Five Tips for Effective Insurance Mediations

Insurance subject matters had always been multifaceted—and then there was COVID-19. As a tool, alternative dispute resolution (ADR) is more effective than ever in the strategic settlement of cases. There is a psychology to negotiating. Using advanced listening skills to discern human condition to influence a settlement is key to navigating the emotional turbulence that can occur at mediation. Negotiating at mediation, whether virtually or in person should accommodate the parties’ need to be heard. The chosen format of participation for any mediation should reflect a consideration of party preference, damages severity, emotional factors and risk based on the damages—visible and invisible.

Mediators are the shepherds to the dispute resolution process and they are responsible for setting the stage for the parties to find areas where compromise is possible.  Patience is key for identifying the underlying interests, not always readily articulated. Insurance related cases can have layers to them, sometimes causing multiparty mediations. The mediator has the (sometimes arduous) task of sorting the interests and issues in segments, to ensure all possible issues and options are explored.

Insurance-focused matters with a personal injury component can add an emotional dimension to the negotiations and cause the rounds to take longer, so that the mediator can gain the trust of the parties and later influence settlement. Claims professionals depend on the collaborative partnership with defense counsel and the mediator to enable a progressive negotiation environment, along with counsel on the plaintiff side. Seeing these interdependent relationships as pieces to the resolution puzzle can bring all participants into a mindset of collaboration versus adversarial posturing.

Insurance touches everything, so it is possible that almost any mediation worthy case could be insurance adjacent. A tip: Most seasoned commercial claims professionals are very sophisticated negotiators. They are usually not depending on the mediator to guide them on general process, unless they ask. The role of the mediator, as the only person in every room during the process, is to exercise discernment around what is possible. An effective mediator can use shared information, timed communications and negotiation points to influence, but must always be respectful of the self-determination canon. The mediator is not always privy to the nuances that exist regarding policy structure, internal matters and negotiation strategy. The mediator is there to facilitate. The stage of a case is the determinant of information available to be shared in a mediation and plays a part in the negotiation strategy.

Post-COVID mediation continues to be an evolving process as newer subject matter areas arise. As the dispute resolution landscape changes, the solutions will follow. Hearings should be constructed with the requests, needs, and interests of the parties in mind. Here are five practical tips with solutions to consider when navigating insurance-related negotiations in a mediation context:

1. Insurance matters have nuances. Choose a mediator with appropriate subject matter expertise and leverage the mediator to assist in crafting and delivering tough messages.
2. Be intentional about considering and selecting diverse mediators to manage cultural competencies and other nuances.
3. Communicate early and often (as appropriate) with the adjuster and make every effort to have them present at the mediation table, as a show of good will, especially in complex matters.
4. In complex cases, consider using two mediators in co-mediation (no additional cost), as a strategy to leverage mediator skill sets, backgrounds and perspectives or to manage the “mediation inside the mediation.”
5. If no resolution is reached, adjourn the mediation rather than calling impasse. The parties will interpret this as an opening to continue negotiating. This opportunity to continue negotiating after mediation always exists, but the terminology used, can influence the parties’ dispositions.