Dear friend,

Here’s a great entry from guest blogger, Paul Moss. Paul is head of claims for QBE’s European operations.

It’s all about how the time has come for the industry to embrace mediation, instead of constantly litigating its way to new legal precedents.

Maybe we’ve heard that view before – but this time something concrete is being done about it. Paul explains all about a new initiative called the International Reinsurance Industry Dispute Resolution Protocol, that I must admit I wasn’t previously aware of.

It looks a really great idea – so I think you should read what Paul has to say.

Over to Paul:

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Litigation has got out of control. As Governor Richard Lamb once cautioned – “No nation in history has ever sued its way to greatness.”

Just to put matters in perspective and taking the America Tort system as an example. Research shows that it spends no less than $80bn a year on direct costs of litigation and insurance premiums and a total of $300bn a year on indirect efforts to avoid liability. Litigation on such a massive scale can only stifle the growth of the US economy. Litigation has caused 47 percent of manufacturers to withdraw products from the market. The threat of litigation has discouraged no less than 25 percent of manufacturers from research. America’s major competitor in the creation of wealth is Japan. In Japan, the ratio of engineers to lawyers is 20 to 1 but in America, it is only 2.5 to 1.

Some argue that litigation has become the conduit for the re-distribution of wealth. Under the tort system only 46 cents in the dollar goes to the claimant. The rest is carved-up between lawyers and associated administrative costs

What’s more, in large business lawsuits, the massive egos of certain leading litigators do not predispose them to quick settlement. They relish the chance to compete in the arena. Indeed, the litigators approach – akin to legal warfare – which in itself, tends to heat up the disputes’ emotional intensity. This makes it even more difficult to settle.

We on the claims side of the house have had to adjust to a rapidly changing environment. We are facing pressures of Regulation & Compliance, over-laid with the Claims Minimum Standards. The claims function now falls under the microscope of the FSA – Sarbanes-Oxley lurks in the shadows

And today, the customer is king. Policyholders rightly seek value added claims services combined with lightening timeframes and processes for the settlement of valid claims. We require to keep “Customer” focused; learn more about using friendly alternative dispute resolution solutions in helping to preserve valuable commercial relationships. Mediation is something which must be added to the Litigation Management Tool Box

Up until recently, the legal profession had become so mesmerised with the stimulation of the courtroom contest, that lawyers had forgotten that they ought to be healers, healers of conflict, healers, not warriors, healers, not hired guns. Don’t get me wrong. There are times when a dispute, coverage issue or other complex claim situation should be resolved through the litigation process. We need judicial guidance. We need legal precedent for future reference, but Arbitration? Some believe that the process has become so devalued that we have to question why we continue to adopt Arbitration as our preferred dispute resolution mechanism.

However, there is a new movement afoot, in part driven from across the Atlantic.

The smart lawyers have already detected that clients believe that there is good reason for a shift in thinking. The smart lawyers recognise a significant change is about to happen. The smart lawyers have sought to re-skill, and train in the art of Mediation.

CEDR (The Centre for Effective Dispute Resolution) is the thought-leader for dispute resolution in Europe and the internationally acclaimed trainer in mediation and conflict management skills. An independent non-profit organisation supported by multinational business and leading professional bodies, CEDR's mission is to encourage and develop mediation and other cost-effective dispute resolution and prevention techniques in commercial and public-sector disputes.

CEDR provides practical training solutions for business people and professionals engaged in mediation and other forms of dispute resolution. To become an Effective Mediator you need to learn new skill-sets – it is imperative that every syndicate or insurance group should have a trained mediation capability built in to the claim function resource.

The International Institute for Conflict Prevention & Resolution, (CPR Institute) is a membership-based non-profit organization that promotes excellence and innovation in public and private dispute resolution, serving as a primary multinational resource for avoidance, management, and resolution of business-related disputes. Mediation Principles for insurance and reinsurance disputes is only one part of an arsenal of materials that CPR has created specifically for the insurance community.

The CPR International Reinsurance Industry Dispute Resolution Protocol is a major step forward to complement and support the need for mediation clauses to be incorporated within treaty wordings.

CEDR & CPR are in the process of working together to produce a training module for insurance and reinsurance professionals who wish to become engaged in mediation

I am very excited about the prospect for changing the way we resolve disputes. Collectively, we can do more than just make a significant shift in thinking – we can start to take action. We will need the buy-in of not just the claim professionals, but underwriters, and wordings specialists as well. We need both commitment, and the contractual mechanism for this to be truly effective.

I am reminded of what Henry Ford once said. “Coming together is a beginning, staying together is progress, working together is success” I am convinced that if we can get London fully engaged, with the US market ready to act; then there is absolutely no reason why we can't go global with this initiative!

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Thanks Paul! That was a breath of fresh air – now let’s get out there and start sorting out our problems man to man – (and maybe cut some of our legal bills down to size).