The continuing recession has created a dilemma for policyholders involved in insurance coverage disputes. The economy has made it critical for policyholders to pursue claims that have been denied by their insurance companies, as the outstanding funds may be essential to cash flow and perhaps even fiscal survival. Moreover, concerns over the financial health of some of the world’s largest insurance conglomerates have resonated with policyholders who are not willing to be patient in exchange for a date with insurance insolvency.
The emphasis on pursuing claims is, however, offset by concerns that insurance coverage disputes can be both protracted and costly to pursue. ADR can be an effective method of insurance coverage dispute resolution for policyholders attempting to pursue claims in an expedited and economical manner, especially in a particularly challenging economic climate.
As an advocate for policyholders, I have found that certain unique characteristics of insurance coverage disputes can make ADR an alluring alternative to traditional litigation in certain circumstances. At the same time, features peculiar to both the arbitration and mediation processes should be recognized and evaluated by any party considering submitting a coverage dispute to ADR.