What is alternative dispute resolution in insurance?

Alternative dispute resolution (ADR) in insurance refers to non-court methods for resolving conflicts, primarily through mediation or arbitration. This approach is designed to settle disputes outside of the traditional court system, offering a more streamlined and often less adversarial means of achieving resolution.

Mediation involves a neutral third party who facilitates a conversation between the disputing parties to help them reach a mutually acceptable agreement. Arbitration, on the other hand, involves a neutral third party who listens to both sides and makes a binding decision on the matter. Both methods are generally less formal than court proceedings and can lead to faster resolution of claims.

Choosing ADR methods can also help alleviate the burden on court systems and are often seen as more cost-effective solutions for all parties involved. This is particularly important in the realm of insurance, where prompt claims handling and resolution are crucial for satisfied clients and efficient business operations.