Arbitrating insurance disputes

QUESTION: WHAT is arbitration in the context of an insurance dispute? The company that insures my car and I do not agree on which of two drivers was at fault in a recent collision. The other driver caused the accident. I have evidence to prove it. My insurer believes otherwise. After much to and fro-ing, the company said that the matter would be arbitrated. I retained a lawyer to represent me. I learned later that the matter had been decided without his involvement. The company has betrayed me. Can anything be done to correct the injustice?

− KT, Kingston

INSURANCE HELPLINE:

The short answer to question number two is no. Even though the insurer’s action may seem to be unfair, calling it an injustice is the wrong way to describe it. The more appropriate question to have asked was whether the company’s action was permissible under the terms of your motor insurance policy. My response, in that event would have been yes.

Insurance contracts are – with great respect to the president of the Jamaica Bar Association, Emile Leiba – contracts of adhesion. North Americans call them adhesion contracts. Investopedia defines this type of agreement as a contract in which “one party has substantially more power than the other” and that for a contract of adhesion to exist, “the offeror must supply a customer with standard terms and conditions that are identical to those offered to other customers. Those terms and conditions are not negotiable”.

I chose Investopedia as my source of reference because insurance contracts are used as examples to explain adhesion contracts.

This source says: “The company (insurer) and its agent have the power to draft the contract while the potential policyholder only has the right of refusal; the (applicant for insurance) cannot counter the offer or create a new contract to which the insurer can agree. Before signing an adhesion contract, it is imperative (that the applicant) read it over carefully as all the information and rules have been written by the other party (the insurer).”

Even though I have not read your policy, I expect that it contains two provisions that give your insurers the right that they exercised in deciding which driver caused the accident without consulting you or your legal representative.

One clause reads as follows: “No person claiming under the policy must admit to, negotiate on, or refuse any claim unless they have written permission from us (the insurer)”.

INSURER IN CHARGE

This statement is crystal clear. It means that the insurer ‘run tings’ – not you. This condition, or something similar, is found in every motor policy.

Lest there be any doubt, the second condition says that “we (the insurer) can: (a) take over and conduct the defence or settlement of any claim; and (b) take proceedings at our own expense and for our own benefit to recover any payment we have made under this policy”. Note the use of the five pronouns after the initial ‘we’.

Further, it says: “We will take this action in your name or in the name of anyone else insured by this policy. You, (the policyholder) or the person whose name we use, must cooperate with us on any matter affecting this insurance, including

any legal proceedings”.

Even though I do not hold a legal education certificate from one of the three law schools in the Englishspeaking Caribbean, I have the constitutional right to interpret and record my opinion about what these words in the policy mean.

Arbitration, according to the World Intellectual Property Organization, “is a procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute. In choosing arbitration, the parties opt for a private dispute resolution procedure instead of going to court”.

The principal characteristics of arbitration are that it is consensual; the parties choose the arbitrators; it is neutral; it is a confidential procedure, and the decision of the arbitral tribunal is final and easy to enforce. Insurance policies usually contain an arbitration condition.

In undertaking research to answer question number one, I found out that the decision about which party caused the accident was not determined using arbitration procedures. The decision was made by a group of ‘experienced insurance professionals’. This information was shared with me during a meeting with members of the Insurance Association of Jamaica and its executive director.

I was advised that written procedures exist that govern how liability is determined and that the rules were blessed by the insurance regulator, the Financial Services Commission. I am still awaiting a copy of the procedures.