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Important Considerations When Mediating Insurance and Reinsurance Matters

Important Considerations When Mediating Insurance and Reinsurance Matters

Having served as a commercial mediator for the Southern District of New York mediation program for 28 years, I have some thoughts about the use of mediation to resolve insurance and reinsurance disputes. My perspective is also driven by 38 years as an insurance and reinsurance disputes lawyer, who has seen his share of litigation, arbitration, negotiation and commutation.

In court-annexed mediation, the parties are directed by the court or by court rule to mediation whether they like it or not. Compulsory mediation is not the best way to put the parties in a position to settle, but in many court systems, it is the reality. But guess what? We mediators settle a good percentage of these cases in spite of the compulsory nature of the proceeding.

How do we do it? What I do is make sure the lawyers and the party representatives know that I have put aside my client work for the day solely to help the parties try to resolve their case. I explain that I will not be taking a break and I will not be stopping for lunch. I tell them that I will not stop trying to help the parties negotiate a settlement unless and until I believe that further effort is futile.

Notice what I am signaling to the parties. This their negotiation. This is their dispute. I am not the judge. I am not deciding the case. I am there solely to help them find a compromise that resolves the case.

This party negotiation mindset is perfect for insurance and reinsurance disputes. Insurance companies negotiate settlements for a living. Every claim lead and every in-house counsel has negotiated a settlement, a contract, a business divorce or some other dispute. What insurance and reinsurance companies sometimes need is a neutral who can help cut through the noise and aid the parties in focusing on reaching a resolution based on an objective view of the dispute.

The key to a successful mediation is that the mediator remains neutral and gain the trust of both sides. If the mediator shows any favoritism or distain for a side, then the mediation will not be successful. A mediator must listen intently to each party and understand and sympathize with each side’s positions. But a mediator has to be the objective reality check on arguments that are farfetched or unreasonable.

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