Dispute Resolution
Dispute Resolution is a process used to resolve disagreements or conflicts between two or more parties. In the context of insurance, it refers to the methods and procedures used to settle disputes between insurance companies and policyholders or between two insurers.
What is a Dispute Resolution in Insurance?
In insurance, disputes can arise for various reasons, such as disagreements over claim amounts, coverage issues, or policy terms. Dispute resolution in insurance aims to provide a fair and efficient way to resolve these conflicts without going to court, which can be time-consuming and expensive.
For example, if a policyholder files a claim for damages after a car accident, but the insurance company believes the claim amount is too high, a dispute may occur. The dispute resolution process helps both parties reach an agreement without resorting to legal action.
Insurance companies or brokers, like Gerrards, have a structured dispute resolution process to handle complaints and resolve disputes efficiently. Here is an example of such a process used by New Zealand’s largest insurers:
Step 1: Making a Complaint
- Let the insurance company know your concerns.
- Select your insurance brand from the options provided to find out how to contact them directly.
- They will acknowledge your complaint within five business days.
Step 2: Management Review
- If you can’t reach a resolution with the initial contact, your complaint will be referred to a manager.
- The goal is to investigate and resolve your complaint within two weeks. If not possible, they will update you on the progress within ten business days.
Step 3: Complaints Resolution Officer
- If the issue remains unresolved after speaking with a manager, your case will be escalated to a Complaints Resolution Officer for review.
Step 4: External Review
- If the complaint is still not resolved, the insurance company will advise you in writing.
- You can then refer the matter to the Insurance & Financial Services Ombudsman (IFSO) Scheme, an independent authority that provides an impartial investigation and free service.
The IFSO can be contacted via phone at 0800 888 202, email at info@ifso.nz, or through their website at www.ifso.nz.
Key Components of Dispute Resolution
There are three key components of dispute resolution in insurance:
Communication: Open and honest communication between the policyholder and the insurance company is essential. Both parties should share all relevant information and documentation related to the dispute.
Negotiation: This involves discussions between the policyholder and the insurer to try and reach a mutually agreeable solution. Negotiation is often the first step in the dispute resolution process.
Mediation or Arbitration: If negotiation fails, the parties may turn to mediation or arbitration. These are formal processes where an independent third party helps resolve the dispute.
Types of Dispute Resolution Covered
There are several types of dispute resolution methods commonly used in the insurance industry:
Negotiation
A direct discussion between the policyholder and the insurance company to reach a settlement. It is the simplest and least formal method.
Mediation
An independent mediator helps both parties communicate and find a mutually acceptable solution. The mediator does not make a decision but facilitates the discussion.
Arbitration
A more formal process where an arbitrator (or a panel of arbitrators) listens to both sides and makes a binding decision. Arbitration is less formal than court but more structured than mediation.
Litigation
When all other methods fail, the dispute may go to court. This is the most formal and often the most expensive and time-consuming method.
How Insurance Covers Dispute Resolutions
Insurance policies often include provisions for dispute resolution to ensure that disagreements are handled fairly and efficiently. Here are some ways insurance covers dispute resolutions:
Policy Provisions: Many insurance policies have specific clauses that outline the process for resolving disputes. These clauses may specify the use of mediation or arbitration before litigation can be pursued.
Legal Expense Coverage: Some insurance policies include coverage for legal expenses, which can help pay for the costs associated with dispute resolution, such as hiring a mediator or arbitrator.
Claims Handling: Insurance companies have dedicated claims departments that handle disputes. These departments are trained to manage conflicts and work towards a resolution that satisfies both parties.
