Illinois Senate SB0152 seeks all auto insurance carriers’ endorsement of a non-governmental agreement called Nationwide Inter-Company Arbitration. This pact was signed by more than 4,000 automobile insurers. This agreement allows automobile insurance companies to work together to resolve disputes related to auto insurance claims. Arbitrations are a way for them to do so without having to resort to the courts or the legal system. The arbitrators are typically experienced auto insurance claim adjusters who have been in the field for many years.
Arbitration Forums Inc. is a Florida-based non-profit organization that manages the NICA method. This method is used to resolve approximately half a million disputes in insurance claims each year, with an estimated value around $2.5 billion.
The agreement is not signed by all Illinois auto insurance companies. Each insurance company must provide all information to the arbitrators in order to resolve claims according the agreement. The final verdict is then waited for. If your insurance company is not willing to pay your auto claim due to the fact that they believe the accident was the fault of the other driver, the adjuster from your company will prepare all supporting documents (records and images, estimates, expense, etc.). To the arbitrator and to the defending firm. The process of completing the claim forms is subject to strict regulations and time frames.
Some insurers don’t find the deal attractive because they feel that this program of managing claims does not reflect fairness. This may be due to the fact that their clients are less serious about obtaining as much information as possible at the time of crashes and providing it to their carriers. Non-standard carriers may not support the agreement and could act against it for any of the following reasons:
- The scheme prohibits the questioning of witnesses or other drivers.
- Arbitration is not open to live specialists.
- Arbitration meetings are not permitted for insured persons or their carriers.
- Arbitrators’ ability to apply their knowledge and make decisions is undisputed.
- Judgements are automated and usually for 100% of claims.
- There is no way to appeal an arbitration decision.
The Nationwide Inter-Company Arbitration: Pluses and Minorities
Non-standard markets insurers are less likely than standard ones to approve the Agreement. This is because their customers are less likely to cooperate in the event of a crash and provide similar information to standard clients. Non-standard insurance companies will suffer more. Non-standard users of Illinois’ SB0152 will pay more for auto insurance but will receive better claim services. This is a good thing for the public but it will mean that more drivers will drive without insurance due to rising insurance premiums.
Non-standard insurers may benefit from The Nationwide Inter-Company arbitration Agreement. This agreement allows them to charge higher insurance rates which results in better profit. The law will require every insurer to sign the agreement. Therefore, competition within the same insurance class will almost be the same as before. It is false to say that non-standard companies evade paying claims by negotiating with other insurers. Standard companies have similar claim procedures to non-standard companies. However, larger claims show more similarities. This Bill could also work in favor of non-standard insurance companies. Companies will often save money on their legal fees by avoiding court costs.
Clients of non-standard insurance companies will see their rates increase. However, the quality of claims services will also rise. Illinois’s slow and inept claim settlement procedures will soon be over. Standard and preferred customers may have to pay higher insurance premiums because preferred and standard insurers will be responsible for more claims from uninsured motorists.
If the Bill is passed, independent auto insurance brokers in Illinois will reap the benefits. The first is that the companies will provide better claim payment services, which will result in less time spent at independent agent offices. They will also see increased profits due to the higher premiums.