The Spring 2009 issue of AIRROC Matters is out and available here:
http://www.airroc.org/files/AIRROC_Spring_2009.pdf.
Peter Scarpato (website here), Editor-in-Chief of AIRROC Matters, wrote an interesting article on AIRROC’s new Dispute Resolution Procedure for Small Claims. The procedure is designed to provide a cost-effective alternative to a full-blown reinsurance arbitration for resolving relatively small-dollar reinsurance disputes. Peter’s article, which is highly recommended, appears on page 9 of the newsletter. (Not too long ago, Peter submitted to the Forum an excellent guest post on mediation of reinsurance disputes, introduction to the post available here, and post available here.)
I sense on the part of many some dissatisfaction with certain aspects of reinsurance arbitration practice. One popular complaint is cost — not only the cost of legal services, but arbitrator fees. Tied into cost is time — most reinsurance attorneys and arbitrators charge by the hour, and reinsurance arbitrations can be as lenghty, or nearly as lengthy as court proceedings. In some cases, they are more lengthy.
When the amount at stake is tens or hundreds of millions of dollars, then the cost/value ratio may not be that high, but when the value of the claim goes down, the cost/value ratio tends to go up (even though the costs are lower from a dollars and cents perspective).
What AIRROC (website here) has done is devised an alternative procedure featuring expedited proceedings, a $150 per hour cap on arbitrator fees, and a single arbitrator. The procedure (which, of course, is voluntary) may well provide a useful alternative to a full-blown arbitration for claims whose dollar value is small enough to fall within its scope.
We’d be interested in what others think about the procedure. In addition, we’d be interested in hearing people’s thoughts on whether the procedure might provide a workable blueprint for other industry small-claims procedures.
Tags: AIRROC, AIRROC Dispute Resolution Procedure for Small Claims, Association of Insurance and Reinsurance Run-Off Companies, Peter Scarpato, Reinsurance Arbitrations
