28 February 2013

CRE: Spanish association calls for the development of insurance mediation

Spanish buyers still pay little attention to the advantages of dispute mediation when solving conflicts with insurers, experts said in Madrid yesterday. But speakers at a seminar on mediation expressed hopes that the practice could progress and gain popularity in the market.

The Spanish government implemented a law on legal mediation – the practice whereby parties try to resolve conflicts via discussions out of court – in March 2012, although some autonomous regions previously had legislation in place. Insurance is one of the sectors that experts believe could benefit most from the spread of mediation. They say it would help buyers and underwriters alike to reduce costs and the time spent involved in protracted court cases. Civil liability would likely be one area to benefit the most, they said.

Miguel Angel Zarandona, Vice-President at Agers, Spain's risk management association, and risk manager at retailers El Corte Ingles, noted that the practice remains underdeveloped in Spain, despite the advantages it offers such as reducing conflict and guaranteeing certain corporate details remain confidential.

The advantages can reach further than the mere solution of trade and civil disputes said Fernando Rodriguez Prieto, a leading notary in Madrid. But in Spain, where courts are swamped with cases, there remains a lot of scepticism about its use.

Thelma Butts, an international mediator, said the US experience taught the market that although mediation is no panacea it certainly helps to reduce costs for those involved. She said key to its development in the US, the UK and other countries such as Singapore and Canada, is the fact that mediation was made mandatory for certain kinds of conflicts, meaning that it has to be considered by parties before a case reaches court. This is not the situation in Spain, where mediation is offered only as a voluntary option for those involved in a legal conflict.

Jordi Rivera, the CEO of DAS International Spain, said that legal protection policies issued by his firm already cover the cost of mediation. He noted that it makes economic sense to try and drive more companies to look for solutions to their legal squabbles out of court. A mediation sentence costs about €910, he said, while the European average cost for litigation costs reaches €2400 (the fees of lawyers and other such expenses not included).

More importantly, perhaps, companies can save much time and effort by avoiding legal wrangling. Mr Rivera said that in Belgium litigation takes on average about 505 days to conclude. Mediation, however, takes a mere 45 days.

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