Negotiate dispute resolution rules early

Although non-U.S. insurers are seeking arbitration provisions in their policies more frequently, policyholders may still be able to negotiate for better terms, say observers.

Michael F. Sharkey, a partner with Perkins Coie LLP in Washington, said “There are insurance companies that take a hard line and say they’re not going to budge,” but he has had some success negotiating the issue and making it optional on the policyholder’s part.

Policyholders should bring it up with their brokers early in the process when they are shopping the coverage, he said.

“Typically, the best time for policyholders to address this issue is when negotiating a policy, and so it’s something insurance brokers and lawyers who are advising policyholders should be aware of, and focus on, because once your arbitration provision is in your contract, it’s not easy to get that set aside,” said K. James Sullivan, a policyholder attorney with Calfee, Halter & Griswold LLP in Cleveland.

“We vet each and every single arbiter,” said Mark E. Miller of Miller Friel PLLC in Washington. “We check into their background, we understand where they came from, what type of experience they have, and we look into everything about them before we suggest them as a possible arbitrator,” he said, adding his firm has achieved good results with such an approach.

Peter A. Halprin, a partner with Pasich LLP in New York, said he prefers “a clear choice of law,” such as New York’s, that would apply to an insurance policy’s interpretation.

In addition, “You want to make sure you’ve got fair procedural rules, which means allowing both sides to present the evidence necessary to the case” without rushed time limits, Mr. Halprin said.