesn’t mean you can’t change its approach.”
Holland said: “I’m not sure that companies should implement a policy where mediation should be considered for each individual case because mediation is meant to be flexible. The problem with policies is they tend to become inflexible.”
Alex Oddy, partner at Herbert Smith LLP, commented: “The way in which ADR is organised, in a systematic or ad hoc way, is driven from within and there is a perception that organisations outside the insurance industry are more joined up in this sense. It is also important to remember that the diversity of issues faced by each individual organisation means that one strategy won’t fit all.”
Phil Heron suggested that the diversity of claims themselves meant that perhaps a multi facetted approach was required. The demands of third party personal injury claims need to be distinguished from subrogated property claims and raised the question as to what role mediation could play in the settlement of coverage disputes between the insured and insurer. He also posed the question of whether there was scope for introducing a mediation condition in policies in order to focus the minds of the parties.
It was suggested that some will go through the motions of mediation as a means of gauging the strength of the other party’s case before pursuing litigation. Gildener commented: “Going through the motions for contractual reasons isn’t desirable. In recent years, mediation seems to be increasingly used in the wrong way – for game playing.”
Another abuse of the process was the manner in which some parties attend mediation without the genuine intention of reaching a settlement but merely to accommodate the direction of the courts and avoid cost penalties. But while these hurdles exist it was felt that as the medium became more widely used they were becoming less significant.
Attitudes towards and the use of mediation are constantly evolving and it was agreed that the way forward is to share best practice.
Paul Fox, UK head of claims from XL, commented: “I’m keen to see more communication on this, we don’t seem to talk as much as we should within the industry which is leading to a potential waste of money.”
Lord Woolf summarised by saying it is important to the reputation of the industry that mediation is pursued in the appropriate manner. In order to ensure this happens, a culture needs to be distilled within organisations through certain methods such as training.
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Notes to Editors:
Teceris
is a loss adjusting practice that responds to the increasing demand in the market place for specialist technical skills in the handling of commercial and major loss property and liability claims, plus the management of corporate accounts in the United Kingdom and globally. Teceris operates as a consultancy based practice and employs high profile market leading adjusters.
The Capita Group Plc
is the UK’s leading provider of BPO and integrated professional support service solutions. With 36,000 people at more than 300 sites, including 59 business centres across the UK, Ireland, the Channel Islands and India, the Group uses its expertise, infrastructure and scale benefits to transform its client’s services, driving down costs and adding value. Capita is quoted on the London Stock Exchange (CPI.L), and is a constituent of the FTSE100 with revenues for 2008 of £2,441 million.
Further information on The Capita Group Plc can be found at: http://www.capita.co.uk
About CEDR
The Centre for Effective Dispute Resolution is the leader in the development of neutral-assisted dispute resolution. It is a non-profit organisation and its mission is to encourage and develop cost effective dispute prevention and dispute resolution in commercial and public sector disputes and in civil litigation. CEDR operates in the UK and internationally and has been instrumental in helping to bring mediation into the heart of business practice and into the judicial system. CEDR Mediator Accreditation is recognised as an international standard.
www.cedr.com