Agencies and Arbitration
In a recently published article, “Is Arbitration a Trap for The Unwary Insurance Agency?”, February 2007, I warn that arbitration does not provide a level playing field to insurance agencies in disputes with carriers, and urge the brokerage and agency community to expand the pool of qualified and available arbitrators knowledgeable on agency issues.
The impetus for the article was an arbitration between an agency with a small but profitable and fully reinsured program and the insurer of the program. The issues before the arbitrators included the circumstances of the termination and the treatment of the agency following termination. The arbitration resulted in an award by a majority of the three arbitrators denying the agency’s claims, but without any explanation. The dissenting arbitrator, however, issued an unusual written dissent stating that the majority had failed to apply custom and practice in its decision, and misapplied the law. As I note in the article, this dissent should be required reading for all insurance agencies and program managers concerned with resolving disputes with their carriers. Because of its importance, a copy of the award and dissent in The Garn Group v. Arch Insurance Company dated