Reaching a win-win
Recent disasters and the growing number of open insurance claims are creating renewed interest in an alternative to costly litigation in resolving claims disputes: mediation. While claim frequency is down, claim cost is way up – more than five times what it was 20 years ago. Unnecessary and abusive litigation has contributed to growing claim cost in Florida. So can taking these claims to mediation really help?
According to Bruce Blitman, a Certified Mediator, Arbitrator, and Umpire out of Palm Beach Gardens, the answer is yes. We had the pleasure to sit down and chat last week for our latest episode of The Florida Insurance Roundup podcast, which you can listen to here.
“What really makes this process work is that you have all of the decision-makers present at the same time, at the same place, in the same room, much earlier on in the process before all of the time and the money and aggravation have been invested in the case. So there’s a tremendous opportunity to resolve cases when you’re getting to them earlier on in the process,” said Blitman, who has been a certified mediator since 1989.
Blitman is also a proponent of pre-lawsuit mitigation, a process he and I both remembered worked very well through a catastrophe mediation program set-up in Miami-Dade County following Hurricane Andrew.
“There was an enormous amount of claims considered. Not every case was resolved at mediation, but many of them were. And by getting through that vast volume, people were able to get on with their lives much more quickly,” he said. Many insurance companies, he added, became more proactive with mediation going forward.
He and I discussed applying those techniques to Hurricane Michael’s open claims and to future events. After a storm hits, we should consider having immediate mediation on the disputed amount of the claim.
At a recent legislative committee meeting, we heard testimony that almost 40-cents of every dollar involved in a litigated paid claim goes to the plaintiff’s lawyer, not including court fees and the cost of defense counsel. Blitman said such plaintiff contingency fees are typically only 20% to 25% if the claim doesn’t go to litigation. Mediators, he said, are paid hourly, ranging from $150-700 per hour based on the complexity of the case.
The podcast also addressed Florida House Bill 337 which was signed into law last spring and becomes effective on January 1, 2020. By raising the dollar threshold of disputes (from $15,000 to $30,000), it will shift court cases that are now heard in circuit court to be heard instead in county court.
We discussed the impact of having a lot more insurance disputes going into civil court, which generally have more limited resources than circuit courts. In fact, 31 of Florida’s 67 counties only have one county court judge. Many of those counties are in the Florida Panhandle and there is concern of logjams created by the 150,000 Hurricane Michael claims.
LMA Newsletter of 11-4-19
