It is nearly always preferable for insurers to attend the mediation as this is likely to increase the prospect of a deal being done on the day,
When a claim is made against a professional who has the benefit of a responding Professional Indemnity Policy, one important aspect to consider is whether a representative of the insurers should attend any mediation arranged by the parties. The same considerations can equally apply to many other types of insured claims.
The context of this is that the solicitors acting for the insured defendant to the claim may not have confirmed to the claimant whether the insured has the backing of insurance cover. In most cases, claimants are not entitled to this information, and confirming the existence of such cover may only serve to encourage the claimant that the claim is worth pursuing. Absent such confirmation, the claimant will need to consider the defendant's likelihood of being able to pay any judgment or agreed settlement sum, and factor that risk into any settlement.
However, when mediation is tabled, there are various advantages and disadvantages to be weighed as part of deciding whether insurers should attend the mediation.
Although insurers will have been providing instructions in the course of defending the claim, and will have received settlement recommendations from the appointed solicitors in advance of the mediation, they are necessarily acting at "arms' length" up to that point, receiving reports and summaries from their appointed lawyers. When the parties reach mediation, everything comes into much sharper focus. Attendance at the mediation, therefore, provides a very good opportunity for insurers to really become familiar with the issues in dispute, the key matters which emerge as the main barrier to settlement, and the personalities at play in the opposing team in terms of both the claimant and its lawyers. One can often establish what is driving the claimant in bringing the claim — what is important to them? Is it purely monetary or is an apology or maintaining a future business relationship with the defendant(s) equally important to them? This can prove invaluable in assisting with your strategy during the mediation, but is also helpful if the mediation does not succeed, meaning that there are likely to be further negotiations in the months following the mediation.
Mediations can be fast moving at times throughout the day, and the fact that insurers are present means that decisions can be made quickly as matters develop, sometimes unexpectedly. Being "in the room" means that an insurer can respond and provide instructions more easily than if they are focusing on matters elsewhere and having to take repeated telephone calls from solicitors who are providing lengthy updates and requesting instructions. Another benefit, particularly in multi-party disputes, is that the insurer representatives can hold "insurer to insurer" discussions which, more often than not, can help to break the stalemate, the insurers being able to move from the previous entrenched position that the solicitors acting may feel unable to leave.
Attendance by insurers can also be seen as a "show of strength" behind the policyholder, and can send a message to the claimant that insurers have "deep pockets", something likely to make a privately funded claimant consider that the defendant has the motive and the means to run the claim to trial, particularly if they are unsure about the strength of their case. While there may be policy issues leading to cover not in fact having been confirmed before the mediation, attendance at the mediation by insurers means that a deal can be done on the day, wrapping up both the claim and any policy issues requiring contribution to settlement by the insured.
All of this sounds very positive — so what are the "downsides" to attending? As already referred to, it might be advantageous in the negotiations not to reveal the fact of insurance cover to the claimant if the insured's business is small, leading to doubt about its apparent ability to pay the claim. Such consideration would not, of course, have the same traction where the insured is a large corporate with assets. Another factor is that time is precious for busy people, and it may not be proportionate for insurers to attend a full day mediation and tie up their time when the claim is small or where the insured has a large excess which is likely to meet the greater part of the claim.
Whatever insurers' intentions, claimants, (and policyholders), can read into non-attendance that insurers are not interested in the claim, perhaps wrongly inferring that insurers consider that the prospects of successfully defending are not good and so the mediation is not worth attending. This would be a negative message to send to the claimant and to the policyholder, especially if it leaves the policyholder feeling that they have had a bad claims experience, a matter that would be at the forefront of their minds on renewal. That can of course be managed, but it is important to explain to policyholders the reasons why attendance is not possible or considered desirable in specific cases.
If insurers elect not to attend mediation, then the mediation should be arranged to take place when the insurer dealing with the claim is available by telephone to provide instructions on offers and any final deal. It is much less desirable for colleagues with little knowledge of a claim to have to step in, although sometimes this is unavoidable. However, the key point is that the person available at the insurer must have the necessary authority to provide instructions on offers and strategies.
All things considered, it is nearly always preferable for insurers to attend the mediation as this is likely to increase the prospect of a deal being done on the day, something that is in everyone's interests. Where that is not possible, or is considered undesirable in specific circumstances, consideration should be given to the messaging around this, both to the claimant and the policyholder, and to the practical arrangements in the absence of attendance so as to maximise the prospects of a successful mediation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
