In recent years, there has been a slow but steady movement for
parties involved in an insurance dispute to choose mediation as a
way of resolving their differences instead of engaging each other
in an expensive, stressful, and time-consuming legal battle in
court or in an arbitration tribunal and ending up with an outcome
they might not be happy with. If you reach an impasse in
negotiations with an insurance company over the settlement of your
insurance claim, you may wish to attempt mediation before jumping
into the courtroom or arbitration proceedings.
Basics of mediation
In mediation, the parties involved in a dispute come to the
negotiating table with a neutral third person (the mediator) who is
trained and experienced to help them come to a mutually
satisfactory solution of their conflict. Mediation is entirely
voluntary. It only happens if both sides request it, and a
settlement of the dispute through mediation is reached only if both
sides agree to it. The mediator does not make decisions or give
opinions. If the parties themselves do not agree to a solution,
they go back to where they left off before mediation.
Benefits of mediation
Greater flexibility and control: Courtroom processes are strict
and rigid. There is a process that parties must adhere to at all
times. In a typical trial, the respective lawyers will present
their respective clients' Opening Statement, followed by
cross-examination of the witnesses and Closing Submissions. Whereas
in a mediation setting, parties are in control and the process is
informal as the purpose is to allow each side to have its say
without the burden of special legal procedures, and without fear
that if they say the wrong thing they can 'lose' in the
Quicker and less expensive: A mediation session usually takes
one day to complete and is less expensive than a typical lawsuit.
The cost of mediation is usually split equally between the parties.
The lawyers also spend less time preparing for a mediation session
as opposed to a full blown trial. Therefore, it is cost
Creative solutions: Parties can explore non-legal remedies and
solutions. Parties can focus their attentions on their needs and
interests rather than on their legal rights and remedies. For
example, in a professional indemnity case involving a dispute
between a house buyer (Claimant) and his property agent
(Respondent), the Claimant requested for a donation to be made in
the Respondent's name to an organisation of her choice as a
term of the settlement.
Confidential: The mediation process is confidential, unlike a
court process which is usually public. This means whatever either
party says or reveals during mediation cannot be used in later
stages of the dispute and there is no media publicity or
Preserves relationships: Mediation can help to preserve
relationships that would likely be destroyed through years of
litigation. Because it is collaborative, rather than adversarial,
commercial relationships can often be saved.
In a public liability case involving a structure which
collapsed and killed a person walking past it, the parents of the
deceased were very aggrieved and demanded for a huge sum of
compensation. The Defendants in that case, namely the event
organiser and builders of the structures, were blaming one another
for the structural defect. During the mediation session, the
Defendants were able to offer condolences to the deceased's
parents and the deceased's parents eventually agreed to settle
at a reasonable amount. On the other hand, the Defendants, who
terminated all their existing contracts with one another, managed
to patch back their relationships and continue to work with each
other on other projects.
Greater compliance: Finally, because it is mutually agreed
upon, compliance with the mediated settlement is generally higher
than with lawsuits as it is a consensual process.
With the myriad and diverse types of disputes within the
insurance industry (insured vs insurer, insurer A vs insurer B), it
is certainly worth considering the merits of referring the disputes
to mediation rather than the adversarial process. In order to
achieve this, dispute resolution clauses within the insurance
policies which typically refer disputes to arbitration should be
re-considered. Underwriters should also consider drafting clauses
to refer disputes to mediation as a first resort. This would
certainly augur well for all the stakeholders in the insurance
First published in the Singapore Mediation Centre's
Newsletter on 4 October 2016.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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