Commercial mediation users' perspectives
Recent research from Victoria University in partnership with Resolution Institute explored users’ perspectives on commercial mediation in New Zealand, looking specifically at users in the insurance industry. The research builds on previous studies, firstly with commercial mediators on the nature of private commercial mediation, and then examining the perspectives of lawyers, the ‘gatekeepers’ of commercial mediation.
Resolution Institute / Victoria University of Wellington
Users of Commercial Mediation in New Zealand – Insurance Industry Report: Summary
Dr Grant Morris (Project leader, researcher and report editor)
Freya McKechnie (Project researcher and report writer)
The results of this survey provide an understanding of users’ perspectives on mediation. The respondents reported a good knowledge of mediation. They also indicated that the insurance industry as a whole is aware of mediation and supports the use of it. Users report they are using mediation often and believe that it is well utilised in the insurance sector. However, most estimate that the organisations they work for use mediation less than 25 times in any given year. Respondents’ main reason for using mediation is its cost-effectiveness. Respondents’ main reason for not using mediation is the other party’s unwillingness. This indicates the party on the other side of a dispute may be a barrier to using mediation. Respondents also noted that the other party having a weak case or unrealistic expectations were reasons not to use mediation. Mediation is used in the insurance industry for various types of disputes: between the insurer and the insured, between multiple insurance companies, between the insurer and an employee and between the insurer and a third party claiming against the insured.
Users seem largely satisfied with mediations they have been involved in and reported high success rates. They clearly appreciate having the option to mediate, however the vast majority of users are against mediation being mandatory. Mediation is usually triggered by external legal advice or by a decision within the company. Most claims managers play a role in selecting a mediator – showing their engagement in the mediation process, and that it is not just lawyers choosing mediators. Those who did not select the mediator indicated that it was their senior managers, in-house lawyers or the insured’s legal advisors who did. The most important attribute to users when selecting a mediator was their track record of previous success. The majority of respondents prefer mediators with a legal background, because of their ability to understand and engage with legal issues during mediation. Users are usually represented by external lawyers during mediation and believe lawyers generally improve the mediation process. Users are more supportive of mediation than lawyers; there may be potential for lawyers to support and suggest mediation more than they currently do.
Respondents were asked for their opinions on what the key challenges facing insurance mediation were. The top response was that the number of suitably experienced and qualified mediators is limited. Another common answer was that mediation becomes simply arguing over the amount of money in dispute, with growing expectations that insurers will usually pay up to settle disputes. Respondents were also asked how the use of insurance mediation could be encouraged or increased in New Zealand. Many believe that mediation is already used extensively and well utilised in the insurance industry. Respondents suggested that promotion of the benefits of mediation could be helpful to increase awareness and in turn increase use of mediation.