Improving the Insurer Insured Relationship

This post from Legal Sanity, in which the writer talks about the importance of mutually beneficial business relationships, defined as those in which each side essentially is watching out for the other even more than for itself, caught my attention, although not, I am sure, for the reason the writer intended, who wrote it with an eye toward the subject of business development for lawyers.

It instead registered with me because I have been looking these days for a neutral umpire for an insurance coverage arbitration before the American Arbitration Association, an issue complicated by the fact that, almost like combatants in a civil war, coverage lawyers are almost always predominately in one camp or the other, either generally representing insurers or instead generally representing insureds. This dynamic can make it very difficult to find an experienced insurance coverage lawyer to serve as an arbitrator who is not seen by one side or the other as excessively aligned with the interests of one or the other of these frequently warring camps.

But if, as the Legal Sanity post suggests, the best business relationships are mutually beneficial rather than adversarial, is the insurance regime really best served by a sort of wary, arms length cold war relationship between insureds and insurers? Don’t both, at the end of the day, really have the same fundamental primary goal, namely the lowest amounts of loss possible under insurance programs? And couldn’t an approach aimed at the two sides working together more, rather than more often than not just crossing swords in litigation after the fact, go far toward reducing both insurers’ losses and insureds’ corresponding premiums?

I will give a concrete example. Many commercial insurance programs mandate arbitration of disputes as one of the terms of the policy. But what if they mandated mediation as a first step in any dispute over a denial of coverage, with both sides expected to bring to the mediation the same level of legal representation, preparation and analysis as they would bring to a court proceeding? Isn’t it possible it could end up with better outcomes for both sides, at less expense and with the possible result of a more trusting long term relationship between businesses and insurers, parties who, after all, have been in a closely entangled business relationship for decades and will continue to be so for as far forward as the eye can see?