Landscape of Settlement

ADR in the Insurance IndustryDeborah Masucci

The content of this presentation represents the personal reflections of Deborah Masucci regarding her experience in the insurance industry. Deborah is not expressing or representing the views of AIG.

Goals for Today’s Discussion

Insurance Industry Use of ADR

Why is ADR so popular in the Insurance Industry

ADR at AIG

Insurance Industry is the Largest Consumer of ADR Services

Disaster RecoveryCoverage DisputesCollectively Bargained ADR (Workers Comp)Subrogation (loss shifting)ReinsuranceCorporate LitigationEmployee Dispute Resolution

Goal of the Insurance Professional

Close a file at the right priceNegotiate for the best resultsRetain insured as customerManage cost per file

Why ADR?Alternate to Litigation80-90% of all lawsuits settle through ADRApplies across all business lines

Why Should Companies Use ADR

Control Legal SpendDecrease Claim DurationIndemnity SavingsControl Over Process and OutcomeAvoid Class Actions

Studies Show ADR WorksResolution 2½ years earlier

$114,000 savings per claim

$670,000 savings for severe injury claims

$32,000 savings from lower legal expenses

$211,000 savings on legal expenses for severe injury cases

2011 Cornell, CPR, Pepperdine Study on Corporate Use of

ADRShift to appropriate dispute resolution and away

from default away from litigationADR expanded to include open door policies and

partnering on construction projectsMove away from always litigate to litigate when

appropriate, otherwise use ADR75% ADR triggered by contract; 71% triggered

by corporate policy to save time and money

ADR at AIGEstablished Office of Dispute Resolution in 2003Collect data on mediators and arbitrators

Provide ADR training

Provide information and analysis regarding ADR

Consulted with Businesses

Office of Dispute Resolution

Mission:Provide Strategic and Tactical support to use ADR

more strategically and effectively within the claims resolution process to reduce legal expenses and indemnity payout

Provide Resources and TrainingIdentify and Implement Strategies to Use

ADR More EffectivelySupport Negotiation by Claims Professionals

Mediator Effectiveness Prepared Organized Neutral Actively Worked With the Parties Strong Negotiating Skills Reality Testing Advocate for Settlement Post Mediation

Training ProgramsPurpose of Training

Increase Awareness Strategic Focus Special Skills New ADR Horizons Elevate Expectations

Types of Training ADR Training Modules Mediate to Advantage WebBased Mediation Advocacy

ADR Training Modules:Training modules make it possible to learn all of this in

enjoyable, practical short sessions… THE LANDSCAPE OF SETTLEMENT BASICS OF MEDIATION BASICS OF GOOD INSURANCE NEGOTIATION AND SETTLEMENT PSYCHOLOGY OF EVALUATION ADVANCED NEGOTIATION FOR EXPERIENCED PROFESSIONALS DEALING WITH DIFFICULT SITUATIONS PSYCHOLOGY OF PERSUASION RISK ANALYSIS APPROACHES TO NEGOTIATION: COOPERATION AND COMPETITION ADR TOOLS TO RESOLVE INSURANCE CLAIMS

ADR Resources ADR page to Litigation Management WebsiteADR Audit QuestionnaireKeep apprised of case law or statutes

Florida requirement to affirm settlement authoritySpecialized Programs

Arbitration Forums Hurricane Dispute Resolution Programs Kansas Alternative Mediation Program List of Florida Insurance Approved Mediators

ADR Advantages InsuredsPreserve relationships

Shorten duration file is open

Allow parties to control process and settlement

Manage premiums

Questions?Mediation is best used strategically when the parties have sufficient

information to evaluate and assess the settlement value

Deborah MasucciMasucci Dispute Management and Resolution Services

Arbitrator, Mediator and Counseldm@debmasucciadr.com

Chair of the Board for the International Mediation InstituteDeborah.masucci@imimediation.org