Download Mediating Insurance Disputes - David Curran

MII Workshop
Mediating Insurance Disputes
14th October 2016
David Curran
Partner – Flynn O’Driscoll
ContactUs
Us
Contact
David Curran
Partner
Our Dublin office:
1 Grants Row,
Lower Mount Street,
E: [email protected]
P: 01 6424265
Dublin 2,
Ireland
Phone: +353 1 6424220
Fax: +353 1 6424220
www.fod.ie
Pennywise or Pound Foolish?
• Insurance disputes lend themselves to mediation. Prime
candidates.
• Complex policy wording/ coverage and economic issues
not best suited for litigation.
• Settlements can be more comprehensive and creative
compared to the black or white litigation outcome.
• It can assist in the reduction of costs, resources and time.
Cap on litigation expenses.
www.fod.ie
Why not?
• Reluctance and ignorance of the process and outcomes.
A clear roadmap of what is hoped to be achieved and
what is hoped to be avoided. Insurers need to buy in to
the process and see a gain, even if only costs
containment.
• Mediation is predetermined to produce a payment to a
policyholder. Payment expectation.
• Process fruitless.
• Sign of weakness.
www.fod.ie
What type of disputes?
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Coverage analysis/refusal
Indemnity payment levels
Professional Indemnity Policy
Building cover Domestic/ Commercial
Motor private/fleet
D&O cover
Almost any type of policy written in Ireland save where there
is multiple insurers on cover. Tower insurance/excess layers.
www.fod.ie
Key elements to insurer mediation
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Timing. Exhaust all internal complaint issues/challenges with the insurer first.
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Consider mediation as opposed to arbitration as is normally allowed for in the
policy. Understand the reluctance and seek to address same. Outline benefits
to all parties.
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Allows for an open and frank exchange of positions and to clearly put forward
complex policy considerations in a non-adversarial arena. Will allow all sides to
air their positions and provides an ability to revaluate based hearing each
other’s arguments. Think of Murphy ’s Law!
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No case so strong that it can’t be lost or so weak that it can’t be won!
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Flexibility of approach encouraged, if wrong or partially wrong, a changed
position can be adopted.
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Complex issues teased out. Such issues maybe not suitable for the costly
court process and the binary outcome of such litigation. No policy is every fully
watertight.
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Costs/benefit analysis.
www.fod.ie
What about Consumer Protection Code
2016 (and preceding legislation)
• 90% of all policyholders are categorised as consumer as
per the definition of a consumer contained in CPC. A
consumer is a person or entity with an annual turnover of
€3m or less. Chapter 7 of the code would apply. Dealing
with claims. Chapter 2 of the code in dealing with the
customer fairly.
• Treating their interests equal to the insurer.
• The integrity of the market.
• Dealing with matters with due care, skill and diligence.
www.fod.ie
Effective Insurance mediation:
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Identity the nature of the dispute and establish if mediation is suited. Is
there a difference in quantum of settlement only?
Would policy cover dispute lend itself to mediation? What about vague
terms being relied upon? Could allow a resolution and an opportunity for
insurer to amend terms of policy.
Identify positive outcomes for all parties, irrespective of result. Even if
someone paying out or taking a lessor figure, identify the win on all sides.
Choice of mediator? One or two? Lawyer and underwriter/ senior
insurance broker. Should there be a battle over the choice of mediator or
consensus.
What relevant expertise is required? Lawyer or insurance background or
both.
A must to have a mediator with expert insurance knowledge. They can
guide, question and prod/challenge from an expert insurance angle.
www.fod.ie
The process
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No correct or incorrect way. This is limited only by all
participants and their creativity in generating a process suitable
to hear the dispute.
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Co-mediation.
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Pre-mediation position papers.
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Plenary session and then singular sessions with mediator.
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Mediation binding or non-binding?
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Likely hazards.
www.fod.ie
The process
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Avoiding a non-committed party from simply seeing out their policy
obligations.
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Costs of speedier resolution outweigh benefits.
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Over lawyering the process. Is there actually a place for a barrister to be
acting for a party to a mediation?
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Undue delay.
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One party embarking on informal discovery.
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Mediation proposed at wrong time.
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Non client centric. Commercial in outlook.
www.fod.ie
Examples of success
a)
b)
Cover challenge on refusal of claim under a commercial property
policy for a fire. Issue one of validity of costs being claimed.
Arbitration stayed to allow for mediation.
Subrogation action mediated on level of quantum. Both sides
realised in mediation that position not as strong as they thought.
Failures
a) Settlements can be more comprehensive and creative compared
to the black or white litigation outcome.
b) It can assist in the reduction of costs, resources and time. Cap on
litigation expenses.
www.fod.ie